How payroll calculations work

Free forever. Payroll calculations, payslip generation and PDF downloads in LexSalim are free for individuals, employers and small businesses. No subscription, no checkout and no hidden payroll charge.

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

Every payroll system, whatever the country, follows the same broad sequence. Understanding it makes a payslip easy to check and explains why the Free Payroll & Payslip Generator treats each country as a separate rule pack.

The pipeline

1. Gross pay. Add up the earnings lines for the pay period: basic pay, overtime, bonuses, allowances and any statutory pay routed through payroll.
2. Pre-tax deductions. Take off anything that reduces taxable pay before tax is worked out. Examples differ by country: some pension arrangements, salary-sacrifice schemes or certain benefit contributions.
3. Statutory deductions. Calculate the deductions required by law on the taxable figure: income tax withholding and social contributions. This step depends on the country, the tax year, the pay frequency, the employee's identifiers (a UK tax code, a US W-4, a Canadian TD1) and, for some taxes, the year-to-date position.
4. Post-tax deductions. Take off deductions that do not reduce taxable pay: for example union subscriptions, repayment of an advance, some pension or loan arrangements, and court-ordered amounts.
5. Net pay. What remains is paid to the employee.
6. Employer costs (for information). The employer's own contributions are calculated alongside but are not deducted from the employee.

Why rule packs

Steps 2 to 4 are where countries differ. The same gross pay produces different net pay in Manchester, Michigan and Montréal because the rules, the thresholds and even the order of operations differ. LexSalim therefore treats each country, and where necessary each state or province, as a rule pack that must be built and verified separately. A rule pack is released only when its results have been checked against official examples for the tax year.

That is why the status on /free-payslips is per country: United Kingdom in development; United States and Canada planned. Within the US and Canada, state and provincial packs (and Québec) are validated individually.

Human review

A calculation is only as good as its inputs and its rule pack. The generator is designed to show every line of the arithmetic so that the person preparing the payslip can check it. It is a preparation aid; responsibility for paying people correctly and for meeting statutory obligations stays with the employer.

No figures here

This help centre deliberately states no rates, bands, thresholds or maximums. They change each tax year and the official source for the country is the only reliable reference.