Understanding Payslips

Payslips

Understanding your payslips can be confusing. We get it!

As your employees' payslips contain a wealth of information, it's important to us that you understand where and how each element works. At foundU, we want to make navigating payslips and the inevitable questions from your employees as easy as possible for you. 

The main intention of this guide is to help you understand:

  • How data from your platform flows into employee payslips.
  • The basic elements included on all payslips and the relevant areas in your platform where these can be updated.
  • The additional elements on payslips that may appear, depending on your business processes and settings.
  • The calculations for gross and net pay on your payslips.

In this article, we will cover:

  • The data in your platform that flows through to employee payslips and
  • How gross and net pay are calculated in foundU

  Permission Reminder: To see employee payslips, you must have 'Access Pay' enabled in your user permissions.

Data that flows to your payslips

To understand your payslips, you must first understand the data that feeds the information shown and where it sits within your platform. This knowledge will help you answer employee questions and identify where to make any needed changes.

The main elements

Six main elements feed together to create the base of your standard payslip. Below, we will outline those elements and where you can go to view or update the information housed there. 

    • Business details - This includes details like your business's ABN, main address, and contact details. Most commonly, the contact details provided here are those of the main person who should be contacted in case of any issues or mistakes noticed on the employee's payslip.
      • These details are housed in the Office Code set on the employee's profile. 
    • Employee personal and financial details - This includes details like the employee's legal name, home address, superannuation fund USI, membership number, and banking details.
    • Position details - This includes employment basis (Full Time/ Part Time/ Casual/ Salaried), and any positions worked.
      • The details supplied here are from the Position set on the employee's profile. You can add a Custom Title when applying or editing an employee's position if you don't want the Award's position title to appear.
    • Line items - These are a breakdown of each rate your employees are paid (Ordinary Time Earnings & Overtime). 
      • For your non-salaried employees, the line items that appear here are based on the position pay rules set in your Award and the shift times worked by the employee in approved in Approve shifts.
      • For your salaried employees, the details here will depend on the work pattern and settings enabled when you apply the Salaried Position to their profile. 
    • Pay period - This is the date range within which your employees are paid. Your pay period is set and maintained in your individual Operations.
    • Payment date - This is the date payment is uploaded to your financial institution to pay your employees.
      • This date can be set within your platform's ABA Payment Settings and overridden when generating payroll.

 

Additional elements 

Your payslips may contain additional items depending on the complexity of your business, the requirements of your Award or Agreement, or individual employee circumstances.

Below, we will go over the additional items that may appear on payslips and where they are housed within your platform. 

    • Allowances and Pay Items - This item will depend on how the Allowance or Pay Item has been set up. It will determine if the allowance is taxed if superannuation has been applied and how it is reported to the ATO.
      • Allowances and pay items can be applied in many ways, including:
        • On the employee's profile so, they automatically apply.
        • Set as mandatory in the Award, these will automatically apply to payslips. 
        • Added from the Approve Shifts page.
        • Directly added to the employee's payslip in an edit or via the import for bulk applications.  
    • Shift Penalties - Shift penalties are set up in a position's Pay Rules in the Award.  They are applied automatically when a shift is approved for work performed during specific hours. 
      • These items will appear with the Allowances and Pay Items on a payslip. 
    • Reimbursements - If any reimbursements have been made, this will show separately to Gross and Net pay. This item can be added in a few different methods, such as:
      • Being submitted by the employee and approved in Approve Shifts.
      • Admin Users can add Reimbursements directly from the Approve Shifts page. 
      • If required, added to an employee's payslip via an edit.
    • Deductions - These can be applied in a few different ways, including:
    • Time off in lieu (TOIL) - When using the system-based TOIL, it must first be enabled in your Time & Attendance settings and turned on from the individual employee profile.
      • TOIL accrued will appear on eligible employee payslips based on any overtime worked.
      • To redeem TOIL, an admin user must add this to the employee's payslip in an edit. If you are using an Entitlement for TOIL, please see below. 
    • Leave entitlements accrued and paid - To understand Leave on payslips, each leave entitlement must be configured and applied to the relevant employee profiles.
      • If set to do so in the individual entitlements configuration, leave hours accrued will appear on eligible employee payslips.
      • Leave can be paid from a few different methods, including:
        • Approved leave applications.
        • Added to shifts in Approve Shifts.
        • Payouts for terminations and changing employment types (e.g. From Permanent to Casual).
        • Manually added to payslips (e.g. Cashing out leave
    • Rostered days off (RDOs) - For this item to appear on payslips, the Award associated with the employee's position must be set up for RDOs.
      • Accrued RDO hours will appear on eligible employee payslips based on the accrual method built into the setup.
      • To redeem an RDO, an admin user must add it to the employee's payslip in an edit. 
    • Additional Superannuation contributions - If any of your employees have additional Superannuation Contributions, like Salary Sacrifice, Employee or Employer Additional Superannuation Contributions, these items will be split out and shown on their payslip.
      • Depending on the settings enabled in your platform, your employees may be able to manage their additional superannuation themselves in their Employee App. 
    • Extra Tax - If any of your employees elect to pay Additional Tax.
      • Employees can manage this themselves in their Employee App.
      • As an admin, you can also update this for the employee if needed. 
    • Wageflo - If Wageflo is enabled in your platform and used by eligible employees, a 'Wageflo' line item will appear on the payslip for employee withdrawals.

Salaried employee payslips

Unlike Casual, Part-Time, and Full-Time employees, Salaried employees' payslips are not based on hours worked and approved. Instead, they are automatically created based on the employee's work pattern, which is set when a salaried position is added to the employee's profile. 

When a position is enabled as Salaried, other display settings can be enabled and disabled to update the details shown on the payslip PDF.

  To learn more about salaried payslips, check out our complete guide on Salaried positions.
Calculating gross pay

Gross pay is the cumulative total amount your employee has earned each pay cycle before tax and any other deductions are taken out.

Besides being visible on payslips, gross pay can be seen across various financial reports. 

Finding your employees' gross can involve a small amount of calculation and can get complicated if a few key items are not set up correctly. To ensure gross and net pay is calculated correctly, first, check how you have set up the following in your platform:

    • Allowances & Pay Items - When setting up an allowance or pay item, confirm whether it should be set to withhold tax
      • If tax withheld is set to No, the allowance or pay item will be applied to the employee's net pay and will not be reduced by tax.
    • Deductions & Salary Sacrifices - When setting up deductions or non-superannuation salary sacrifices, confirm whether they should be set as a gross or net deduction. 
      • Gross deductions are taken out before tax, while net deductions are taken post-tax and reduce employee's take-home pay. 
    • Superannuation Contributions - Confirm that any additional superannuation contributions are set correctly.
      • Employer and employee additional contributions are both taxable items, while super salary sacrifice is not. 

Calculations

To make things a little bit easier for you, below, we will outline the different calculation methods that can be used to find an employee's gross and net pay. 

To calculate an employee's Gross Pay, use the following calculation method:

    • Gross Pay = Wages + Taxable Allowances + Non-Taxable Allowances 

To calculate an employee's Net Pay, you must first find the Taxable Total using the following calculation method:

    • Taxable Total = Wages - Non-Taxable Allowances - Gross Deductions - Superannuation Salary Sacrifice

Once you have found the Taxable Total, to calculate Net Pay, use the following calculation method:

    • Net Pay = Taxable Total - PAYG - Net Deductions + Non-Taxable Allowances

  Please note: Taxable Total may appear on your platform, in financial reports and on your Generated Payslips, for Financial Years 22/23 and earlier.

SCENARIO

Using the above calculations, we'll use the following example payslip to demonstrate how to find Net Pay.

When Megan looks at her payslip, she is confused as to why there is a big difference between her Gross and Net Pay and how she goes from earning $3076.92 to only receiving $1999.23 in her bank account.

In addition to her regular pay each fortnight, she receives an allowance for being a First Aid Officer and for any hours worked on the tools. Megan is a member of her business's Social Club, which costs her $30 each fortnight. Along with her full-time job, she works as a manicurist in the evenings. Therefore, Megan chooses to pay additional tax each fortnight to avoid paying extra tax at the end of the financial year.

Megan wants to retire early, and as her employer allows her to make a Super Salary Sacrifice, she allocates 20% of her pay to top up her superannuation. 

Let's calculate Megan's Net Pay by first finding her Gross Pay and Taxable Total:

  • Gross Pay includes any Wages earned and Allowances.
    • $3076.92 + $21.28 + 73.34 = $3171.54 (Gross Pay)
  • To find the Taxable Total, we must deduct any Gross Deductions and Super Salary Sacrifices from Gross Pay. 
    • $3171.54 - $30.00 - $634.31 = $2507.23 (Taxable Total)
  • To calculate Megan's Net pay and what her employer will pay into her bank account, we must deduct PAYG and any Additional Tax from the Taxable Total.
    • $2507.23 - $458.00 - $50 = $1999.23 (Net Pay)