Understanding Payslips & Bank Statements

Do you understand all the information contained in your payslip? And do you know how to read your bank statement? Many people find these documents tricky to understand, but these documents provide a snapshot of your financial ‘score’ every month.

What’s on my payslip?

Although all payslips differ slightly they all contain common information, including your gross and nett salary, deductions as well as leave days due to you.

Here is an example of a payslip. You will see that it contains your name and ID number. It also contains the following:

  • Gross salary: this is your total salary including any overtime, bonus pay, allowances as well as benefits (cellphone, housing subsidy etc).
  • Deductions: this includes government deductions, voluntary and contractual deductions.
Government deductions

 These are deductions for PAYE tax and UIF. Every person who is formally employed pays 1% (i.e. one Rand for every hundred Rand they earn) to the Unemployment Insurance Fund (UIF). This is a fund that acts as a safety net if you are fired, retrenched or on parental leave. PAYE (or Pay-As-You-Earn tax) is paid over to the government. Everyone who earns more than a certain amount pays tax. This helps pay for things like government schools, roads, government hospitals, clinics and police services throughout the country.

Compulsory deductions
These are amounts that are taken off your salary but pay for your benefits. For example, medical aid or retirement fund contributions and group insurance benefits. If you are a member of a group scheme through your employer, you often do not have a choice about these deductions, they are part of your contract of employment.
Voluntary deductions
These are deductions that YOU have agreed may come off your salary. Union subscriptions fall into this category.
Contractual deductions
These are deductions that the employer has been asked to make, by a court order. These might include maintenance payments, or garnishee orders (now called emolument attachment orders – EAOs).
  • Nett salary: this is your salary after all deductions have been made.
  • Leave days due: this is the number of leave days due to you.
whats on my payslip wagewise

What’s on my payslip?

Although all payslips differ slightly they all contain common information, including your gross and nett salary, deductions as well as leave days due to you.

Here is an example of a payslip. You will see that it contains your name and ID number. It also contains the following:

  • Gross salary: this is your total salary including any overtime, bonus pay, allowances as well as benefits (cellphone, housing subsidy etc).
  • Deductions: this includes government deductions, voluntary and contractual deductions.
Government deductions

 These are deductions for PAYE tax and UIF. Every person who is formally employed pays 1% (i.e. one Rand for every hundred Rand they earn) to the Unemployment Insurance Fund (UIF). This is a fund that acts as a safety net if you are fired, retrenched or on parental leave. PAYE (or Pay-As-You-Earn tax) is paid over to the government. Everyone who earns more than a certain amount pays tax. This helps pay for things like government schools, roads, government hospitals, clinics and police services throughout the country.

Compulsory deductions
These are amounts that are taken off your salary but pay for your benefits. For example, medical aid or retirement fund contributions and group insurance benefits. If you are a member of a group scheme through your employer, you often do not have a choice about these deductions, they are part of your contract of employment.
Voluntary deductions
These are deductions that YOU have agreed may come off your salary. Union subscriptions fall into this category.
Contractual deductions
These are deductions that the employer has been asked to make, by a court order. These might include maintenance payments, or garnishee orders (now called emolument attachment orders – EAOs).
  • Nett salary: this is your salary after all deductions have been made.
  • Leave days due: this is the number of leave days due to you.

The benefits of compulsory deductions:

  • You don’t have to think about making these payments, they are done automatically.
  • Many of them (like retirement contributions) are like forced savings, but they are also “invisible”. You don’t see them and so don’t think about them. 
  • You are not tempted to spend the money, because it has been paid to the different accounts immediately.

 

The low-down on garnishee orders

What is a garnishee order? Garnishee orders, which are also known as an emolument attachment order, are granted by the court if you fail to repay a loan, hire-purchase or a payment you promised to make (like a maintenance payment).

There are two main types:

  1. In the first case the company (or the person) to whom you owe money, has to prove to the court that you owe them money and that you have not repaid it. The court then grants the order for the money to be taken from your salary. You have to be notified of this action, and you have a right to tell the court your side of the story.
  2. In the second case you may have signed a document (when you took out the loan) that says you agree to a judgement against you, should you fail to pay. This is called a Consent to Judgement and you are often asked to sign this before you are given a loan. The company then just has to show this document to the court to win their case.

When the court grants a garnishee order, this is brought to the employer so that they can deduct the money from your salary. Your employer has to provide you with a copy of the order.

If you do not agree with the order, you need to go to court to appeal against it. But this can be costly and expensive in terms of time and money and this is why you should be EXTREMELY careful when signing any contract for a loan or credit.

New regulations:

  • From July 2017 there are new regulations on garnishee orders that restrict garnishee orders to no more than 25% of a worker’s salary.
  • Now only a magistrate can authorise a garnishee order and not a clerk of the court.
  • The new laws also prohibit the practice of forcing credit applicants to sign a consent to an emolument attachment order (garnishee) prior to being granted a loan.

But remember these new provisions only apply to new garnishee orders and not existing ones existing prior to July 2017.

#GetWageWise tip: if your employer offers a retirement package, take it. That way you are saving money that you don’t even realise you are saving, because the money is taken off your salary and put into retirement savings.
understanding payslips and bank statements wagewise

The benefits of compulsory deductions:

  • You don’t have to think about making these payments, they are done automatically.
  • Many of them (like retirement contributions) are like forced savings, but they are also “invisible”. You don’t see them and so don’t think about them.
  • You are not tempted to spend the money, because it has been paid to the different accounts immediately.
garnishee orders wage wise block

The low-down on garnishee orders

What is a garnishee order? Garnishee orders, which are also known as an emolument attachment order, are granted by the court if you fail to repay a loan, hire-purchase or a payment you promised to make (like a maintenance payment).

There are two main types:

  1. In the first case the company (or the person) to whom you owe money, has to prove to the court that you owe them money and that you have not repaid it. The court then grants the order for the money to be taken from your salary. You have to be notified of this action, and you have a right to tell the court your side of the story.
  2. In the second case you may have signed a document (when you took out the loan) that says you agree to a judgement against you, should you fail to pay. This is called a Consent to Judgement and you are often asked to sign this before you are given a loan. The company then just has to show this document to the court to win their case.

When the court grants a garnishee order, this is brought to the employer so that they can deduct the money from your salary. Your employer has to provide you with a copy of the order.

If you do not agree with the order, you need to go to court to appeal against it. But this can be costly and expensive in terms of time and money and this is why you should be EXTREMELY careful when signing any contract for a loan or credit.

New regulations:

  • From July 2017 there are new regulations on garnishee orders that restrict garnishee orders to no more than 25% of a worker’s salary.
  • Now only a magistrate can authorise a garnishee order and not a clerk of the court.
  • The new laws also prohibit the practice of forcing credit applicants to sign a consent to an emolument attachment order (garnishee) prior to being granted a loan.

But remember these new provisions only apply to new garnishee orders and not existing ones existing prior to July 2017.

#GetWageWise tip: if your employer offers a retirement package, take it. That way you are saving money that you don’t even realise you are saving, because the money is taken off your salary and put into retirement savings.

Bank statements

As part of doing your budget, make a habit of reviewing your bank statement regularly. Reviewing your bank statement will help you track what is coming in and what is going out of your bank account.

Benefits to reviewing your bank statement every month:

  • It will help you track what you are spending money on – are you spending a lot on take-aways and eating out? Are you spending a lot on data? 
  • Going through your bank statement will help you track the debit and/or stop orders that are going off on your account. You will also pick up if debit orders are still going off for accounts that have been long paid up.  
  • You can track any fraudulent activity on your account such as unauthorised debit orders.
bank statements wagewise

Bank statements

As part of doing your budget, make a habit of reviewing your bank statement regularly. Reviewing your bank statement will help you track what is coming in and what is going out of your bank account.

Benefits to reviewing your bank statement every month:

  • It will help you track what you are spending money on – are you spending a lot on take-aways and eating out? Are you spending a lot on data? 
  • Going through your bank statement will help you track the debit and/or stop orders that are going off on your account. You will also pick up if debit orders are still going off for accounts that have been long paid up.  
  • You can track any fraudulent activity on your account such as unauthorised debit orders.

#GetWageWise tip: going through your bank statement will help you understand the bank charges you are paying for different services. This can help you make adjustments to your banking behaviour to avoid high transaction fees such as drawing money from inside the bank at a bank teller.

Frequently asked questions

Why are my leave calculations incorrect on my payslips?
You will need to speak to your HR or finance office about this.
How much money can be deducted through a garnishee order?
New laws that were signed in July 2017 put a limit of the money that can be deducted, which can be no more than 25% of a worker’s salary or wages. This law however does not apply to garnishee orders that were already in place before 30 July 2017.
What is the process of issuing a garnishee order and how can I appeal or challenge the amount?
A garnishee order may be amended (changed) or withdrawn provided that the person bringing the application shows a valid reason, for example, if it is fraudulent or the balance being claimed is incorrect or the debtor cannot afford the amount stipulated in the order.

Appealing an amount of a garnishee order can be very expensive and requires applying to court. It is better to ensure that you do not give permission for a garnishee order to be issued against you. Read all the agreements provided to you, especially if you borrow money or buy on credit. If you are not sure about something then don’t sign the agreement. Ask specifically if there is a part of the agreement that speaks about garnishee orders and ask that this is explained to you.

Saver Waya Waya WageWise is a financial literacy initiative of the ASISA Foundation. The WageWise website was largely funded by the Sanlam Foundation.