There’s a lot of information on your payslip—do you know what all of it means? There are 4 essential points to keep in mind in order to get a better understanding of your payslip. Read our guide to make sure everything’s in order with your wages every single month.
1. What are your gross and net wages before and after tax?
Before you begin figuring out your payslip, it’s helpful to brush up on the vocabulary. You should know the difference between the following 4 terms:
1) Gross salary—This is your pay before social security contributions and income tax deductions. It includes your basic salary plus any bonuses, additions (for children, years of service, etc.), additional hours, commissions, benefits, as well as remuneration for paid annual leave or sick leave. Employer contributions are not included in your gross salary.
2) Net salary before tax—This is the salary amount calculated after social security contributions and any benefits, such as additional health cover or restaurant vouchers, have been subtracted.
3) Taxable salary—This differs from your net salary before tax, with the addition of certain non-deductible social security contributions.
4) Net salary after tax—This is probably the figure that you care about most, since it concerns your salary after all social security contributions from you and your employer, along with income tax have been paid. This is what your employer pays into your bank account.
As a reminder, income tax has been deducted from the source since 2019. This means that your employer pays this tax directly to the tax authorities on your behalf, with the monthly amount calculated based on your previous tax returns. Find out more about filing your tax returns in our article.
Are you on reduced working hours? If so, that has to appear on your payslip. You can usually find this label under your gross salary, and it includes your “reduced” gross salary, unemployment benefits paid, and the hours for which you’re being compensated.
Where is DIF on your payslip? Your Personal Entitlement to Training, now known as CPF (Compte Personnel de Formation / Personal Training Account) no longer appears on your payslip. To find this, you need to visit the Mon Compte Formation site and log in to your space.
Which salary matters when you want to take out a loan?
Since there are four different “wages” on your payslip, you might be wondering which one is used when applying for a loan. Your net salary before tax is the one that will be taken into account in that case. This is the basis used in calculating your debt capacity.
Can self-employed people get a payslip?
Self-employed people are non-salaried workers. Without a salary, it’s not possible to create a real payslip. Their business collects revenue, from which expenses and other charges are then subtracted. The individual then pays themselves a salary, which they set from the remaining profits. If they apply for a loan, the lender will use an average of the person’s income over the past three years to determine their eligibility.
2. Social security contributions on your payslip
To really understand your payslip, you need to understand the social security contributions that are deducted from your pay, since this is the main factor that differentiates your gross salary from your net salary. Social security contributions are divided into 5 categories:
- Sickness—This covers everything related to sickness, disability, maternity leave and death.
- Accidents at work and work-related illness—This covers non-life insurance in the event of accidents or work-related illness.
- Retirement—This includes contributions to the basic pension scheme (listed as “capped/ uncapped pension” on your payslip), and to the supplementary scheme (Agirc-Arrco; possibly Apec for executives).
- Family—This covers child-related benefits, housing benefits, disability claims, and family support.
- Unemployment insurance—This covers unemployment benefits from the unemployment office, also known as Pôle emploi.
There are two additional social security contributions you should definitely know about:
- CSG—General social security contribution. This is used to finance welfare and social security.
- CRDS—Contribution to the repayment of social debt.
These contributions include a deductible portion and a non-deductible portion of income tax.
Here’s a tip: the difference between social security charges and social security contributions is that charges give you entitlement to benefits, while contributions do not.
3. Where’s annual leave on your payslip?
Not sure how many days of annual leave you have left? You can find this information on your payslip, which includes an insert with your paid annual leave counter. This is normally divided into 3 parts:
- Leave acquired or in the process of being acquired (i.e., the total amount of leave to which you are entitled)
- Leave taken
- Balance, the amount of leave you have left to take
Remember that unless an alternative company agreement has been signed, annual leave runs from June 1 to May 31, not January to December.
4. Should I save my payslips?
You absolutely must keep all your payslips, whether they’re online or on paper, for the rest of your life until you retire. These documents are precious—they’re evidence of the number of years you’ve worked, and hence your social security contributions, which is especially important when you retire. Remember that your employer is obligated to keep a copy of your payslips for at least 5 years.
Filing your paper payslips
Sort your payslips by year, as well as by employer if you change your employer often. A filing cabinet is a great place to keep paper payslips, although it’s also a good idea to consider saving a digital copy of everything too. Read on for more suggestions of how to do this safely.
Filing your payslips online
Scanning your payslips will give you a digital record in case you ever lose your documents or they get destroyed. If you receive your payslips online, you should also be keeping a record of them. Again, it’s worth saving your payslips in chronological order and backing them up in several places (such as on hard drives, USBs, and on the cloud).
For more security, you can use a digital safe like Digiposte to keep a record of your payslips. This service takes the form of an online storage account that you access with a username and password. You can save all your official documents here, so that you can consult them from anywhere in the world. And don't forget to save your documents in PDF format so that the layout stays the same, no matter which program you use to open them.
Managing your finances with N26
Here at N26, we want to help you manage your finances like a pro, at all stages of your career. Enjoy flexible, mobile banking designed to fit your life—every account comes with a virtual N26 Mastercard and real-time access to your account, whenever and wherever you need it. Plus, we’ve partnered up with brands you love to make your money go further. Whether you’re in the market for our free N26 Standard account, or something more premium with all the perks, find the perfect plan for you on our Compare Page.