A payslip is also called a pay stub or a pay advice. The United States Department of Labor states that under the Fair Labor Standards Act, employers are not required to give employees a payslip, but state law might. Therefore, if state law requires it, the employee is entitled to a payslip for each pay period. The payslip shows a breakdown—or the terms—of the payment. You should make an effort to understand your payslip to ensure that you were accurately paid.
Determine your gross earnings. This is the amount of your pay before deductions happen.
Suppose you’re salaried on a weekly pay cycle earning £30,550 annually. Calculation: £30,550 / 52 weeks = £587.5, weekly gross pay.
If you’re hourly, multiply your hours for the pay period by your hourly rate. Suppose you’re paid hourly on a biweekly pay cycle. Calculation: 80 hours x £7/hour = £624, biweekly gross pay.
If your payslip shows additional pay, such as overtime, bonuses or commissions, add the amount to your regular gross pay.
Subtract voluntary deductions, such as company-sponsored benefits and deductions that you agreed to. This includes retirement benefits; medical, disability, dental and life insurance; loan repayments; parking fees; union dues; and charitable contributions. The remainder is your take-home (net) pay.
Subtract the statutory deductions listed on your payslip from your gross earnings. This includes all mandatory deductions, such as federal income tax, Social Security tax, Medicare tax, and state/local/city income tax (if applicable). Make sure you understand how much of your income is taxable. Many voluntary deductions are taken out before federal taxes. Furthermore, subtract wage garnishment/levies and child support, if applicable.
When subtracting deductions, ensure you use the current amounts listed on your payslip, not the year-to-date (YTD) amounts. The latter gives you the amount deducted thus far for the year. Learn the abbreviations on your payslip; this varies by employer. For example, federal income tax may show as FIT, Social Security tax as SS, medical insurance as MED, and child support as CH SUPP. If your payslip does not match your calculations, let your employer know.