On this page 4 sections
Most people look at one number on their pay slip: the one at the bottom. That is understandable, but the lines above it contain mistakes more often than you might think. Wrong tax codes, missed overtime and deductions that should have stopped months ago are all common. Payroll teams are human, and payroll software only knows what it has been told.
Labels and rules differ a lot between countries and employers, so treat the example below as a map of the usual sections rather than a description of your own slip.
The sample slip
A fictional employee, salary $60,000 a year, paid monthly:
| Line | This period | Year to date (month 7) |
|---|---|---|
| Basic salary | $5,000 | $35,000 |
| Overtime | $240 | $720 |
| Gross pay | $5,240 | $35,720 |
| Retirement contribution (pre-tax, 5%) | −$262 | −$1,786 |
| Health plan premium (pre-tax) | −$120 | −$840 |
| Taxable pay | $4,858 | $33,094 |
| Income tax withheld | −$760 | −$5,180 |
| Social insurance contributions | −$370 | −$2,540 |
| Union dues (after tax) | −$25 | −$175 |
| Net pay | $3,703 | $25,199 |
The numbers are invented. The structure is typical.
The four blocks
1. Earnings. Basic pay plus anything variable: overtime, commission, bonuses, shift allowances, back pay. If you worked extra hours last month, this is where they should appear, sometimes a month in arrears.
2. Pre-tax deductions. Money taken out before tax is calculated, such as some retirement contributions or health premiums. Whether a deduction is pre-tax depends on your local rules and your employer’s scheme. These reduce your taxable pay, which is why a $262 pre-tax contribution reduces take-home pay by less than $262.
3. Tax and social contributions. Income tax withheld is an estimate of your liability for the year, spread across pay periods. Social contributions fund pensions, healthcare or unemployment insurance, depending on the country.
4. After-tax deductions. Things like union dues, loan repayments to the employer, or salary-sacrifice schemes that come out of net pay.
Five things to check every month
- Gross pay matches your contract. Divide your annual salary by the number of pay periods. Any difference should be explainable.
- Variable pay arrived. Overtime, commission and expenses claimed should appear, even if a month late.
- Your tax code or withholding status is right. Many systems use a code or category to decide how much tax to withhold. An emergency or default code can lead to overpaying for months. Look up what yours means where you live.
- Deductions you signed up for are there, and ones you cancelled are gone. Gym schemes and old loan repayments have a way of lingering.
- Net pay matches what arrived in your account. It sounds obvious. It is occasionally not true.
What to do if something looks wrong
Write down the line, the amount you expected and why. Email payroll or HR with that note rather than raising it in passing, so there is a record. Most errors are fixed in the next pay run, often with a back-payment line you can then look for. If it concerns tax withholding, your tax authority may also be able to correct your code directly.
Ten minutes a month is enough. The first time you catch a missed overtime payment, the habit will have paid for itself.