How to read your payslip
Many new graduates don’t know why it is a good idea to check their payslip, and how they do this.
Supplementary labour market contributions (AM-bidrag), Danish labour market supplementary pension contributions (ATP) and functional supplements. When you look at your first payslip, you may see many abbreviations and terms you don’t recognise. But don’t worry. You’re not alone. Many new graduates focus on many other things once they have landed their first job. They look at the amount being transferred to their bank account and think that it’s considerably higher than the state education grant. So all is well. But it’s important that you understand your payslip, so that you know what you’re paying for and you can spot any errors.
“If there’s an error, you’ll most likely be the one to make sure that it is corrected. Neither HR nor your boss will make sure to correct it. If you have the slightest doubt, we recommend that you have us look at your payslip,” says Nicole Sander Jensen, a legal adviser at IDA.
The interactive payslip
IDA has developed a digital tool that can help you read your payslip to ensure that you understand the various terms. And of course, that you don’t miss out on money that is yours. The tool will help you understand the different items on your payslip. You can also check whether you’re paying too much in supplementary labour market contribution (AM-bidrag) or whether there are other items on your payslip that you should be aware of.
“You’ve spent a long time becoming good at something specific, and then suddenly something comes along and confuses you. This tool is good to form an overview,” says Nicole Sander Jensen.
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The interactive payslip
IDA has developed a digital tool that can help you read your pay slip, so you are sure you understand the various concepts. And of course, that you are not cheated of money that should go to you. The interactive payslip helps you to understand the various postings. You can also check whether you are paying too much in AM contributions or whether there are other entries on the payslip that you should be aware of.
”You have spent a lot of years getting good at something specific, and then suddenly something comes along that can be confusing. Here, the tool is quite good for forming an overview, says Nicole Sander Jensen.
UNDERSTAND YOUR PAYSLIP
The payslip not only provides an insight into what you’re being paid. It also contains information about your tax liabilities, pension and other important elements. Below are 8 steps to understanding your payslip.
- Personal information: Check that all the information on your payslip is correct. A wrong civil registration number (CPR number), an error in your address or a missing middle name may impact tax calculations.
- Period: Your payslip will describe the period that your salary covers. Most often your salary is paid on a monthly basis, but this will be different if you have project-based employment or are employed on fixed-term assignments. It’s important that the period and the hours are correct, as this affects when you have to pay tax.
- Basic salary and pay supplement: Your basic salary and any pay supplements are the amount you have earned before deduction of tax or other deductions. Any overtime pay, bonuses or other types of pay supplement will also be stated here.
- Tax and deductions: Your payslips will also state how much you have to pay in taxes and what deductions you have. This includes income tax and the compulsory contributions such as supplementary labour market contribution (AM-bidrag) and Danish Labour Market Supplementary Pension Scheme (ATP).
- Net pay: Your net pay is the actual amount transferred to your bank account after tax, various contributions and deductions.
- Pension: Most companies, public as well as private, have a pension scheme. It will say on your payslip how much your employer pays into your pension scheme each month. It’s important to understand how your pension scheme works, as it can add up to a lot of money in the long term.
- Other information relating to salary: Some payslips also include other information. This may be insurance, transport allowance or per diem allowance, if you are absent from the workplace for several hours a day or need to stay overnight at a different location.
- Compare with previous payslips: A good way to ensure that your payslip is correct is by comparing it with previous payslips. In this way, you can see whether there are changes in your income or other irregularities. If you any questions regarding your payslip, contact your manager or the HR department.
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Responsibilities of the employer
In Denmark, the employer is responsible for ensuring that the payslip correct. Employers are obligated to deduct tax and other mandatory contributions from an employee’s salary and report information to the relevant authorities. The Danish Tax Agency supervises that employers comply with their obligations.
In this context, they may perform controls to ensure that employees receive the correct salary. If not, the companies risk penalties or fines. So, if there is the slightest doubt, this may not only affect you, but also your employer. Therefore, keep in mind that you’re entitled to receive a correct payslip. And say it out loud, if something doesn’t make sense to you.
You’re always welcome to contact IDA’s legal advisers with any questions.
Interactive payslip
Click on image to go to the tool.
