How to read a pay slip

In collaboration with our partner F2Dwe decided to delve deeper into the elements that make up a pay slip.

Pay slip

This is the accounting declaration in which all the elements concerning the employment relationship are reported, with specific reference to those that make up the net fee of the worker who receives it.
The current legislation does not provide for a particular model, but leaves the company organization free to identify the most suitable form.

However, some elements must necessarily be present. In particular, the pay slip must always include:

• all the elements that make up the remuneration;
• the employer’s identification data;
• the worker’s data;
• the individual withholdings made.

In order to simplify the reading of the pay slip, it is worth dedicating some attention to examining the different parts that compose it, let’s look at them together:

2. Identification elements of the parties: the data of the employer and the employee
3. Composition of remuneration
4. Body of the pay slip
5. Determination of withholdings
6. Statistical Counters
7. Attendance calendar

Composition of remuneration

The remuneration due to the worker is normally established by the CCNL which, based on the salary level and function, establishes the amount. Usually paid on a monthly basis, it is generally made up of ordinary elements and additional elements. The following are included among the ordinary elements of remuneration:

• the table minimum otherwise known as «basic pay»
• the former contingency allowance
• the distinct element of remuneration (EDR)
• the collective superminimum or third element
• seniority increases
• the individual superminims
• function allowances and elements deriving from decentralized or second level bargaining

Some examples of additional elements of remuneration include:

• cash or money handling allowances
• transport allowances
• canteen allowances
• the contractual holiday allowance

Indirect salary items accrued on an annual basis are often envisaged. These include:

• the thirteenth month’s salary
• the fourteenth month’s salary
• equalization elements (e.g. CCNL Metalworking Industry)
• productivity and/or results bonuses

Finally, «deferred remuneration» is defined as that compensated at the end of the employment relationship. The main items of deferred remuneration include:

• severance pay
• compensation for holidays and leave accrued and not taken
• incentives for leaving
• indemnity in lieu of notice.

The body of the pay slip

The main body of the pay slip represents the development and determination of the amount due to the employee in relation to the service rendered, in days or hours.
The remuneration is related to the quantity of work performed, also taking into account elements that determine greater performance compared to that contractually agreed, such as overtime, holidays or night work. «Paid» absences, such as holidays, vacations, leaves, paid leave, also contribute to the determination of entitlements, the methods and times of use of which are generally established by collective bargaining.
Family allowances, travel allowances, any salary transfers, as well as any benefits granted to the worker are also included in the body of the pay slip. However, it should be noted that each specific CCNL and each specific task may correspond to additional salary items, which must necessarily be reported in the pay statement. (e.g. cash allowance, canteen allowance, contractual holiday allowance, arrears, one-off, etc.).

How to determine withholdings

The purpose of the pay slip is to certify the income received by the worker in a given period, as well as the withholdings made by the employer, which contribute to the formation of the so-called «net pay slip», i.e. the amount that the employer will have to deliver to the worker.
The main deductions to which the worker is subject are social security and tax deductions, which the employer withholds and subsequently pays to the relevant bodies.
The amounts thus obtained are subtracted from the total skills due to the worker, thus determining the gross income (so-called taxable income) on which the tax withholdings will be made. The latter are quantified through a system of IRPEF rates which varies according to the income produced by the worker.
After calculating the gross tax, the «tax deductions due» to the worker are quantified, which represent a tax «discount», variable depending on the earning capacity of the individual worker, as well as any persons declared dependent.

What are statistical counters?

This portion of the payslip displays the statistical counters relating to the management of holidays, ROL (Reduction of Working Hours), former holidays and the hours bank (where established).
The accrual of holidays, like that of paid leave, is quantified by the CCNL applied by the company, which can also indicate the methods of use. It is important to point out that holidays, unlike paid leave, represent an inalienable right of the worker.

Unless otherwise provided in the collective bargaining agreement, the worker has the right to a rest period of at least two weeks in the year and a further two weeks in the following 18 months, which cannot be replaced by the relevant compensation for unused holidays, except in the case of termination of the employment relationship.
The holidays enjoyed by the worker are therefore reported in the body of the pay slip also to demonstrate that the terms of use provided for by the law have been complied with.

Attendance calendar

The attendance calendar represents another indispensable element: here must be the number of hours worked by each employee, the indication of overtime hours, any absences from work, even unpaid, holidays and rest periods.
The attendance calendar can be processed separately from the pay slip; in this case, it is not given to the employee.

How is net pay calculated:

GROSS SALARY (RL) – SOCIAL SECURITY CONTRIBUTIONS (normally 9.19%) = TAXABLE AMOUNT

TAXABLE AMOUNT – IRPEF DEDUCTIONS + ANY DEDUCTIONS – MUNICIPAL AND REGIONAL ADDITIONALS = NET SALARY IN POUCH

Any items to be added to the net salary are:

• Allowances for the family unit
• Former Renzi Bonus

Is it a little clearer to you now how to read a pay slip? We hope we have resolved some doubts and curiosities for you! Remember that for the correct processing of these documents it is important to be supported by professionals who can give you a hand in all the calculations so as to ensure that you always pay the correct amounts so as not to incur penalties. If you want to be supported by F2D, discover our services and tell us your needs in an online video call.