Salary Slip is an important document provided by an employer to the employees. It gives details of the salary given along with different components of the salary. A salary slip is also known as payslip and is considered an important document because it acts as a proof of the salary which can be used on various occasions like at banks while applying for a personal loan, bank account, etc.
Why is a Salary Slip important?
A salary slip is proof of the income that an employer is paying the employee. Apart from this, there are other important benefits with a salary slip or payslip like,
- Proof of Employment – It acts as proof that the individual has a job and is getting paid as per the details mentioned in a salary slip. It is legal proof while applying for a university or visa.
- Document for financial assistance – When you apply for a credit card, personal loan, salary account, bank account, insurance or any other financial requirement, the salary slip is a mandatory document. Financial institutions determine the loan repayment capability according to the payslip.
- For the next employment – Even most of the companies ask for a salary slip to provide as proof of current or previous work. This will also help in salary negotiations.
Salary Slip Format
The format of a salary slip may differ from employer to employer. But some employers provide a paper copy and some give a digital copy of the salary slip. Be it hard copy or a soft copy, these payslips need to be documented and stored properly. A basic salary slip contains details like,
- Company name
- Company Address
- Date
- Name of the Employee
- Employee Designation
- Bank Account Number
- Bank Name
- Employee Department
- Number of working days, number of leaves taken, leaves pending, Leaves without pay
- Basic Salary
- Allowances
- Deductions
- Net Salary
A sample salary slip or payslip is
Salary Slip Components
Even though a Salary Slip may look like a simple document with salary details, there are different components that need to be noted in it. If you don’t have a proper knowledge or understanding about the details in the salary slip or payslip, it can impact you later when you apply for financial assistance or change to another company.
- Basic Details – Under the basic details sections there is, Name of the company, location, Name of the Employee, Employee designation, Date of the payslip is given along with the bank name and account where the salary is being transferred to.
- Allowance – Some employers provide allowances to employees like house rent, conveyance, medical perks, etc. These details are provided under respective sections.
- Gross Pay/ Gross Salary – This is one of the important components of the payslip you must note. It is the sum of the basic salary and the allowances. Gross Pay is the salary without any taxes allocated to the employee. In the UAE as there is no income tax like most countries, this is the final amount that is handed over to the employee.
- Net Pay/ Net Salary – If any taxes are levied then the amount under Net Pay/ Net Salary is the final salary. This is the component you need to check as the amount disclosed under the Net Pay/Net salary is your take-home salary.
- Salary Advance – If any salary advance is taken from the employer, then it is mentioned in the document along with the amount that will be deducted in that month.
- Leaves details – Salary slip also contains the number of total working days of the month, number of total annual leaves, the number of leaves taken, leaves pending, not paid leaves taken (if any)
- Payroll number – Each employee is given a number. If your employer uses a payroll software to generate the monthly payslip then the payroll number is provided on the document.
What is the difference between Salary Slip, Salary Certificate and Salary Transfer Letter?
The three important income documents of an individual are Salary Slip, Salary Certificate and Salary Transfer Letter. Even though the common thing among these documents is the salary, there is a major difference between these, that is
- Salary Slip – A salary slip gives the breakdown of the salary with the components. It is also known as Payslip.
- Salary Certificate – A salary certificate is a proof certificate that reveals how much the employer is paying to the employee.
- Salary Transfer Letter – A salary transfer letter is a letter given by the employer to the bank or financial institutions stating that the employee’s salary will be transferred to that particular bank.
Even though it is an important income proof, not all the employers provide a salary slip to the employees. Some small companies offer salary certificates to the employees. As mentioned already, a salary slip provided periodically needs to be stored properly. Usually, official authorities ask for at least 3-6 months salary slips as proof so ensure you have saved all the payslips till date carefully.