What is a payslip?
- March 15, 2023
- 5 min read
A payslip is like a treasure map of your salary!
It outlines all the hard work and effort you put in during a pay period, detailing every single dollar you’ve earned and where it’s gone.
From your gross pay to all the deductions, it’s a comprehensive account of your financial journey.
Whether you’re a seasoned pirate or a fresh recruit, a payslip will show you the riches you’ve accumulated and how much you get to keep in the end.
So go ahead, take a look at your payslip and see just how valuable your hard work truly is!
Overview:
- What is a payslip?
- Why do you get a payslip?
- What are the payslip requirements for employers?
- What record-keeping is required for payslips?
- Common mistakes Australian employers make with payslips
What is a payslip?
A payslip is a document provided by an employer to an employee that details the employee’s total earnings for a given pay period, including gross pay, deductions, and net pay.
Look at one of your payslips. It should show the breakdown of the various components of your salary, such as base pay, bonuses, overtime pay, and any deductions, such as taxes, health insurance, and retirement contributions.
Why do you get a payslip?
The purpose of a payslip is to provide the employee with a clear and concise record of their earnings and deductions.
It also ensures that the correct amounts are paid to the employee and the relevant government agencies.
What are the payslip requirements for employers?
Are you a small business employer in Australia?
You are legally required to provide payslips when paying employees in accordance with the Fair Work Act 2009 and the National Employment Standards.
Check that you have included the following information on your employees’ payslips:
Employee and company details
The employee information such as name, address and, if applicable, their classification or job title
The employer’s Australian Business Number (ABN) and employer name
Dates
The dates of the pay period
Earnings
The gross pay and taxable earnings including hourly wages, ordinary hourly rate, employee’s leave balances,
Allowances and deductions
The details of any allowances, loadings, or overtime hours and pay, any penalty rates and other paid entitlements.
Any details of deductions, such as taxes, insurance, and superannuation contributions
Pay details and payments
The net pay or take-home pay
How you paid the employee, ie, their bank account details and the date it was paid
Payments to superannuation fund
Don’t forget the payslip must be provided in a clear and concise manner.
It must be provided to the employee either in writing (such as a paper or electronic document) or made available to the employee via an electronic communication system within one working day of being paid.
Did you know your accounting software can produce your payslips automatically using their payslip template function?
However, as an employer, you must make sure the information on the payslip is accurate and correct.
Employers who do not comply with the payslip requirements can face penalties under the Fair Work Act.
What record-keeping is required for payslips?
In addition to the payslip information, as an employer, you are required to keep records of the hours worked by your employees, including their pay rate, dates, times, and the type of work performed. As well as leave balances for annual leave, sick leave, carers leave and long service leave.
It then makes it easy to use this information to calculate the correct pay and entitlements for your employees!
Why do you need to keep this information?
Accurate and up-to-date records can be used to verify your compliance with workplace laws, to resolve any disputes that may arise, and pay taxes to the Australian Taxation Office.
Common mistakes Australian employers make with payslips
Here at Sleek, we help lots of Australian employers of all sizes with their payroll.
We’ve found these are the most common mistakes made when preparing and distributing payslips to their employees.
We don’t want you to make the same mistakes!
Incorrect calculation of gross pay, taxable earnings, and deductions
Omitting important information, such as the employee details, payment method, payment date, hourly rate, superannuation contributions
Providing payslips that are difficult to understand or read
Not providing pay or payslips to an employee in a timely manner or at all
Failing to keep accurate records of employee information and payslip details
Not being aware of and complying with the latest Fair Work legal requirements and changes
These mistakes can lead to confusion, frustration, and mistrust among employees, and can result in compliance issues and penalties for the employer.
As an employer, how do you avoid these mistakes?
Stay informed about the latest Fair Work requirements and regulations and have clear processes in place for calculating employee pay, preparing payslips, and maintaining records.
Or you can get Sleek to help you with all your payroll and payslip processes!
Take the worry away now and call our accounting team on +61 4 9100 0480 or schedule an appointment to see how easy peasy payroll can be!
You might be interested in reading about:
- Understanding the balance sheet for small businesses
- What is the general purpose of financial statements?
- Carried forward loss: What is it and how does it work?
