What is a Payslip?

What is a payslip?

A payslip is a note or a receipt that is given to an employee when they have been paid. A payslip will be given regularly to an employee. Probably once a month or however regularly they receive their wages.

The pay skip will show how much the employee has been paid but it will also show how much tax and insurance has been deducted.

Payslips will provide proof of the earnings you have received as well as the tax you have paid and any pension contributions that you may have made. They are therefore very important to hold onto in case a situation arises or if you want to rent or buy a property, these slips can act as proof of income making you more likely to be successful to gain access to a mortgage or personal loan.

pay-slip

Who does not receive payslips?

The right to a payslip applies to casual staff as well as employees. It doesn’t apply to independent contractors or people working freelance. Some examples of these people will be:

  1. Not an employee but are working, for example, a contractor, consultant, freelancer or worker
  2. In the police service
  3. A merchant seaman

When do you receive a payslip?

It is a complete requirement that your employer provides you with a payslip and they can be provided to you either through electronic means or through paper or both, it just depends on both the preference of the employer and employee! Nowadays people prefer electronic means and it is perceived to be more environmentally friendly.

It is important when you begin working that you clarify how you will be paid (cash, cheque or direct bank transfer). It is vital that your payslip and your form of payment align with one another.

What is on your payslip?

For a payslip to be valid it must have certain information displayed on it:

  1. The number of wages you earn before any deductions
  2. Your individual amount of any fixed deduced
  3. The total amount of deductions that apply if you are given a ‘standing statement of fixed deductions’
  4. The individual amount of any variable deductions, such as variable general tax
  5. The net amount of your wages
  6. The amount and method of any part payment of wage

Personal Information on your Pay Slip

7. Your personal information (Name and potentially home address)

8. Your payroll number (Some companies may use payroll numbers to identify individuals on the payroll)

9. Date (The date your pay should be credited to your bank account is usually shown)

10. Tax Period (The number here represents the tax period for that payslip)

11. Tax Code (Your tax code will be sent to you by HM Revenue and Customs, the code tells your employer how much tax-free pay you should receive before deducting tax from the rest. This is incredibly important as if the code is incorrect you could end up paying either too much or too little tax. For most people the code will be 647L)

12. National Insurance Number (You must have a National Insurance number to work in the United Kingdom, your NI number will remain the same throughout your life even if your name changes. It is your personal number for the entire security system and it is used to ensure that your contributions are recorded correctly. It will help ensure you are entitled to certain benefits such as a pension)

13. Expenses (An employer may pay any expenses owed to you via the payroll)

14. Pensions (If you are paying towards a workplace pension that your company has set up or has access to the amount you are contributing will be shown)

Statement of Fixed Deductions

If the person who employs you decides not to set out any fixed deductions they must give you a statement which lays out any fixed deductions.

For the statement to be valid it must fill certain requirements.

  1. Be in writing
  2. Updated every 12 months
  3. State the amount and when the deductions are made
  4. State the reason, description or purpose for the deduction
  5. Be issued to you before your first payslip with the fixed deductions

Student Loans

student-loan

If you are making repayments towards your student loan this will be shown on your payslip.

If you are employed you will typically begin to pay back your loan the April following the date you graduate or leave your course. The HMRC will inform your employer how to work out what you owe and deduct the right amount.

Once a year the HMRC will inform the Student Loans Company what has been repaid. Keeping your payslips and P60 as a record is important if they are problems with repayments.

Court Orders and Child Maintenance

court-order

A court can order deductions for Child Maintenance Service directly from your wages. If this is the case your employer can take a minuscule fee for administration. Most employers, however, will deduct this fee.

Payslip Problems

If there are any problems with your payslip it is very important that you speak to your employer as soon as possible and have the situation remedied. If your employer is unable to sort them out and you are a member of a trade union or you have an employee representative you should consult them for help in resolving the issue.

If the problems persist you can make an application to the industrial tribunal. If you find that you are having to wait for your payslip, you may want to take out a loan with Payday Bad Credit to tide you over. 

Daniel is a loans expert based in London and has been working in the payday loans industry since 2010.