Although a payslip is important in our lives, you've probably had doubts on more than one occasion when you've taken time to conduct an in-depth analysis, because you weren't sure of some of the concepts it contains. So that this doesn't happen again, we are giving you a guide to understanding your payslip: what this document consists of, what information it should contain, and its key issues.

What is a payslip?

A payslip is a document which the company must give each employee. It provides certain data on the company, the type of job you have done, the period worked, and various economic amounts. It is a receipt for payment of your salary, but it also provides evidence of the social security you have paid as an employee, and withholdings for personal income tax (IRPF). Moreover, since it has been completed and signed by the company, it is a document with a legal value in the event of any problem relating to it.

The payslip acts as evidence of social security payments made and IRPF withholdings, but also as a receipt of payment, and as such it must contain information concerning the type of work done, and the amounts received for various items. The company must provide basic data on its activity such as:

  • Lawful name of the company (not the business name, but the name that appears in the register)
  • Registered office
  • Tax code (CIF)
  • Social security code
  • Payment period (the period in respect of which payment is made)
  • Work centre

It must also contain the basic data on the employee:

  • Name
  • National identity card number (DNI)
  • Employee's social security code
  • Professional category or group
  • Date the employee joined the company
  • Contract type code

These data refer to the relationship between the entrepreneur and the employee. This is considered to be the basic information that must be shown on a payslip, although more specifications may be added. Below we will describe the various sections of a payslip, and the data that must be shown in each.

Sections of a payslip

The basic sections of a payslip are:

  • Header
  • Accruals
  • Deductions
  • Net amount to be received
  • Signature and stamp box 

In each of the sections you will find different data, which you must be familiar with in order to interpret this document properly.

Header


Regulations make it compulsory to shown certain data on the payslip, which identify the company and you as an employee to the State Employment Service (SEPE), Social Security and the Tax Authority. What information must be shown on the header of a payslip?
The following will appear in the company section:

  • Company name
  • Address
  • CIF tax number
  • Social security code

The following will be shown in the employee section:

  • Full name
  • National ID card number (DNI)
  • Social security number
  • Professional category or post
  • Date the employee joined the company

The payment period must also be shown in this section.

These data may also be accompanied by other details, such as the collective agreement applicable to the employee, the current account (of the payer and the payee), and other data.

Accruals


Accruals are the earnings you receive. This is divided into two categories:

Pay received

Pay received is the amounts that are paid over to you by way of remuneration for your work. There are normally several breakdowns, the sum of which is known as the gross salary. These breakdowns contain the following:

  • Basic salary: this is the minimum salary established by your collective agreement, depending on your professional group and category, or the amount agreed for your contract. This is the main part of your salary, and the most important section of your payslip.
  • Extra pay items, which may be:
    • Personal: depending on your length of service, your post, your training or any other extra items with respect to your personal conditions. This is the case in extra pay for length of service, for responsibility or your knowledge.
    • Due to the type of post: this section shows the remuneration for this specific post. The most common and well known are night work, danger money or shift pay.
    • Productivity bonuses: this is remuneration paid over to you on the basis of the amount or quality of the work you have done.
    • Overtime: this is payment for hours worked in addition to the working hours stipulated in contract.
    • Extraordinary gratifications: employees are entitled to two extraordinary payments each year, one of them at Christmas and another in the month stipulated in the collective agreement. If they are paid pro rata, i.e. if they pay you the portion of the total of the two payments month by month, this will appear in this section.
    • Payment in kind: this is non-monetary pay you receive as good or services, which forms part of your salary. This means use of a company car, insurance or luncheon vouchers, among other items.

Non-salary items

These are goods and services you receive from the company, which are not considered taxable pay. They are not liable for any IRPF deductions, and are not registered with social security.

  • Indemnities and charges: charges are expenses which employees have been compelled to pay in advance in connection with their work - for example, payment of tolls or purchase of paper. Indemnities are not amounts which employees have been compelled to pay in advance, but rather redress for any adverse economic impact on them as part of their work for the company.
  • Transportation bonus: to compensate travel expenses from your home to your place of work.
  • Allowances, which include outlays on sustenance and accommodation. A portion of this is exempt from social security, but not all of it. The maximum amount excluded is as stipulated in the law and IRPF regulations. For Spain, this is set at EUR 26.67/day with no overnight stay, and EUR 53.34/day with an overnight stay. Outside Spain, this is set at EUR 48.08/day with no overnight stay, and EUR 91.35/day with an overnight stay.
  • Travel expenses: these are your expenses when you have to travel from your work centre to another work centre to do your job. For public transport, the total justified by the receipt will be exempt from social security, but if you use your own vehicle, only EUR 0.19/km will be exempt. Therefore only payments in excess of EUR 0.19/km will be applicable.
  • Outlays on material, etc.
  • Social security benefits and compensation: these are the amounts you receive when you are in a situation of temporary incapacity or partial unemployment. These amounts are not eligible for tax and are not applicable to social security.
  • The delegated payment of monies due to temporary incapacity or partial unemployment.
  • The voluntary increases by the entrepreneur or the collective agreement applicable, protective social security action such as, for example, extra payments for temporary incapacity or partial unemployment up to the amount of the effective salary which the employee would have been entitled to in a normal situation of employment.
  • Compensation for transfers, suspensions or redundancies: these amounts are exempt from social security and IRPF withholdings.

Deductions


Deductions from a payslip include payments by the entrepreneur to social security to cover any absences due to incapacity, your future pension or your unemployment benefit, which are deducted from your income. A withholding will also be deducted as an advance on income tax, which will be finalised when you submit your tax return. The main deductions you will see on your payslip are:

Contributions by the employee to social security

Contributions by the employee to social security, including:

  • Common contingencies, covering contingencies arising from non-employment accidents, common illness and maternity leave. This is calculated as 4.7% of the total remuneration, with the exception of any items we have stipulated as exempt and the amount of additional hours (counted apart), plus the monthly remunerations of the pro rata extraordinary bonuses, where applicable.
  • Unemployment: this item guarantees you a contribution-based allowance, i.e. unemployment benefit, if you lose your job. It is calculated with respect to the basis for professional contingencies, which is obtained by adding overtime to the basis for common contingencies. The deduction will be 1.55% in the event of a permanent contract, an intern contract, a substitution contract, an interim contract, or a contract drawn up with a disabled person. If the contract is for a specific period, the deduction will be 1.60%.
  • Vocational training: this is 0.1%, on the basis for professional contingencies.
  • Overtime: this will be calculated as 2% on the total amount of overtime due to force majeure, and 4.7% on the total amount of extra structural hours and non-structural or volunteer hours.

Personal income tax

This is an advance on what you will have to pay in your tax return, which will specify the exact sum. The percentage of this withholding is not fixed, since it will depend on what you earn (it is a progressive charge), on your personal and family circumstances (marital status, number of children, dependent persons, level of disability etc.). The minimum withholding is 2%, but this can be adjusted. The average is around 15%.

Advances

You are entitled to advance payments with respect to work already carried out before pay day. In this case, the deduction for the money requested will be set out in this section.

Value of products received in kind

This value represents the appraisal of products in kind, already included in the accruals section as "Extra pay items".

Other deductions

Union dues may be included here.

Net amount to be received

This is the sum of accruals and deductions, and you will know when the company will deposit this in your account. This is the net salary, which you will actually receive. It is calculated by subtracting the amount to be deducted from the total accrued.

Signature and stamp box

The lower section of your payslip must also have a block with the signature and/or stamp of the company, the payer, with the date of delivery of the payslip and a space for "receipt", where employees must sign and state the date on which they received their pay (if the company keeps a copy). Optionally, the number of the account where the salary is paid in may also appear here.

Additional pro rata payments on the payslip

The usual procedure is for extraordinary payments to accrue annually. Extra payments are generated as of the day on which the previous payment is made, and are not registered annually (because you have been registered for them each month), and the IRPF tax withholding is applied to them.

All employees make a number of social security payments each month, depending on their salary. These amounts are deducted on the basis of the monthly salary pro rata. Each month the following items are withheld from your pay: common contingencies, unemployment and vocational training, as if your salary's extra payments were pro rata. When employees receive extra payments, they need only deduct income tax, because social security contributions have already been deducted.

But who decides the pro rata procedure for extra payments on the payslip? The Employment Statute stipulates that the collective agreement may establish that extraordinary gratifications will be applied pro rata over the twelve payments.

Receipt of the payslip: how to claim it

Our guide to understanding your payslip contains a new section on claiming the payslip receipt. What happens if the company does not give us a payslip? Article 29 of the Employment Statute establishes that salaries will be settled and paid promptly with documentation on the date and at the location agreed and that "salaries will be documented by an individual receipt for the payment made for the employee”. Failure to provide a payslip or failure to do so in the proper manner, therefore, is punishable. The Law on Social Infringements and Sanctions stipulates that:

  • Failure to provide employees with a salary receipt promptly constitutes a minor administrative infringement, entailing a fine of between EUR 60 and EUR 625.
  • Failure to record the amounts actually paid to employees on the payslip constitutes a serious administrative infringement, entailing a fine of between EUR 626 and EUR 6,250.
  • Failure to use the official salary receipt model applicable constitutes a minor administrative infringement, entailing a fine of between EUR 60 and EUR 625.

If, when you have submitted a claim, you do not receive a payslip, you may request payslips in writing through the legal system.

Do you have a better idea of your payslip now? Do you know the information it contains and why you must keep it for any claims or requests? Check that the proper deductions have been made, and compare the gross annual salary to check whether it has changed.

If you want a salary account to deposit your income, ask for information on the range of Santander current accounts. If you want, you can also calculate your net salary with our calculator.

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