Every functioning business needs a neat system of registering and paying employee’s paychecks. paychecks are in many ways the spine of the business. It is the legal right of every employee to receive his compensation on time and with a detailed and clear pay stub guaranteeing all his social rights. Abusive conduct with regard to payment deadlines and details of the pay stub is a violation of the Wage Protection Act and may lead to hearings in the Labor Court and heavy penalties.
In addition, an employee who receives his salary on time and with all the conditions attached to it is a satisfied employee who works more efficiently and with more energy. In order to accurately calculate employee wages, various factors that constitute components of his salary such as the living area, marital status, resident status, number of months worked in a year and whether he received additional income in specific year must be taken into account. All this information appears in the pay stub.
Parts of the pay stub
A proper pay stub consists of a number of key parts
Employee and employer information
These are, in fact, the details that are filled in on form 101 that the employee fills out upon starting at the workplace. For example, marital status, name, address, whether his salary is hourly, daily or monthly, etc.
Computation of salary and its componentsThis section contains the calculation of the salary itself with all its components – base salary, overtime, Sabbath and holiday supplements, recovery, sick or vacation days, etc.
Details of absences
The pay stub must specify the days of sickness and vacation that the employee took – monthly utilization, as well as a few more days at his disposal this year – monthly accrual.
Benefits and gifts
There are certain benefits to which the employee is credited and will be charged in Social Security and Income Tax and should therefore be mentioned in the pay stub. These components include, for example, clothing, travel, gift certificates, meals and more. It will usually appear in the pay stub as “imputed income”.
Mandatory and Optional deductions
This section will detail the various deductions that are submitted to the tax authorities such as social security, income tax, pension fund and provident funds or continuing education funds. The details of the employee’s and the employer’s contributions as well as the components of the compensation will be noted. In addition, various deductions may be deducted such as a down payment or loan, payment of union membership fees, payment of meals or clothing, etc.
Legal document for all intents and purposes
Importantly, the pay stub is a legal document that is evidence of the employer-employee relationship and may be used in various labor disputes and other legal incidents between the employee and the employer. It is very important to be precise in the way the pay stub is issued and be clear, legible and detailed in order to avoid future unpleasantness.
For all payroll needs in your business we invite you to contact our office
When your business conduct is correct and you can know for sure that employees’ rights are being preserved and their records are legally managed, you can sleep peacefully and know that the business is in good hands. CPA Guy Dovrat offers this peace of mind by a professional and reliable service backed by a great deal of knowledge gained in working with many clients and in-depth recognition of the tax authorities’ policies. We await your inquiry and will be happy to cooperate and advise you on any tax matters.