Understanding payslips: 7 tips to help your employees

December 9, 2022

Do you know how to read your company’s payslips well? Even better, do you and your employees know what they mean?

Employees may find it difficult to understand payslips. Some employees don’t even look at their payslips. Others go through them with a fine-toothed comb to check for any discrepancies.

It is important to answer any questions your employees might have, and to show that your payroll processes are accurate.

They could miss crucial details if they don’t get their payslips.

How can you simplify all calculations, formulas, and deductions?

He discusses employees’ changing expectations regarding payslips and how those responsible for payroll are trying to improve the company’s pay slips.

He also shares seven tips to help you improve the clarity and readability of your company’s payslips.

  • Make sure you are clear about how your payroll team calculates the pay

Simon points out that salaried employees are most interested in the way the payroll team calculates their wages.

He said, “One of the biggest things that always confuses people it the hours that appear in a payslip are generally averaged over 12 months for salaried workers. Their calculations are affected if the month is shorter.

“Their payslips show they were paid for 162 hours of work, but in reality they have only worked 130 hours.”

This detail could be added to the payslips of salaried employees, which could help slow down these types of inquiries.

  • Clarify employer-paid benefits

Understanding payslips can be difficult because it is not easy to see how other components of employees’ compensation are documented, such as pensions.

Simon states: “There are many questions about what an employer pays and how that’s displayed on the payslip.

“There are still many payslips that do not cover all the elements in sufficient detail.”

This itemization can be added to the payslip by expanding the field.

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  • Customization is a way to make it easier for you to understand your payslips

Simon states that employees need more than a standard payslip. It doesn’t contain enough information about pay.

A simple update to your payslip template can make a big difference in the number of queries.

He says, “I believe there is a shift to a more customizable and bespoke payslip that fits the specific needs of the company.

“HR managers should not use one template. They should compare the layouts of payslips and detail to determine how many levels of detail they can and should include.”

  • Digitalise your payslips

Digitalisation is the most important change to payslips. This is to your advantage in many ways.

Simon states: “Digitalising makes it easier to create payslips. Most software offers a variety of templates that can be customized to meet the needs of your business.

It’s much easier to write a story on a payslip now that it’s electronic than it was if it were printed stationery.

“If you get a lot of questions about your average hour per month, you can update your payslip to address it and stop receiving those calls.”

  • Employer self-service capabilities

When it comes to understanding your electronic payslips, employee self-service is crucial.

Employees today expect to have the same access on demand to their pay slips as they do in other areas of life.

You can use payroll software to create a FAQ about common questions regarding payslips that your employees can access and view on-demand.

They can receive immediate answers when they need them. You don’t have time to address the same questions repeatedly.

  • Leavers: Plan ahead

Simon says that the exit stage remains a challenge for companies to find the right solution so employees have access to their pay slips after leaving the company.

“Think about the way a person will take their payslips when they go.

“Usually, when a person leaves an organization, their access to the portal is disabled or temporarily turned on. Both can cause confusion for former employees.

“Some organizations have separate portals that allow employees to upload their final documents.

“But, by doing this, you risk not complying with GDPR because your payslips end up in multiple places for multiple workers.

“It’s a process I recommend that you give lots of clarity and thought through.

  • Onboarding should include understanding payslips

Although it may seem obvious, Simon states that this is often overlooked when mapping employee experiences.

He says, “I don’t believe it’s ever been covered in an induction program. Personally, I have never had anyone go through my payslips with me.

“But, if you look at the process of payroll processing, I believe that many organisations make it artificially complicated.

It doesn’t have to be complicated as you think.

“Once these processes are simplified, it will be much easier to distinguish single- and double-time wages, holiday entitlements, and all other things.

“Because people only see the pay slips and don’t understand what they mean. It’s important to clearly define the expectations for new members when they join, so that those elements don’t become confusing.

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