What is a pay stub?

Every employee's paycheck comes with a pay stub, which is a financial record of the employee's earnings. In the days before digital banking, employees would cash a paper paycheck that was tied to a paper "stub" detailing the breakdown of hours worked, earnings, deductions, and taxes. Many businesses still utilise paper checks, and even with direct deposit, many employees will receive their first paycheck at a new job on paper, along with a real, old-fashioned paper pay stub.

Even though the medium has changed, the premise behind pay stubs remains the same: companies must provide pay stub information so employees may examine the breakdown of each payment.

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Also read : Salary of employees - How to discuss pay with your employees

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What information should a pay stub contain?

A pay stub typically includes the following:

- Employee information, including name, social security number, and address

- Employer information, including name and address

- The dates of the pay period

- Employee pay rate

- Gross earnings, or their earnings before taxes, employee contributions, and deductions are taken out

- Taxes withheld, such as federal income tax, and if applicable, state or local taxes

- Employee contributions, such as to retirement plans or pensions

- Deductions, such as for health insurance or life insurance

- Net pay, which is the total amount the employee actually takes home in their paycheck after all taxes, contributions, and deductions are subtracted from gross earnings

The hourly rate and hours worked should be listed under gross earnings for hourly employees. The default for salaried staff is 40 hours per week.

If the employee is entitled for overtime, the pay stub should additionally show how many hours of overtime they worked. Any incentives received by an employee would likewise be listed under gross earnings. 

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Why should employers provide pay stubs?

A pay stub is useful for tax purposes and for resolving any issues with employee pay as an employer.

It offers a record of your employee's salary, assists them in understanding their taxes, contributions, and deductions, and allows them to verify that they were paid correctly. It can also be used as proof of income or work, which is frequently required when asking for a loan or other type of credit.

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Pay Stub vs Payslip: What's the Difference?

These terms are often used interchangeably. However:

• Pay Stub is more commonly used in the US and Canada.
• Payslip is popular in the UK, India, and parts of Asia.

Both refer to the same document showing salary and deductions.

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How to Read a Pay Stub?

• Employee Information: This section includes the employee's name, address, and sometimes their social security number or employee ID.
• Pay Period: The pay stub specifies the start and end dates of the pay period for which the paycheck is issued.
• Gross Earnings: This is the total amount the employee earned before any deductions. It includes regular wages, overtime pay, bonuses, and other forms of compensation.
• Deductions: Deductions are amounts subtracted from the gross earnings to determine the net pay. Common deductions include federal and state taxes, Social Security, Medicare, and various benefits such as health insurance, retirement contributions, and union dues.
• Taxes: The pay stub itemizes the taxes withheld from the employee's earnings, including federal income tax, state income tax (if applicable), Social Security, and Medicare taxes.
• Net Pay: Net pay, also known as take-home pay, is the amount the employee receives after all deductions have been subtracted from gross earnings.
• Year-to-Date (YTD): This section provides a summary of the employee's earnings and deductions for the entire year up to the current pay period.
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Paperless Pay Stubs: The Digital Shift

With modern HR and payroll platforms like peopleHum, businesses can now generate and distribute pay stubs digitally—securely, instantly, and paper-free.

Benefits of digital pay stubs:

• Reduced paper usage (eco-friendly!)
• Faster access through mobile or self-service portals
• Easy retrieval of past pay stubs for tax filing or documentation
• Enhanced data privacy and security

Tip: Explore peopleHum’s payroll features to enable automated, compliant, and employee-friendly pay stub management.

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🚀 How peopleHum Can Help

Managing payroll and pay stubs doesn't have to be manual or messy. With peopleHum’s cloud-based payroll system, you can:

• Automate pay stub generation
• Ensure legal compliance
• Deliver stubs via secure self-service portals
• Track YTD data and deductions with ease

👉 Book a free demo to see how peopleHum simplifies your payroll process and helps you deliver a seamless employee experience—from hire to retire.

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FAQs

1. What is a pay stub and why is it important?
A pay stub is a document that details an employee’s earnings, taxes, and deductions for a specific pay period. It’s important for tracking income, understanding take-home pay, and verifying tax withholdings.

2. What details should I check on my pay stub?
Check your gross pay, tax deductions, benefit contributions, and net pay. Also review year-to-date (YTD) figures to track overall earnings and withholdings.

3. Is a pay stub the same as a payslip?
Yes, both terms refer to the same document. “Pay stub” is common in the US and Canada, while “payslip” is more widely used in the UK, India, and other regions.

4. Are employers legally required to provide pay stubs?
In many countries, including the US, Canada, and the UK, employers are legally required to provide pay stubs. Regulations vary by region, so local labor laws should be reviewed.

5. Can employees access digital pay stubs online?
Yes. Many companies use HR software like peopleHum to provide secure, digital pay stubs through employee self-service portals, making access faster and paperless.

6. How long should I keep my pay stubs?
It’s recommended to keep your pay stubs for at least one year or until you verify your W-2, income tax return, or reconcile discrepancies in payment records.