There is often confusion between the terms “pay stub” and “payslip.” Although they are both used to document wages and employee earnings, they have different purposes. In this blog post, we will discuss the differences between pay stubs and payslips, and explain why both are important documents for employers and employees alike.
1. What is a pay stub and what is a payslip?
A pay stub, also known as a paycheck stub or payroll check stub, is issued by an employer to employees that details how much the employee has made at their job. It provides information about wages earned and taxes paid for each pay period. The term “payslip” refers to any document showing salary payment details such as gross income before deductions, net pay, and deductions.
However, there is no legal distinction between the two terms, so either can be used interchangeably.
2. How are they different?
There are several differences between pay stubs and payslips. A pay stub is a document that shows the employee’s gross income for each paycheck, as well as their net earnings after taxes have been withheld. It also lists other deductions such as insurance premiums or retirement contributions if those items were deducted from their paycheck. The term “paystub” can also refer to any document that shows the employee’s total compensation, such as a summary of benefits and deductions from their paycheck.
A payslip is typically sent out electronically or by mail at least once per month (and often more frequently). Some companies may choose not to send paystubs because they don’t want employees knowing how much their colleagues are making.
Payslips usually detail an employee’s gross pay, deductions, and net pay. They may also include information such as hours worked, overtime payments, and sick leave accrual.
3. Which one should you use?
Both pay stubs and payslips are important documents for employers and employees alike. For employers, they servee as proof of payment in case an employee claims they were not paid. For employees, it provides trackable evidence that can be used for tax purposes or other documentation requirements.
4. When do you need to provide them?
The main distinction between the two is when a pay stub and payslip are generated: The employer must create a paystub every time wages are issued, whereas the payroll provider can create payslips on a more frequent basis (e.g., weekly, biweekly).
The employer should provide a pay stub to the employee at least once per month, unless they’re paid hourly or have an irregular schedule. If there are not enough hours in one pay period for employees who work full-time (40 hours/week) then companies may choose not to send out a paystub at all, but instead send a single monthly summary.
The employer should give employees their payslips before payday so that they know how much money to expect on their direct deposit or check. They can also provide them after payday as well, but it’s best practice for employers to send this information out beforehand if possible.
The law does not require companies to provide pay stubs or payslips, but it’s a best practice to do so as it helps with employee tracking and compliance.
5. Which one you should receive from your employer?
It depends on the type of employment you have. If you’re an hourly employee, your employer should give you a pay stub every two weeks or once per month. If they don’t do so regularly, make sure to ask for one from time-to-time as proof that they’ve paid all hours worked correctly (and haven’t underpaid).
If you’re a salaried employee, your employer may provide payslips after each payday rather than just once per month. This can be helpful for tracking hours worked and making sure that all time has been paid correctly (and on-time!). In this case, it’s important to understand how many hours are expected from week-to-week so that employees know what they’ll receive when payday comes around again.
Some companies provide both a pay stub and payslip for salaried workers, but it’s not mandatory to do so. If this is an issue of concern, you can ask your employer about their policies in order to make sure you’re getting paid correctly (and on-time!) regardless of which type document they provide each month.
6. Where can you find more information about them?
If you’re looking for more information about pay stubs, the United States Department of Labor provides a comprehensive guide on their website.
For payslips, Canada’s Office of the Superintendent of Financial Institutions (OSFI) offers an overview of what they should include and how frequently they should be sent out.
Both organizations are great resources for understanding the specific requirements of your region (if they differ from what’s listed above).
I hope this post has helped you understand what a pay stub is and how it differs from the payslip. Remember, if you have any questions about payroll or taxes related to your paycheck, ask your employer! Stay tuned for more updates and tips on other topics that may be helpful for college students like yourself!
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