Content of the pay slip: e-pay slip, sample, and interpretation rules

But why is the pay slip so important? For one thing, the pay slip gives employees transparency about their pay. It helps them to understand how their net pay has been calculated from their gross pay, what deductions have been made and what allowances/benefits they have received. This gives employees an accurate picture of why they are paid what they are paid.

What is a pay slip?

A pay slip, also known as a pay stub, is an official document issued by the employer to the employee at the end of each pay period. This document details the employee’s gross and net salary, all deductions made, as well as the benefits and allowances received. The purpose of the pay slip is to inform the employee in a transparent way how his/her salary has been calculated and what items have been deducted or added.

The importance of the pay slip lies in its ability to ensure the transparency and accuracy of salary information. It helps employees to understand how the final amount they receive is calculated and what deductions have been made from their gross pay. This is particularly important for managing personal finances and accurate budgeting.

The purpose and function of the pay slip

The main purpose of a pay slip is to document in detail the employee’s income and the deductions made from it. It fulfils the following functions:

• Information: The pay slip provides clear and detailed information about the employee’s remuneration, including gross salary, deductions (tax, social security contributions, other deductions) and net the amount of the salary. It helps to understand how the final amount the employee receives has been calculated.
• Transparency: The pay slip ensures transparency in the payment process, which increases trust between employees and employers. A transparent pay slip reduces the possibility of misunderstandings and disputes.
• Legal compliance: The pay slip is an important tool of ensuring legal compliance. It helps both the employer and the employee to comply with local tax and social security rules. It can also serve as evidence in disputes concerning the salary.
• Financial planning: A detailed pay slip allows employees to better plan their personal finances. It provides accurate information on how much money is available for monthly expenses and savings.

The contents of the pay slip

The pay slip contains several important elements that provide both the employee and the employer with essential information on pay and deductions.

Basic elements

Employee data

• Name: The full name of the employee.
• Address: The address of the employee.
• Tax number: The tax identification number of the employee, which was issued by the tax authority.
• Identity card number: If applicable, the employee's ID card number.

Employer data

• Name: The name of the employer company.
• Address: The registered address of the company.
• Tax number: The tax number of the employer, which was issued by the tax authority.
• Contact person: Name and contact details of the person responsible for payroll accounting, if applicable.

Period to which the payroll slip relates

Pay period: The month or period to which the payroll slip applies, e.g. 1-30 June 2024.

Details

Gross and net salary

• Gross salary: The amount the employee receives for his/her work, without deductions. This includes basic pay, overtime pay, as well as other benefits and allowances.
• Net salary: The amount the employee actually receives after all deductions have been made.

Deductions (tax, contributions, other deductions)

• Tax: The income tax paid by the employee on the gross wage.
• Contributions: Social security contributions, which include pension contributions, health insurance contributions and labour market contributions.
• Other deductions: For example, union dues, child support, other court attachments or voluntary pension contributions.

Benefits/allowances and bonuses

• Benefits/allowances: Any non-monetary benefits/allowances received by an employee, such as meal vouchers, travel passes, insurance.
• Bonuses: Cash bonuses such as year-end bonuses, performance-related bonuses or other, one-off payments.

Accounting for working time and overtime

• Working time: The basic working time worked by the employee during the given period.
• Overtime: Time worked in excess of the basic working time for which the employee receives extra pay. The payroll slip also includes the number of overtime hours worked and the remuneration for such overtime.

The electronic pay slip (e-pay slip)

The electronic pay slip, or e-pay slip, is a digital version of the traditional, paper-based pay slip. The e-pay slip contains the same information as the printed pay slip, but in electronic format: gross and net pay, deductions, benefits/allowances, as well as the number of normal working time and overtime hours. This document is usually stored in an online system that employees can easily access.

Advantages:

• Environmentally friendly: Using an electronic pay slip reduces the use of paper, which helps protect the environment.
• Easy access: Employees can access the e-pay slip any time and from anywhere if they have an internet connection. This is particularly useful if the employee is away from the office.
• Security: Electronic documents are protected by encryption, so confidential information is secure. In addition, the loss or destruction of documents can be avoided.
• Easy storage and organisation: E-pay slips can be stored and organized digitally, making them easy to search and archive.
• Quicker accessibility: Electronic pay slips can be accessed and viewed more quickly as there is no need for physical delivery.

Disadvantages:

• Technical issues: Lack of internet connectivity or technical problems may prevent access.
• Data security: Although electronic pay slips can be protected by encryption, there is always a risk of data theft or hacking.
• User skills: Not all employees have the technical skills necessary for using electronic pay slips, which can cause difficulties.

Does the electronic pay slip replace the paper-based pay slip?

In Hungary, the introduction of an electronic pay slip is not mandatory and employers may choose to continue to issue paper-based pay slips. However, an increasing number of companies are switching to electronic payroll accounting and e-pay slips because of the advantages they offer.

It is important to note that employers must inform employees about the introduction of electronic pay slips. In addition, employees should also have access to a paper copy of their pay slip if they request it.

The importance of payroll accounting in the production of pay slips

Payroll accounting is a complex process whereby employers calculate and pay employees' remunerations, as well as the related contributions and taxes.

Payroll accounting plays an important role in the production of pay slips, which are based on the data calculated during the payroll accounting process.

Accurate payroll processing is essential to produce accurate and up-to-date pay slips. Incorrect payroll accounting can lead to incorrect pay slips being produced, which may have serious consequences for both the employer and the employee.

Payroll accounting can be a complex task, which is why many companies use payroll services. Payroll service providers have teams of experts who can take care of all the payroll tasks so that employers do not have to deal with this. This can save time and money for the employer and ensure that payroll accounting is done in compliance with the law.