Reading a payslip line by line

Start at gross, not at net

Employees look at the net figure first, which is why payroll conversations so often start in the wrong place. Read a payslip from the top: basic pay, then additions, then deductions, then net. If you cannot explain each line in that order, you cannot defend the payslip.

The additions

Basic pay is contractual and should reconcile to the contract without adjustment. Overtime should reconcile to approved timesheets, at the contractual multiplier. Allowances — housing, transport, telephone — should each trace to a policy document. Where an allowance has no policy behind it, you have found a control weakness, not an anomaly.

The deductions

Statutory deductions come first and are non-negotiable: social insurance, pension, tax where applicable. Contractual deductions come next, such as loan repayments or salary advances, and each needs written authorisation from the employee on file. Voluntary deductions come last. Any deduction without a document behind it should be stopped, not explained.

Net, and the reconciliation nobody does

Net pay must reconcile to the payment file, and the payment file to the bank. Separately, the payroll journal must reconcile to the general ledger. Most payroll functions do the first and skip the second, which is how differences accumulate quietly across a year.

Where this is taught

Payroll Fundamentals covers the calculation and the payslip in detail. Payroll Management & Compliance covers the control framework, the audit trail and end-of-service calculations.