An employee’s salary does not just consist of the gross amount that a company or corporation decides to forward to him or her. This is especially true with big corporations that remunerate a hefty amount of taxes. But there are some documents that include information about the gross amount as well as the final salary of an employee. This is basically done to convey to an employee about their deductions and additions that have been made in the salary.
To know whether a pay stub is the same thing as a pay statement one must know they are individual definitions as well as features so that a comparison can be drawn between the two.
What is a Pay Stub?
Paystubs are also known as wage slips, or pay slips. They are directed to the Employees and are given to them by the employer. It is basically a document that contains information about the paycheck of an employee for a certain period of time and how and why deductions are made in the gross salary of the employee. The basic reasons for deductions in the gross salary can be the reduction due to Income Tax as well as amount taken out for providing employee benefits.
Pay stubs can either be in a physical form that is a hard copy and even in a digital form. When an employer or a company gives an employee their salary physically a pay stub is usually attached along with the cheque. On the other hand if an employee’s salary is given to them via a direct deposit made in their account, the employee can still get their pay stub via online and digital channels.
Along with the inclusion of deductions and additions in one gross salary, pay stubs also include information about the basic salary of an employee along with the hours of work that an employee has done to calculate the basic salary of an employee.
A pay stub has two very effective uses in terms of finances. Firstly, it allows a company, a corporation or an employer to come clean about the fact that they are giving adequate salaries to their employees as per the established norms or laws of the place. It also helps the corporation to have a record of the submission of taxes done by them as well as the other employees of the company. Secondly, giving an employee a pay stub ensures that the employee himself is aware of how his net salary is affected by other factors like taxes without keeping the employee in the dark about what all amount has been deducted from his gross salary. This makes it a great way to communicate and keep records of different answers of the finances of the company as well as the individuals working there.
What is a Pay Statement?
In simple language and usage, a pay statement can also be referred to as a pay slip or a wage slip. It is basically a document that contains information about the calculation of the net salary of an employee. There are many countries around the world which have laws that can make an employer and the corporation legally bound to provide a pay statement to their employee. It can be given to the employee either before the salary or when the salary is being paid.
There is some information that should without doubt be included in a pay statement. These things are the gross wage or the salary that does not contain any reductions. The statement should also contain all the fixed deductions that are to be made to the gross salary along with the reason for making such a deduction. Along with fixed deductions, there are certain variable deductions made to an employee’s salary, such deductions should also be mentioned in the statement along with the reason to do the same.
The pay statement should finally include the net pay that is to be made to the employee. This basically refers to the employee’s net salary or in-hand salary. Along with this, the last thing that should be there in a paste statement is the breakdown of the salary that is to be made by the Corporation and the modes for it. For example, if a company decides to pay 70% of an employee’s salary via cash and the other 30% via a check, it should be mentioned in the pay statement while the pay breakdown is being written.
So, is a pay stub the same thing as a pay statement?
If one looks at the general sense of the terms and how they are used in the day to day lives of people, one can come to a conclusion that both the terms pay stub and pay statement mean the same thing. These terms basically mean a pay slip that is given by an employer to his or her employees which gives information about an employee’s salary. Such a statement consists of both all the deductions and additions to an employee’s salary before it is finalised, it can include information about the employer-paid taxes, contributions made by the employer as well as the employee-paid taxes, it is basically like a receipt. In this way such a receipt is helpful to both the employer as well as an employee.
Both the above documents, that is a pay statement and a pay stub offer the same functions and include the same information and hence can be said to be the same.
As established above it can be said with quite some confidence that both pay stub and pay statement refer to the same document that is a pay slip. This makes it quite easy to understand and conclude that both these terms can be used interchangeably and are usually used interchangeably in day to day use of the terms.