Ok, it’s not the most exciting subject matter but being able to read, and make sense of, your payslip is very important if you want to ensure you are being paid, and indeed taxed, correctly.
All employees (casual staff included) have the legal right to receive a detailed salary payslip at the time they are paid (or before in some cases). This may take the form of a Private & Confidential paper slip, an email version of the paper slip or it may be obtained electronically via a website.
When I check my paystubs, what should I see?
Your payslip must contain the following information…
- Your gross pay
- Your net pay
- Variable deductions
- Fixed deductions
- The amount and method of any part payment (for example, cash payment and bank account credit)
- From April 2019, salary payslips must show hours where the pay varies by the amount of time worked
What is the difference between gross pay and net pay?
- Gross pay refers to your earnings before deductions (usually tax and National Insurance).
- Net pay refers to your earnings after deductions – this is the amount that will be paid into your bank account and is essentially, your ‘take home’ pay.
What is the difference between variable deductions and fixed deductions?
- Variable deductions are deductions that may change each time you’re paid – for example, income tax (sometimes this appears as PAYE – Pay As You Earn) and NI (National Insurance).
National Insurance is a tax which will enable you to claim certain benefits in the future, such as a state pension.
If you see LEL on your payslip, this refers to the Lower Earnings Limit and is the amount you can earn before you have to pay NI contributions.
- Fixed deductions refer to things like monthly repayments for a rail season ticket or union dues. An employer does not have to detail these deductions on the payslip, but a separate statement detailing any deductions, must be provided at least once a year.
What other information might I see on my salary payslip?
Many employees will include other information which they are not required, by law, to show.
- Payroll number/ Staff ID/ Employee number. Most companies use unique numbers to identify employees on the payroll. This number, sometimes known as a payroll number, staff ID or employee number may be on a payslip in order to identify employees and their corresponding salaries and area of employment.
- Pay method. This will detail how you are going to be paid – for example, by BACS.
- Your tax code. This is sent to you by HMRC and the code tells your employer how much tax-free pay you are entitled to before tax is deducted from the rest. You may see ET on your payslip – this stands for Earnings Threshold and merely refers to the amount you can earn before you have to pay income tax.
- The tax period. This shows the tax period for that specific payslip so if you’re paid monthly, because the tax year starts in April, April is 01, May is 02 and so on. TY on your payslip would refer to Tax Year.
- Your National Insurance number. You cannot work in the UK without an NI number and you keep the same NI number throughout your life and it is your unique number for the entire social security system.
- Pay and wages. Your payslip may detail how your pay was calculated and may also show any bonuses, overtime and commission paid to you.
- Any expenses owed to you (petrol, stationery, etc) may be listed separately on your payslip.
- Contributions towards a workplace pension may be shown (from both you and the employer, if applicable).
- Student loan. Any student loan repayments will be shown here.
- Court orders and child maintenance. The Child Maintenance Service can ask for a Deduction from Earnings Order for child maintenance and this money would be taken directly from your salary. Other direct deductions from your salary might be ordered by a court to repay unpaid fines or for debt repayment.
- Sick pay. This will vary, depending on your company’s sick pay policy (which you should have a copy of). If you’re off sick for four days (or over) in a row, you may be paid Statutory Sick Pay (SSP). You may also be paid Occupational Sick Pay (OSP). Tax and other deductions will be made in the same way they are from your regular salary.
- Maternity, paternity and adoption pay. Statutory Maternity Pay (SMP), Shared Parental Pay (ShPP), Statutory Adoption Pay (SAP) and Additional Statutory Paternity Pay (ASPP) may be detailed here.
- Workplace benefits. A company car, health insurance or other workplace benefits will be shown here.
- Other deductions. Any trade union subscriptions should be listed here.
- Some payslips will detail your cumulative salary, tax, NI, pension payments so far this YTD (Year to Date).
- Payroll Giving. This is a scheme which enables employees to make charitable donations directly from their salary.
- Your personal information, such as your full name and address may be included here.
