Global HR Glossary

What is a Pay Stub? 

A pay stub is a document provided to employees with each paycheck that details their earnings for that pay period, along with deductions and taxes withheld. It serves as a record of income and contributes to transparent financial transactions between the employer and employee.

Components of a Pay Stub

• Gross Pay: Total earnings before any deductions.
• Net Pay: The amount the employee takes home after all deductions.
• Deductions: Detailed list of taxes, insurance premiums, retirement contributions, and other withholdings.
• Year-to-Date Totals: Cumulative totals for various financial categories for the current year.

Purpose and Importance

• Transparency: Pay stubs ensure that employees understand how their earnings and deductions are calculated.
• Record Keeping: They provide a vital financial record for both employees and employers, useful for tax purposes and loan applications.
• Legal Compliance: In many jurisdictions, providing pay stubs is a legal requirement to show that employees are being paid according to agreed terms and relevant labor laws.