Please note:
The payslip shown is for illustrative purposes only. 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?

The term "payslip" is the German generic term for payroll accounting. Payslip accounting (in English 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:

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

In order to have a certificate of your future pension entitlements, among other things, it is advisable to keep all payslips, regardless of how short the period of employment with the respective employer was. 

For employers

Unlike employees, employers must comply with the statutory retention periods for payroll accounts in accordance with Section 41 of the German Income Tax Act (EStG). This stipulates a retention period of 6 years, beginning on January 1 of the year following the last recorded payment of remuneration and ending 6 years later on December 31.

Sample payslip

The headboard 

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

• General information (e.g., address, date of birth, and bank details) 
• Social security data (e.g., social security numbers, contribution and person group codes)
• 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 EBV: 

• Name and address of the employer 
• The employee’s name and address

Social security details

The following information is contained in the personal social security data section in accordance with Section 1 EBV: 

• the 12-digit social insurance number according to § 147 SGB IV
• the social insurance group key
• the social contribution key
• the competent collection agency for the total social security contribution 
• the social security days included in the payroll period 
• The number of children for calculating nursing care insurance 
• 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 on whether the employment relationship involves transitional areas pursuant to Section 20 (2) SGB IV (German Social Security Code IV) 

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 characteristics for church tax deduction 
• the tax days included in the payroll period 
• if applicable Tax allowances or additional tax amounts by year and month

People data / Contract data 

The following information is contained in the Personal Data / Contract Data section in accordance with § 1 EBV: 

• 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.

Comments

The comments section is located above the main section on each payslip. Here you can see comments on:

• Unpaid absences: with the number of days and the total deduction amount (€) per period.
• Annual income tax adjustment: with information about the implementation of the annual income tax adjustment, if applicable.

Please note:
The display of unpaid absences in comments is being rolled out in an actual fashion. It is therefore not yet available to all customers.
The display of unpaid absences under Comments is linked to the Temporary Suspension of Employment feature. Only temporary suspensions of the employment relationship that are assigned to an absence type are displayed. Absences without this assignment are not taken into account for comments and deduction calculations.

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 payment amount 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
• premiums 
• Company car  
• BAV 
• 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 included in the tax gross or social security gross in the columns St (tax gross) and SV (social security 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:

The total gross amount minus tax and social security deductions equals the employee's net earnings. 

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. Examples of the most common net amounts include deductions from advances or contributions to the VWL. However, garnishment amounts, total contributions to voluntary health insurance, and loan repayments are also net deductions. 

The conclusion 

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 earnings certificate shows the employee's total earnings for the current calendar year of hiring. 

What do the abbreviations mean?

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