Understanding Your Payslip

Understanding your Payslip

Understanding Your Payslip

Regardless of how long you’ve been employed or whether this is your first payslip, understanding how your pay is calculated is crucial. Important details on your payslip include your date of payment, gross and net pay, deductions and the money that is actually paid into your account. Knowing your payslip and how to verify that you are being paid the correct amount is key. Numerous deductions are made from a person’s salary, a fact that many people rapidly come to realise.

Your payslip is another way to show proof of your employment and is very important to financial institutions. As a result, you need to be aware of the information that appears on your payslip over the course of your employment. The following information must appear on your payslip according to the Basic Conditions Employment Act:

  • Employer’s name and address
  • Employee’s name and occupation
  • Period for which payment is made
  • Total salary or wages for the month
  • Any deductions
  • The actual amount paid
  • Employee’s pay and overtime rates for the month
  • Number of hours worked on a Sunday or public holiday
  • Total number of ordinary and overtime hours worked


We at Debtco Group, a trusted debt counselling company have put together a glossary of terms that are important to know when understanding what your payslip consists of each month.


It’s important to keep in mind when considering deductions that they cannot exceed 25% of your gross income. Tax and Unemployment Insurance Fund contributions are examples of mandatory deductions. Pension, medical aid, life insurance and income protection are typically optional but occasionally required depending on your employer’s policies. Keep in mind that quantities can vary from company to company and are not the same across all industries.

Basic pay

Your set salary, minus any incentives or overtime, as agreed upon by you and your employer. This amounts to typically one-twelfth of your annual income if you are a monthly-paid employee.

Cost to Company

This phrase refers to an employee’s entire compensation package. It is the pre-tax salary and consists of all the benefits the company offers.

Gross pay

Your actual take-home pay before taxes and other deductions.

Net pay

The amount of money you will receive after all your deductions.

Pay as you earn (PAYE)

This is the tax that your employer is required to deduct from your income and pay to SARS. Your PAYE amount is based on your income and is calculated using tax rates provided by SARS.

Unemployment insurance fund (UIF)

UIF offers financial assistance is you lose your job or are unable to work due to long-term illness or maternity leave. You can only claim from UIF if you and your employer made contributions to the fund. The overall contribution is 2% of your salary (1% is provided by you and 1% by your company).

One of the first steps necessary on the path to financial freedom is understanding your payslip. Your budget for other monthly expenses is impacted by how much you make, how much you spend on things like medical aid and how much tax you owe. Take a few moments today reading over and understanding every line on your payslip.

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