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The structure of a payslip

 

Note that this article is only relevant for you if your company is located in Germany. 🇩🇪

Please note that the content of our website (including any legal information) is intended solely for the purpose of providing non-binding information and does not constitute legal advice in the true sense of the term. The content of this information cannot and should not replace individual and binding legal advice that addresses your specific situation. In this respect, all information is provided without guarantee of correctness, completeness or of being up to date.

Note
The payslip shown serves as an example. This person is a purely fictitious person with data that does not exist in this form and cannot be assigned to any real person.

What is a payslip?

A payslip shows the detailed make-up of the monthly salary or wages for a particular month. It lists all components and deductions of an employee's salary. In this way, the employee and employer can track the exact calculation of the amount paid out. Every payroll, regardless of the software or provider, contains the same information in accordance with § 1 eV. Usually, they differ only in design and structure. You can find a sample payslip under the corresponding point.

What is the difference between wages and salaries?

Wages and salary differ in calculation and payment:

Salary  Wages
  • Payment each month, regardless of the number of working days and hours.
  • Usually a fixed amount.
  • fluctuation is possible due to allowances (shift allowances) and variable compensation (bonus).
  • Can be paid out on any day of the month, mostly towards the end of the month.
  • Based on hours actually worked and listed on the payroll.
  • Exceptions are, for example, piecework pay.
  • Paid out with a time delay after the work has been performed.
Salary and wages are taxed the same way.

Legal basis

Since the German Remuneration Certificate Regulation (Bundesurlaubsgesetz; e.V.) came into force on 1 July 2013, there is an obligation under labor law according to section 108(3)(1) of the Employee Code to provide a payslip and its contents in accordance with section 1 PBV. In addition, employers are required to create a payslip in text form and make it available to the employee.

How long do payslips need to be kept?

For employees

We recommend that you keep all payslips, regardless of how short the employment was, to ensure you have proof for future pension entitlements and other purposes. 

For employers

In contrast to the employee, the employer must comply with the statutory retention periods according to Section 41 EStG . The retention period is six years. It begins on 1 January of the year following the last payment and on 31 December, six years later.

Sample payslip

Manuel Payroll payslip Apr 2025 - draft (1) (1).png

The header 

In the header, you will find all the employee's payroll-relevant master data in accordance with § 1 (1) EPA. These include:

  • General data (for example, address, date of birth, and bank details) 
  • Social security data (for example, social insurance numbers, social contribution keys, and social insurance group keys)
  • Tax information (for example, tax ID, tax class, and allowances)

Below you will find an overview of the listed data. You can find a sample payslip here.

General section 

The general section contains the following information in accordance with § 1 EPA: 

  • Employer name and address 
  • The employee’s name and address

Tax data

In accordance with § 1 GDPR, the tax data contains:

  • the 11-digit tax ID
  • The tax class, if applicable, including the chosen factor
  • the number of child allowances 
  • The church tax deduction characteristics 
  • The tax days included in the payroll period 
  • if applicable Tax allowances or additional tax amounts by year and month

Personal data / Contract data 

The personal data / contract data section contains the following information in accordance with section 1 eV: 

  • The employment start date
  • at the end of employment, the employment end date in the certificate for the most recent payroll period
  • The employee's date of birth

The items: personnel number, weekly working hours, and cost center serve as additional information and are not required by law.

Social security details

The Personal social insurance data section contains the following information in accordance with § 1 PBV: 

  • the 12-digit social insurance number according to § 147 SGB IV
  • the social insurance group key
  • the social contribution key
  • The collection agency responsible for the total social insurance contribution 
  • The social insurance days included in the payroll period 
  • if applicable, information on the contribution surcharge for people without children according to § 55 (3) SGB XI
  • if applicable, information whether this constitutes a multiple employment period
  • if applicable, information whether the employment is within in a transitional area according to Section 20 (2) SGB IV 

The main part 

The main section contains the following information:

  • the calculation of the total gross amount
  • The calculation of tax and social security contributions 
  • Net income and deductions
  • the amount to be paid to the employee 

Below you will find an overview of the listed data. You can find a sample payslip here.

From gross to net 

To understand the composition of the different amounts, you first need to understand the sub-amounts that serve as the basis for tax and social security deductions. The following is an overview of the process for calculating payslips:

Gross income

The monthly compensation is composed of the following amounts:

  • Fixed salary
  • Hourly wages
  • One-time and recurring payments
  • Surcharges 
  • Company car 
  • Pension 
  • etc. 

The basis for calculating the total gross is all the line amounts marked with a Y (Yes) in the total gross column. You can see whether amounts are relevant to the tax or social insurance gross in the columns Tax (tax gross) and SI (social insurance gross). 

Tax and social security

This section provides a detailed breakdown and calculation of tax and social insurance contributions. The gross tax amount and the social insurance gross amount are created based on this calculation:

Gross tax amount Social insurance gross

Total gross minus all amounts that are not individually taxed. 

The amount paid as part of income tax is used as the basis for calculating what are known as associated taxes, consisting of church tax and solidarity surcharge.

The social security insurance gross is divided into four amounts:

  • Health insurance base
  • Pension insurance base 
  • Unemployment insurance base
  • Care insurance base 

However, the BBG (social insurance contribution assessment bases) for health insurance/care insurance and pension insurance/unemployment insurance may be different. The contributions for each social insurance base are calculated based on the respective social insurance gross.

The total gross minus tax and social insurance deductions results in the employee's net salary. 

Net income and net deductions

Afterward, the net income and deductions are considered. These can either increase or reduce the net earnings and have a corresponding effect on the payout amount. The following are examples of the most common net amounts: B. deductions from advance payments or capital-forming benefits contributions. However, garnishment amounts, total contributions to voluntary health insurance and loan repayments are also net deductions. 

The final section 

The following information is provided in the final section of the payslip:

  • Earnings certificate
  • an explanation of the abbreviations used

Below you will find an overview of the listed data. You can find a sample payslip here.

Earnings certificate

The employee's total values for the current calendar year of employment are displayed in an earnings certificate. 

What do the abbreviations mean?

The explanations for the various abbreviations that you will find on payslips are usually in the footnotes. What do they mean? 

Abbreviation Description  Explanation 
l Recurring payments Recurring payments are regular payments (for example, salary or wages) for a standard payroll period of usually one month. These also include fluctuating salaries, for example, ongoing sales commissions. 
S Other reference In terms of wage tax law, other remuneration defines all payments that do not constitute regular wages. These include, for example, B. One-time payments.
F free These benefits are free in social insurance and tax and are not deducted or taxed.
E One-time payment As defined by social insurance, a one-time payment is any payment that is not an ongoing salary. These include, for example, B. One-time payments.
P Flat rate When a salary component is flat-rate, the income tax on the amount is not calculated using the individual tax rate but according to an average or statutory tax rate.
A Severance package Severance package as a special salary component  Usually paid in connection with a termination by the employer.
M Multi-year taxation If the taxation on other remuneration is too high, a multi-year taxation can be applied to the amount for a multi-year remuneration, e.g. in the case of an anniversary bonus.
n Recalculation When correcting a payslip from the previous month.
v previous year Amounts allocable to the previous year, for example, B. for the march clause.
W Remuneration credit  The remuneration balance or credit balance (also called time value accounts) is to be used to make provision for longer-term leave such as sabbatical, early retirement, or semi-retirement.
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