Understanding Your Payslip: A Comprehensive Breakdown

Understanding Your Payslip

A payslip, also called a wage slip, is the document delivered to workers with their wages. It specifies each of the earnings, as well as deductions.

The header includes information such as:

Category or occupational group: Workers are classified into different occupational groups according to the functions performed and the qualifications or knowledge acquired in their profession.
Quotation group: All workers are included in one of eleven groups for social security contributions in the established professional categories.

The body of the wage statement details:

Accruals: Amounts the worker receives for various reasons, divided into wage and non-wage earnings.
Deductions: Contributions from employee social security, common contingencies, unemployment, vocational training, and overtime.

This section outlines the bases used for calculating various deductions, including:

Social Security Base
Base Subject to Social and Personal Income Tax Withholding: Records of the bases used for calculating various deductions, to which the worker’s wages are subject, i.e., contributions to social security and personal income tax withholding.

The remuneration of labor should be distinguished:

Base Salary: The fixed part of the remuneration for time or work, established for each professional category.
Pay Supplements: Assessed to determine the wage base.

Based on personal circumstances of the worker, such as seniority, special skills, languages, etc.

Received for the special features of the job: difficulty, toxicity, danger, shift work, height, night work, and so on.

Incentives for activity, attendance, punctuality, etc.

Overtime: Overtime hours are paid in the amount fixed, if not less than the value of one ordinary hour, or compensated with paid rest.
Extraordinary Payments: At least two extraordinary payments must be made per year, one for Christmas and the other in the month fixed by collective agreement between the employer and the legal representatives of workers. The amount is fixed by the collective agreement or in relation to the benefits of the company.
Wages in Kind: Economic valuation of goods or services provided by the company to workers, such as housing, electricity, coal, etc. These cannot exceed 30% of salary earnings.

These are earnings not considered wages and are excluded from social security contributions. They can be classified into the following categories:

Compensation and Allowances: Amounts paid to workers for expenses incurred as a result of doing their job, such as travel allowance, travel expenses, etc.
Benefits and Allowances from Social Security: Amounts the employer pays the worker when the worker is on sick leave or partial unemployment.
Damages: Amounts the employer pays the worker as a result of transfers, dismissals, or suspension of employment contract.
Other Non-Wage Payments: Christmas gift baskets, etc.

A series of deductions are made to arrive at the net amount the worker receives. These are:

Employee Contributions to Social Security: Workers are obliged to contribute to social security, and employers are obliged to deduct the corresponding shares regarding workers’ pay, for common contingencies, unemployment, vocational training, and overtime.
Personal Income Tax (IRPF): Employers are required to withhold income tax on account of certain percentages calculated as a function of income.
Advances and the Value of Products in Kind: The value of products in kind that the worker has received will be deducted, reflected in the earnings of wage received.
Other Deductions: Union dues of unionized workers, the repayment of loans the worker has received from the company.