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What is a Payslip?

In most countries, employers are legally required to produce and provide their workers with documentation showing workers’ earnings and deductions. These are generally referred to as ‘payslips’.

A payslip is a document that employers provide to their employees each pay period. Payslips may be distributed electronically or via physical copy depending on a given organisation’s accounting setup and local regulations. In most countries, employees have a statutory right to receive payslips and employers must provide them.

For employees, a payslip serves as a record of their earnings and outlines the details of those earnings as well as any deductions for a specific pay period. Depending on the company, the payslip may also include earning totals for the current year, or ‘year-to-date’ (YTD) totals. This compilation of information allows workers to track their income, verify for accuracy, and ask for a review if they spot something amiss.

In some countries, payslips can also be used to verify employment and average annual salaries when applying for things like bank loans, home mortgages, or international work visas.

What information is included on a payslip?

A typical payslip generally contains:

The current pay period

A payslip should clearly include the dates covered for that specific payment period, indicating the specific time frame for which the employee is being paid. For example, if employees are paid bi-weekly, the two-week period for which the worker is being paid should be clearly notated. The same is true for monthly payments.

Individual earnings categories

Sometimes a worker is paid for other things outside of their regular salary or hourly wages. This section provides a breakdown of earnings in various categories for the pay period.

In addition to a regular salary or hourly wage, these might include any overtime pay, bonuses, commissions, remote work allowances, reimbursements, or other additional earnings.

Deductions

‘Deductions’ refers to any amounts withheld from the employee's earnings. The most common deductions are for income tax, social security or pension contributions, health insurance premiums, retirement fund contributions, and any other voluntary deductions.

In countries like the UK offering bike-to-work schemes, workers typically enter into a salary sacrifice arrangement, meaning a portion of their pre-tax salary is used to cover the cost of the bicycle and accessories in exchange for a tax break. These deductions will appear on the employee’s regular payslip.

Taxes

This section outlines information about taxes withheld from the employee's earnings, including federal, local, and other applicable taxes, all depending on the worker’s tax residency.

Gross pay

This is the total amount of earnings before any deductions are taken out. This total will include all wages if the payment combines amounts from differing ‘categories’.

Net pay

Net pay, also known as ‘take-home pay’, is the amount the employee receives after all deductions have been subtracted from the gross pay.

This is the actual amount the employee will receive in their bank account or via a physical paycheck.

Year-to-date (YTD) totals

This section provides a summary of the employee's earnings and deductions for the entire year up to the current pay period. In most cases, employers include YTD earnings on every payslip throughout their fiscal or taxable year.

Employer contributions

If the employer makes contributions to retirement plans, health insurance, or other benefits on behalf of the employee, those contributions may be listed on the payslip.

Is a payslip the same thing as a paycheck?

No, a payslip is not the same as a paycheck.

Whereas a physical paycheck can be taken to a bank and deposited into an account or exchanged for cash, a payslip is simply a record of earned compensation. It is not possible to exchange one for money. The word ‘payslip’ or ‘pay stub’ should be clearly notated on the document.

For companies that do offer physical paychecks to employees, the paycheck is often attached to the payslip and easily detached.

Get global payroll help with Boundless

Juggling employee pay and the accompanying payslips and records is a big job. When you’re managing a global team, ensuring you remain compliant with each country’s requirements is paramount.

Boundless can do more than help: As part of our global employment solution, we take care of your employee’s payroll. Chat to one of our experts about your options.

The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance. You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

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