Contents

  1. 1. What is a payslip?

Payslip Template

August 13, 2021No doubt you have seen a payslip or two in your lifetime. We're all guilty of occasionally quickly scanning it to find our take-home salary without a second thought. However, it's still a legal document and one that, as a business owner, you need to be aware of.As a small business, when your team starts to grow you are required by law to provide your employees with an official payslip. While this is the case, there are no laws that indicate what the payslip format should be.Unsurprisingly, this can make formatting this document a little confusing and can leave you wondering what exactly needs to be included and where.With this in mind, we've created a free payslip template that you can download and use as a guide, along with this article to help create your own payslips for your business. 

What is a payslip?

A payslip is a document that details an employee's pay for the work that they have undertaken for a company. It will show the employee's salary or wages, list the deductions made for tax purposes, and state any contributions made towards the employee's National Insurance and pension.Legally, payslips have to state both the Gross pay and the Net pay, which means the full wage before and after any deductions have been made. Typically payslips are cyclical and are issued weekly, bi-weekly or monthly in conjunction with the pay being processed.Now we've covered exactly what a payslip is and what it details, let's look at how to create one.

How do I create a payslip?

No matter how many payslips you may have received in your lifetime, they most likely have all looked slightly different. This is because certain features are compulsory, whereas others are not. Because of this, we stress the importance of using our template simply as a guide. Feel free to add or remove any relevant sections.If you are wondering how to create your own payslips, then look no further. We have created a payslip template that you can use as a guide alongside this article to create the perfect payslip for your business's needs. 

Mandatory payslip features

When it comes to creating payslips for your employees, certain features have to be included.
Employee information
While this might seem obvious, it is essential to include employee details on the payslip in order to identify who the payslip is clearly intended for. Standard minimum requirements include the employee name and address, yet further identification, such as the company name or the employee's National Insurance number, may also be detailed.
Gross pay
It is a legal requirement to state your employee's Gross pay, the employee's total earnings before mandatory tax deductions are been made. We'll have a look at each of these deductions in more detail below.
Net pay
After the total Gross pay, you then need to state the Net pay for that employee. This is the actual take-home pay after the deductions have been removed.
Variable deductions
It's essential to state which variable deductions have been made to your employees' pay on their payslips.Some deductions are considered variable because they depend on the pay earned, and as such, the amount will vary. Variable deductions will look slightly different depending on the obligations that that individual has. For example, if your employee has a student loan, they will likely need to repay each pay period; however, the amount will depend on their personal salary.Here are some examples of variable deductions that are usually included on employee payslips.
Tax
The tax deduction needs to be clearly stated on the payslip. Income Tax is the tax that everyone needs to pay if they earn above the £12,570 (as of 2021-2022) tax-free personal allowance. The total tax deduction will differ depending on the employee's income and tax code bracket. 
National insurance contribution
To be eligible to work in the UK, you need to have a National Insurance number. Your employee should already have their National Insurance number as this number stays the same throughout their lifetime. It ensures that they can receive state benefits such as state pension and keeps tabs on the contributions that have been made across their working life.
Pension
If you have set up a workplace pension for your company, then you also need to clearly show what contribution the employee has made to that pension. You can also include how much you are contributing. However, the minimum requirement is the employee's deduction taken from their salary. These are the main three variable deductions to include on your employee's payslip; however, there are many more which we explore in more detail below.
Fixed deductions
In addition to the variable deductions, there are also fixed deductions. As the name suggests, these do not vary depending on income. Instead, they are the same each pay period and usually cover a recurring cost.For example, union subscriptions are common fixed deductions or even parking payments. These set costs are removed from the salary and need to be clearly listed so that your employee can see what this deduction covers. 
Hours worked
If you pay your employee by the hour and their wage varies depending on the number of hours they have worked, you now need to state these hours on the payslip. This is a relatively new rule that came into action in 2019 and may or may not apply to your business. However, it is essential to include this if it does, and we'd recommend keeping a detailed timesheet to make sure you don't risk underpaying them.

Optional payslip features

The optional payslip features will vary for every business. Not only will they depend on the personal circumstances of the employee, such as if they have taken sick leave this month, but can be influenced by the circumstances of the business itself, such as whether or not you offer workplace benefits.
Payroll number
This is a handy way to help you identify individuals on your payroll. It is a further method to add identification to the payslip beyond your employee's personal information.
Tax code
HMRC will notify your employees of what tax code they are on. If your employee is on the wrong tax code, they will likely pay too much or too little tax.
Summary of the financial year
National Insurance number
As we identified above, anyone who wants to work in the UK requires a national insurance number. These are commonly displayed on the payslip as another way to identify the individual.
Pay rate
Quite often, the pay rate is displayed on the payslip. This might be as an annual amount or an hourly rate. Pay rates are also commonly included whenever there are any pay changes. For example, if your employees receive time and a half wage for working weekends.
Extra payments
Extra payments include overtime, tips, bonuses, and commission. These are any additional wages that your employee has earned that go beyond their primary salary.In addition to this, you might choose to pay back expenses that you owe your team through their payroll. As such, it should be detailed on their payslip.
Sick pay & holiday pay
Depending on your company policy and how long your employee has been sick, what you need to include on the payslip will look slightly different. If they are entitled to statutory sick pay, then this is treated like the salary or wages it replaces.
Maternity, paternity, adoption pay
If your employees are receiving statutory maternity, paternity, or adoption pay, then this could also be detailed on the payslip.
Student loan
Some of your team might be making their student loan repayment. It is common for their repayment amount to be listed on the payslip alongside their other deductions. HMRC notifies the student loans company of the repayment that has been made.
Court orders & child maintenance
Both Child Maintenance Services and the court can order deductions to be made directly from an individual's pay. If any of your employees are affected by court orders or child maintenance, then you might list their deductions on their payslips. 
Workplace benefits
If you offer your employees any workplace benefits such as health insurance or maybe a company car, then you might want to list these on the payslip as well.
Payment method
It is vital to make a note of the payment method in which your employee expects you to pay them. This may just be directly into their bank account; however, this could sometimes be split across bank accounts and cash. 
Important messages
Finally, you might also choose to add a message to the payslip. If you need to explain something or add a comment, this is an excellent opportunity.

Download our payslip template

Download our free payslip template to get started with creating your own. Payslip templates vary, and as you can now see, so does the salary slip format. Nevertheless, you can use this as a structure to get started and to find what is best for you and your team.

Automate your payroll with Ember

With Ember, you can automate your payroll to support seamless employee payment further.Not only can you file Real Time Information (RTI) directly to HMRC, but our handy dashboard allows you to clearly see the breakdown of your employee's total deductions, including Gross Salary, PAYE, National Insurance Contribution (NIC), and pensions all in one place.Your Ember account will grow as you do, you can easily add employees as and when you need to, and once you are happy with the pay run, you can easily switch on 'automate payroll'. You can feel confident that HMRC will receive all the information they need, with no extra effort on your part.In addition to this, here at Ember we support SmartPensions and Nest integrations for every pension arrangement out there, making auto-enrolment for your employees more straightforward than ever. We can even auto-generate all P45s and P60s in seconds to help remove any stress when you are growing your team.

Summary

Payslip, pay stub, salary slip, paycheck, pay packet; however you choose to refer to it, you should now have the confidence to create your own company payslip with ease. Using our payslip templates and the payroll features within our app, you can get going with paying your people on time, making payday a piece of cake.
Aaron ShawCEO + Co-Founder

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Payslip Template

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