A Salary Certificate is provided by your employer as a documented proof of your employment and your salary entitlement. This is issued by the employer on receiving a request from the employee. The certificate usually carries details about your employment with the organization.
The Salary Certificate is usually printed on the organization’s letterhead with the seal and signature of the authorized personnel on it. It is not addressed to any specific organization like a bank or a government agency and can be used for multiple reasons. A Salary Certificate letter, on the other hand, is addressed to a specific organization and states the reason behind the issuance of the certificate. Many employees confuse a salary certificate with a pay slip too. A pay slip details the amount of pay received by you and amount of tax and/or insurance deducted.
A salary certificate is a mandatory document when you apply for a loan or a credit card and when you apply for immigration purposes. It is a proof of your employment and salary. Most banks and financial institutions have their own format of the salary certificate, but the basic information sought is the same. You can approach the Human Resources Department [HRD] of your organization and submit an application for the issuance of a Salary certificate. If the bank or financial institution has a set format, then you must inform your organization about the same. Usually, human resource professionals are aware of the types of salary certificates required by most banks but it is better to provide all the information at the outset.
You must ensure that the salary certificate is duly signed by the authorized signatory, printed on the official letterhead and carries a rubber stamp of the company.
While there can be many variants of the salary certificate required by banks, the primary input points include:
- Date of issue – the date on which the salary certificate has been issued
- Employee’s name – your name as in the records of the organization
- Position held in the organization – the designation on paper[Many companies have a functional designation too. That won’t be mentioned on the salary certificate]
- Job profile/designation
- Joining Date
- Salary amount – both the gross and net salaries
- Allowances, if any – this can include HRA, transportation and any other allowance which is paid monthly
- Benefits, if any
- Name, address and contact details of the HR official/HR head who signs it
The salary certificate consists of basic details as mentioned above. It is not addressed to any particular bank so one certificate can be used in different banks if needed.
Here's the sample document
A Salary Certificate letter will have an added section addressing a bank or a financial institution. This letter can be used only for the reason and the institution specified at the time of applying for the letter.
So, if you are applying for a personal loan with XYZ Bank, then the salary certificate letter will be issued to “XYZ Bank” for the purpose of a personal loan. You cannot submit this letter to any other organization or for any other purpose.
Before applying for a salary certificate or a salary certificate letter, ensure that you understand the exact requirement of the bank or the financial institution.
Here's the sample document
A pay-slip is a note given to the employees when they are paid a salary.
This usually provides a break-up of the amount earned (less deductions, if any). This is not given for any specific purpose and can be used as a proof of income if the financial institution accepts it as a valid document.
Some banks provide the alternative of submitting a carbonized copy of the pay-slip in lieu of the salary certificate.
Here's the sample document
These are basic formats of the salary certificate, salary certificate letter and pay-slip.
Note:Organizations can have their own format to issue these notes/documents. Bank and financial institutions can also have their acceptable format of these documents. You must check with the institution before submitting these documents.
When you approach a bank or a financial institution for a credit card or a home loan or personal loan or car loan or any other type of loan, they need to ascertain your ability to repay the loan. This is done by assessing your savings[which is done by looking at your bank statements] and your monthly income [which is done by analyzing your salary certificate]. This helps them to ensure that they are lending to an individual with a regular earning and repaying potential. A Salary certificate verifies your earnings and position in the organization along with many other factors. This information is used by banks to arrive at a decision about your creditworthiness[This is one of the factors and not the sole factor].
In UAE, most government departments require attested documents for processing your requests. These requests can be sponsoring your family, applying for loans with banks or financial institutions or sponsoring domestic help, to name a few. In UAE, a salary certificate is one such document which needs attestation by the Ministry of Foreign Affairs, Dubai or Sharjah and subsequently by the Consulate General of India, Dubai. The following documents must be carried for attestation:
- Original Salary Certificate along with a photocopy.
- Original Passport of the applicant along with a photocopy of the first and last page and a valid visa page.
Apart from the documents, you have to be physically present at the time of attestation. Additional documents may be required for attestation depending on the documents presented. The Fees associated are:
|| AED 10
|| AED 10
|| AED 60
Many banks in UAE ask for a salary certificate as a mandatory document when you apply for a loan and/or a credit card. Depending on the type of loan and credit card, the documents may vary but the basic requirements are:
- Valid Passport and Visa Page
- Latest Salary certificate or Carbonized Pay slip
- Bank Statements (Latest 3 months)
Most banks and financial institutions in the UAE will not process your loan or credit card application without a salary certificate which makes it an important document in the loan application process.
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Q. If I get a salary certificate issued by my employer on January 01, 2017, then till when can I use it as a proof of my income?
A. Usually, the salary certificate is valid for a period of one year unless specified otherwise. It would be prudent to check for these details with your employer and the institution where you are submitting the certificate.
Q. I want to apply for a personal loan with the bank with which I am holding my savings account. Do I need to provide my salary certificate?
A. A savings account is opened by the bank to facilitate your savings. Since it is not a loan, they do not verify your employment and earning credentials. You will have to provide the salary certificate as per the format mandated by the bank. Please check with the bank about the same too.
Q. I am a consultant who is not an employee of the company that I work for. I am applying for a loan and the bank wants me to provide a salary certificate which I don’t have since I don’t get a salary. What can I provide in lieu of the salary certificate?
A. This can vary from bank to bank. Please ensure that you inform the bank upfront and ask for alternative documents, if any, that can be provided by you to apply for the loan. Keep your employer informed about this as well.
Q. I work for a free zone employer. How do I procure a salary certificate?
A. In UAE, free-trade zones are specific areas having their own employment laws. An independent authority oversees each free zone and assists the companies operating in these zones with establishing their operations. All free zone employees are sponsored by this authority. You may contact your employer or the trade free zone authority for the same.
Q. I am applying for a credit card with the bank where my salary gets transferred. Will I need to submit my salary certificate too?
A. Banks can have different rules depending on their agreement with individual companies. It will be best to check with the bank about special offers, if any, with respect to the documents required for credit card applications.
Q. My company is not listed with most banks on their pre-approved list of companies. I am working in a senior position with a very good salary. I am looking for a personal loan and would be applying to some financial institutions for the same. Will my salary certificate be enough to prove my credit worthiness?
A. Yes. Few banks are offering personal loans for employees of non-listed companies too. These banks work on the standard document requirements as with listed companies. You must check with the respective bank before applying.
List of banks offering personal loans to employees of non-listed companies.
Q. Can my spouse attest my salary certificate on my behalf on the basis of a letter of authority?
A. No. You have to be physically present at the time of attestation along with the documents mentioned above.
Q. I have availed of an employee loan from my organization. Will this reflect in the salary certificate?
A. Usually, employee loans are repaid in installments which are deducted from the monthly salaries. If that is the case, then it will reflect in the salary certificate and will be counted as a liability. The installment amount will be deducted from your salary before calculating the loan amount offered by the bank.