PAYSLIP
money
YOUR PAYSLIP PAYSLIP: UNPACKED Understanding your payslip plays an important role in empowering you as an employee. Here’s what you need to know.
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Earnings
This is the total cash amount payable to you, excluding deductions and tax. This amount can be made up of: • Basic salary • Commission • Overtime • Allowances • Bonuses
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Deductions
These are the amounts that your employer deducts from your earnings: • Unemployment Insurance Fund (UIF) • Pay-as-you-earn, aka PAYE (income tax)
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Text: Dominique Bowen; Photography: Shutterstock, rawpixel.com/Freepik
PAYE This is the tax that your employer must deduct from your income based on your annualised salary and pay to SARS on your behalf. It's called pay-as-you-earn because you pay a monthly tax deduction instead of a lump sum to SARS at the end of the year.
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Fringe benefits
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Cost to company (CTC)
“Fringe benefits are additional non-cash benefits offered by an employer for the benefit of an employee and are tax exempted, provided they meet set conditions,” says Seolwana. These could include: • Free or discounted accommodation • Meals • Company car • Educational assistance • Gym memberships • Life insurance
“This is your total earnings + fringe benefits (if any) + company contributions,” says Seolwana.
UIF The UIF provides financial support to you if you become unemployed or are unable to work. “UIF deductions apply to all employees, excluding those who work less than 24 hours per month, students on learnerships, public servants, pensioners and workers who earn commission only,” explains Given Seolwana, managing director of VHG HR and Payroll Consulting.
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Nett pay
This is the cash amount you receive in your bank account on payday. This amount is calculated as follows: (total earnings) – (total deductions) = Nett pay.
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Company contributions
These are non-cash contributions your employer makes on your behalf, says Seolwana. These could include: • Medical aid • Pension/provident fund • Unemployment Insurance Fund (UIF) • Group risk cover
Total cost to company (TCTC) This can vary across employers, but it normally refers to your cost to company + the company contribution for a skills development levy + the company contribution to UIF + any other additional benefits that are not guaranteed.
What’s a skills development levy? This is an amount employers must pay to develop and improve the skills of their employees. This contribution is calculated based on your salary and paid directly to SARS. Spring 2021
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