What is a payslip and of what importance is it to the employees?
A payslip is a small document, mainly a slip of paper, which contains records of an employee’s wage or salary, including details of insurance paid, tax paid, pension contribution and other charges.
A payslip is issued by employers to all the employees in every organization. Every employee of any organization has the right to a payslip. It is issued to an employee at the end of every month or the agreed time of payment between an employee and employer.
It is mainly prepared at the accounts department by the employee who prepares the payroll – mostly the accountant, and later distributed to all the employees of an organization, either using email or as a hard copy.
Indicated in the payslip is:-
– The total monthly pay with no deductions taken i.e. the gross pay
– The income tax – which is the amount of money paid by the employee to the Inland Revenue. This amount is based on the employee’s total income
– The National Health Insurance Scheme, which is a contribution made by employees to the Health Insurance Scheme, to cover for the employee’s treatment for illness.
– The pension scheme contributions which is the amount paid to the pension scheme provider, to boost an employee’s income upon retirement
– The net pay which is the total amount of money an employee takes home after all the deductions are made.
– The name and address of the employee.
– The period for which the payment is being made.
The importance of having a payslip is that it is a record document that may be used in future as reference, especially when seeking new jobs, as most employers seek an employee’s payslip for the previous organization they were employed in, mainly as a verification that the employee was actually employed in the organization he claims.
It may also used in banks when obtaining loans. The bank calculates the amount of money they will loan you, according to the figures on your payslip.