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The most valuable resource your company has is its employees, and their salary is the fundamental receipt for their contributions to the company. In Sweden, it is customary to provide employees with payslips. However, recent statistics show that only 6 out of 10 individuals actually read them. Why is it important for you as an employer to encourage your employees to read them, and what is the employer's responsibility when it comes to these important documents?
Is there a requirement to send out payslips?
There is no law that specifically requires companies to send out payslips. However, 9 out of 10 Swedish employees apply some collective agreement that may regulate the employer's obligation to distribute payslips. According to the Tax Procedure Act, employers are obliged to provide written documentation regarding the amount of tax paid for the employee's salary. Nonetheless, it is considered good practice to provide employees with payslips, as it promotes transparency and security for both employees and employers in terms of calculations and payments.
Why is it important to encourage your employees to understand their payslips?
There are several advantages for employers in encouraging their employees to read and, most importantly, understand their payslips:
- Reduce the burden on the HR department by minimizing inquiries related to payslips.
- Provide employees with a sense of security that their paid salary is correct. Often, claims of "my salary is wrong" stem from the employee's lack of knowledge about the salary process, creating unnecessary frustration.
- Mitigate challenges related to time-off requests, such as vacations, compensatory time off, and flexible working hours, when employees learn to read balances and take responsibility for their requests.
- Cultive employees' understanding of their responsibilities in certain aspects of salary calculations, such as submitting time reports and travel expenses on time.
- Decrease questions regarding tax deductions on salaries in connection with the receipt of income declarations.
How can you help employees understand their payslips?
Many individuals find it difficult to understand the document, which may also be specific to the company or industry. One tip is to create a guide for your payslips. At Azets, we have helped several companies create custom guides that explain the different sections of the document.
Additionally, it is important to provide employees with quick and easy access to their payslips through modern and secure digital tools. As a customer of Azets, you have the opportunity to choose the method that best suits your company, whether it's through our own portal, Azets Cozone, or one of the most popular portals in Sweden, Kivra.
Important information in a payslip
Below are some examples of key items that an employee should keep track of:
- Accumulated gross salary, benefits, and taxes:
Since January 1, 2019, individual-based employer declarations have been introduced, which are reported on a monthly basis. As employees do not receive the income statement (KU10) showing the year's values, it is important to verify the accumulated values for gross salary, taxes, etc., against their income declaration. - Tax deductions: Income from employment is subject to preliminary tax, which is calculated differently depending on the specific part of salary it applies to. It may be based on tax tables, a one-time tax table, or based on an individual tax reduction decision obtained from the Swedish Tax Agency. It is also possible to make additional tax deductions, known as voluntary tax deductions if desired by the employee. Even though many companies use payroll systems that have direct APIs to the Swedish Tax Agency's tax register, it is still beneficial to keep track of tax deductions throughout the year to avoid tax liabilities in the income declaration. It is important to be aware of and understand how tax deductions are calculated to have a better overview of personal finances and avoid surprises in the income declaration.
- Time balances and vacation days: Keeping track of the remaining vacation days throughout the year, including both paid and saved days, facilitates planning and helps avoid situations where an employee either does not have enough remaining days to take planned vacation or is forced by the employer to take saved vacation days that they did not plan to take themselves. It is also important to monitor other types of time balances, such as flextime, compensatory time off, or reduced working hours.
- Absence: A common question regarding payslips pertains to absence deductions. There are several stages where errors can occur: the employee may have missed reporting their time, or reported time needs adjustment if the employee falls ill during planned vacation, for example. It can also involve late submission or approval of time reports, resulting in deductions not appearing in the correct month. It is important to review absences to avoid retroactive corrections and unnecessary deductions that can impact the employee's personal finances. This is particularly important during long-term absences, whether due to sick leave, parental leave, or other forms of leave. Pay attention to whether the deduction is made in arrears or in the current month, as this can help the employee plan their finances better when returning to work.
- Personal information: It is important to verify that the address and bank account number are correct, as there are various types of fraud where incorrect information can be exploited. The employer may use the address for other mailings besides payslips, so it is crucial that it is accurate. Be particularly mindful that certain pieces of information, such as health-related or children-related information, require additional protection under the GDPR.
Employers should handle payslips with great care as they contain personal information. If you need assistance in securely and digitally sending payslips, for example, via Kivra, or if you require a guide for your payslips, please feel free to contact us. We would be happy to help.
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