Payslip Components
An employee’s payslip details their remuneration and deductions in order to determine their nett pay. This article briefly discusses each of the types of items that could appear on a payslip and contains the following sections:
Remuneration
An employee’s remuneration is made up of any income and / or allowance, which is paid or is payable to them by their employer, as well as the value of any benefits. It is also known as gross income.
Therefore, remuneration can be calculated as cash income + cash allowances + the value of benefits.
Nett Pay
An employee’s nett pay is the cash amount that they will receive at the end of each pay period. It is calculated by subtracting any applicable deductions from the cash components (income and allowances) of their gross income.
Income
Income items are for amounts owed to an employee as a result of their employment and in exchange for their service rendered. These will usually be amounts that the employee requires to live, such as their basic salary.
Allowance
An allowance is an amount of money given to an employee by an employer to incur business-related expenditure on the employer’s behalf, without an obligation on the employee to prove or account for such expenditure. The amount of the allowance is based on the expected expenditure.
Benefit
A benefit is the monetary value of anything given to the employee by the employer as a perk of or by virtue of the employment relationship or as a reward for services rendered and includes any non-statutory contributions made by the employer on the employee’s behalf.
Reimbursement
A reimbursement of business-related expenditure occurs when an employee has incurred and paid for business-related expenses on behalf of an employer, without being given an allowance or an advance, and is subsequently repaid for the exact expenditure. The employee must produce supporting documentation in the form of receipts.
Custom reimbursements can be created by going to Settings > Custom Items > Add > Reimbursement.