Gross pay versus net pay

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Availability. The generator is not yet live on lexsalim.com. United Kingdom support is in development; United States and Canada are planned.

Gross pay is the total an employee has earned in a pay period before anything is taken off. Net pay, often called take-home pay, is the amount that reaches the employee after deductions. The payslip exists largely to show how one becomes the other.

Gross pay

Gross pay is the sum of all earnings lines for the period:

• basic salary or hourly pay (hours × rate);
• overtime, where it applies;
• bonuses, commission and allowances;
• statutory payments the employer makes through payroll, such as sick pay or parental pay, where they apply;
• any other taxable additions.

Some benefits are provided in kind rather than in cash and may be treated differently for tax; they are not the subject of the free generator.

Deductions

Between gross and net sit the deductions. Broadly they fall into three groups:

1. Statutory deductions required by law in the employee's country: income tax withheld through the payroll, and social-security style contributions (National Insurance in the UK, Social Security and Medicare in the US, CPP or QPP and EI in Canada).
2. Agreed deductions such as pension contributions, union subscriptions or repayment of an advance.
3. Deductions ordered by a court or authority, where they apply.

How each deduction is calculated depends on the country, the tax year and the employee's own circumstances (for example a UK tax code or a US W-4). Rates and thresholds change, so the free generator will apply a verified rule pack for the selected country rather than fixed figures, and will show the result for you to check.

Net pay

Net pay = gross pay − all deductions. It is the figure the employer pays into the employee's account. On a well-designed payslip, the arithmetic is visible line by line so that both parties can check it.

Employer costs are separate

Employers often have their own contributions on top of gross pay (for example employer National Insurance or employer pension contributions). These are a cost to the employer, not a deduction from the employee, and are shown for information only where the payslip layout includes them.

See Earnings and deductions explained for the individual lines, and How payroll calculations work for the order in which they are applied.