How to Understand Your Payslips as an Employee - Fleximize

How to Understand Your Payslips as an Employee

Stacey McIntosh of Sage Advice UK​ talks us through how to understand your payslips as an employee, including a look at key terminology

By Stacey McIntosh

If you’re employed full-time, part-time, or as either a contractor or a zero-hours contractor, you’re entitled to an individual and detailed payslip outlining a breakdown of your pay, including deductions and benefits. But over the past year, 2.8 million people in the UK claim to have been impacted by an incorrect payslip.

Take the impact of Covid-19, for example. As a result of it, you may have been furloughed or had a pay cut – that means you’d need to check your payslips closely to understand what’s changed. This article includes the information you need to help you understand your payslip and what to check each month.

What should a payslip include?

With every payslip, your employer is obliged to ensure their payroll process is compliant with UK regulations, which means having the correct information. While payslips may look different for different workers, the basic information on them should be the same. At the very least, a payslip should include:

Your payslip may also include your tax code, National Insurance number and pay rate as well as deductions, such as pension, bonuses or overtime pay.

When to check your payslip

You should aim to check your payslip when you receive it. While checking your payslip isn’t always a priority, if there have recently been changes made to your pay, tax or student loan, for example, checking your payslip may be more important.

These changes make more room for potential errors, so checking your payslip and understanding what those changes mean will help you notice if an error has been made.

Tips to help you understand your payslip

You should be able to understand a fair amount of the information on your payslip, such as your payroll number and the date that your pay should be credited to your bank account.

But there are some sections that may be confusing. Let’s run through the terminology and what it means in practice:

Why you should keep hold of your payslips

Payslips hold key information about your income and tax deductions. By understanding what the details mean, you can make sure you’re getting paid the correct amount. But it’s important to keep hold of them well beyond pay day. In fact, HMRC recommends you keep hold of your payslips for 22 months after the end of the previous tax year.

A payslip is often the preferred document to prove how much you’re paid or have been paid. Here are some examples of when you may be asked to present them:

Keeping your payslips in a safe location is incredibly important due to the sheer amount of personal information included on them. If your payslips are digitised, you should have a password to log into the payroll system. If you use paper payslips, store them in a safe place where they won’t accidentally be thrown away or lost.

About the Author

Stacey McIntosh is the editor of Sage Advice UK and Sage Advice Ireland. He has more than 15 years of editorial, PR and social media experience, and has worked across print and online for national newspapers, magazines, PR and marketing agencies.