Saturday, April 13, 2024

LOUISE FAIRSAVE: Ask for your pay slip


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As an employee, whenever you receive your pay, it is required by law that you are provided with a pay slip that reconciles your net pay with your gross salary and benefits. The onus remains on the employee, no matter what the employer’s preference is, to ask for a pay slip.  
As long as a pay slip is requested, it must be forthcoming every time.  
A key rule of managing your budget and particularly your earnings requires that you, as an employee, are absolutely clear why and how each payroll deduction is made. In addition, you must be patently aware of the benefits that result from each deduction.
Certain deductions are compulsory. For example, it is required by law that every employee contribute to the National Insurance Scheme (NIS), and that employers withhold income taxes payable at the point of payment. Are you aware of the rules that govern the quantum that is deducted from your gross pay?
Do you know the quantum and range of benefits to which you are entitled as a result of the amount paid into the NIS? Are you aware of the timing and amount of the last change in rate? When last did you make a claim on the scheme?
Are you aware of how this scheme interacts with the company’s pension scheme? What are the periods that you are not required to contribute to the scheme?
The National Insurance Department provides a handbook which clearly sets out the objectives and rules of the scheme, how it operates and the benefits available.
Many employees have significant unused influence on how income tax is applied. Minimising PAYE deductions during the payroll process reduces the amount of taxes claimed as a refund during the annual tax return filing.
It is possible for an employer to operate a group health insurance scheme for the benefit of employees and their near relatives or dependents. The employers’ plan may require the employee to contribute to the cost of the coverage (such a plan is called a contributory plan) or the employer may agree to meet the full cost. This would be a non-contributory plan.
For a contributory plan, the employer usually arranges for the employee’s share of the cost to be deducted through payroll. The benefits of the plan will need to be carefully evaluated.  
It is important to point out that health insurance is not to be readily dismissed just because the annual deductible on doctor visits is high. Numerous doctor visits for routine ailments have hardly ever run anyone into bankruptcy. However, major illnesses and surgical requirements can bankrupt even an employee of significant means.   
Very similar to group health scheme (and sometimes an integral part of the group health scheme) is group life insurance coverage.
An employer may be able to provide cheaper access to life insurance than the individual employee can. Furthermore, employers tend to operate these schemes as non-contributory. Employees are typically insured for once or twice their annual basic salary.
Employers may also operate group pension schemes for employees. Most employers in the private sector operate these as contributory schemes.
Two fundamental clarifications employees should seek are whether the pension plan is integrated with the NIS, and whether it is a defined benefit plan or a defined contribution plan.  
Employees can also initiate deductions from their pay packet by signing an agreement to have such deductions made. It is within the employee’s authority to request a myriad of different deductions, but there are certain limitations on the amount that can be deducted and sometimes on the number of deductions allowed.
 Louise Fairsave is a personal financial management counsellor, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek other counselling about their specific circumstances.


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