Payslip advice: making sense of your salary

By David Crossley, CFP® BDO Wealth Advisers


You have received your first payslip, online or in an envelope from your finance department. You open it up and realise you have no clue what’s going on. It could be your first payslip, or maybe you’ve been working for some years, but either way, what is essential is that you should understand what the information means. Your payslip contains important information including your contribution to UIF (Unemployment Insurance Fund), your tax code, your payroll number, gross pay and net pay. As an employee you have to know how much you will be paid and what all those deductions mean in order to do proper financial planning.

Your payslip is also how you can provide proof of your employment, and holds a lot of weight with financial institutions. Therefore, you need to understand what sort of information goes onto your payslip throughout your career.

According to the Basic Conditions of Employment Act, your payslip must contain the following information:

  • Employer’s name and address
  • Employee’s name and occupation
  • Period for which payment is made
  • Total salary or wages for the month
  • Any deductions
  • The actual amount paid
  • Employee’s pay and overtime rates for the month
  • Number of ordinary and overtime hours worked
  • Number of hours worked on a Sunday or public holiday
  • Total number of ordinary and overtime hours worked


When looking at deductions, it is important to note that personal/voluntary deductions cannot exceed 25% of your gross pay. Voluntary deductions include staff loans, donations to charities, gym fees and in some cases union fees. Compulsory deductions include tax and Unemployment Insurance Fund contributions. Deductions related to benefits, such as pension, medical aid, life cover and income protection, are usually voluntary but can sometimes be compulsory depending on your employer’s policy. Remember that these are not standard amounts in all industries and they can differ from company to company.

Glossary of terms

Basic pay: The rate agreed between you and your employer as your set pay, without any bonuses or overtime. For staff who are paid monthly, this is usually one-twelfth of your annual salary.

CTC: This stands for “Cost to Company” and is a term for the total salary package of an employee. It is the pre-tax salary and includes all benefits the company is offering.

Employee number: An employee number is assigned to each employee when they begin at a company and serves as a unique identifier for each employee.

Gross pay / amount: The amount that you actually earn before deductions from your salary.

Net pay / amount: The amount that gets paid into your bank account. It is the amount that you will take home after deductions.

IRP5: This is your tax certificate. It is issued to you at the end of each tax year detailing all employer/employee related incomes, deductions and related taxes. It is used by you specifically to complete your income tax return for a given year.

PAYE: This stands for “Pay As You Earn” and it is the type of income tax that you pay. Your employer will deduct PAYE from your salary on a monthly basis and pay it to SARS on your behalf. The amount of PAYE that you will contribute depends on how much you earn, and is calculated from tax tables issued annually by SARS.

SARS: The South African Revenue Service, which is responsible for the collection of all taxes in South Africa.

UIF: This stands for “Unemployment Insurance Fund” and is another deduction from your salary that is paid by your employer on a monthly basis. All employees, as well as their employers, are liable for these contributions. As an employee you pay 1% of your total salary and your employer pays another 1% of your salary to the fund every month. If you become unemployed after contributing to the UIF, or your company does not pay for maternity leave, you will have the right to claim from the UIF.

It is important to remember that it is your responsibility to ensure that the information contained on your payslip is correct. So at the end of each month please remember to check your payslip, check the deductions, and if you notice anything out of the ordinary, then bring it to the attention of your payroll or HR staff member as soon as possible. Keep copies of your payslip.

BDO South Africa is the South African member firm of BDO International, which provides audit, tax and advisory services in 157 countries, with over 64 300 people working out of 1 400 offices worldwide.

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