Your payslip is a vital part of your everyday financial life. Make sure you understand everything that is deducted from your monthly salary.
Do you struggle to make sense of your payslip? Many think of it as another one of those embarrassing financial questions that you dare not ask anyone. But, when all is said and done, you need to know what your financial situation is and, especially, what monthly deductions you can expect for effective financial planning.
What Is In Your Payslip?
UIF (Unemployment Insurance Fund) contribution
Why Is Your Payslip Important?
Your payslip is often the "Golden Seal" to many financial situations and holds a lot of weight with financial institutions. Payslips also provide proof of employment, which is a prerequisite to estate rental agencies, bond applications, debt applications, retail accounts, etc.
Number of hours worked on a Sunday or public holiday
Total number of ordinary and overtime hours worked
Voluntary Vs. Compulsory Payslip Deductions
A distinction must be noted between personal or 'voluntary' deductions and compulsory deductions. Voluntary deductions include staff loans, charity donations, gym fees, or union fees. Compulsory deductions include tax and UIF. Depending on the employer's policy, pension, medical aid, life cover, and income protection can sometimes be compulsory. Not all compulsory deductions are standard in all industries, so it vital that you make yourself aware of what currently gets deducted, as it can differ from company to company.
This is a salary package that details all employee benefits you receive and what it costs the company.
What Is An IRP5?
An IRP5 is a tax certificate issued at the end of every tax year to an employee. It details all employer/employee related incomes, as well as deductions and related taxes. Why do you need this? It is used when you file your income tax return for the financial year.
Pay As You Earn?
Otherwise referred to as PAYE, this is the income tax you pay and is deducted by your employer from your salary every month. The employer then pays the South African Revenue Service (SARS) on your behalf. PAYE is dependent on how much you earn and will be adjusted accordingly by calculated tax tables developed by SARS.
How Much Do I Contribute To UIF?
A total of 2% of your salary is deducted for UIF. With your employer paying 1%, and you the remaining 1%, to be contributed to the fund.Each employee is liable to make these contributions, which could be a godsend should you become unemployed and cannot find work immediately. It is also your right to claim from UIF if your employer does not pay maternity leave.
Check Your Payslip Monthly
It is your duty as an employee to make sure all information on your payslip is correct. If you do not notice an unfamiliar deduction, make sure you bring this up with an HR staff member or payroll as soon as possible. It is also wise to keep copies of all your payslips, should you misplace them.