Understanding Your Payslip: A Simple Breakdown
Whether you’ve just started your first job or been working for years, it’s always worth understanding what’s really going on in your payslip.
That little document (digital or paper) holds the key to knowing how your salary is calculated - and more importantly, why your take-home pay might look very different from your gross pay.
In this blog, we’ll walk through a standard Irish payslip, explain the typical deductions (including pension contributions) & help you get to grips with what each section means.
Want a quick reference? [Download our handy 1-page payslip breakdown here.]
What Is a Payslip?
A Payslip is a document issued by your employer each time you're paid - typically weekly, fortnightly, or monthly. It outlines:
What you earned
What was deducted (e.g. taxes, pension, etc)
What you're actually taking home
It’s a legal requirement under Irish employment law, and it’s your right to receive one.
A Typical Irish Payslip – What to Expect
Let’s take a look at the typical components of an Irish payslip, and break it all down!
Here is an example layout:
Please Note: This is a test payslip provided for example purposes. Actual payslips may vary in format and content.
1. Gross Pay
Gross Pay is your total earnings before any deductions. It includes your basic salary and any bonuses, commission, overtime, or taxable benefits.
In our example, Lisa’s Gross Pay is €4,000 for the month.
2. PAYE (Pay As You Earn)
This is your income tax. The amount deducted depends on your tax credits, standard rate cut-off point, and whether you're on the correct tax band.
Most people are taxed at 20% for income up to a certain threshold.
Anything over that is taxed at 40%.
Revenue provides each employer with your Tax Credit Certificate (TCC), which determines how much tax to deduct.
Lisa pays €600 PAYE in this pay period.
USC (Universal Social Charge)
The USC is an extra tax introduced during the financial crisis and still in place. It’s charged on gross income above a certain threshold, using different bands (e.g., 0.5%, 2%, 4.5%, 8%).
In our example, Lisa’s USC is €140.
3. PRSI (Pay Related Social Insurance)
PRSI contributions fund social welfare benefits like the State Pension, Jobseeker’s Benefit, Maternity Benefit, etc.
The standard class for most employees in Ireland is PRSI Class A, which includes:
Employee PRSI (typically 4%)
Employer PRSI (Around 8.8% to 11.05%, depending on income level. Not shown on your payslip)
Lisa’s PRSI is €160.
4. Pension Contribution (Employee)
This is where things get interesting - and where you’re investing in your future.
If you’re part of your company pension scheme, you’ll see a deduction listed as “Pension” or “Employee Pension Contribution.”
This is a percentage of your gross salary that you voluntarily or automatically contribute to your pension fund.
These contributions are tax-free, meaning you’re not taxed on this amount, reducing your PAYE liability
In our example, Lisa contributes 4% of €4,000 = €160 to her pension.
5. Employer Pension Contribution
Although not always shown on your payslip, most employers include the Employer Contribution for transparency.
This is the additional amount your employer pays into your pension - typically between 4% and 10%.
It’s not deducted from your salary - it’s a bonus that goes directly into your pension fund.
Lisa’s employer contributes 6%, or €240 per month.
💡 Together, that’s €400/month going into Lisa’s pension - a valuable long-term benefit.
6. Net Pay (Take-Home Pay)
This is what lands in your bank account - your Gross pay minus all deductions.
For Lisa, Net Pay = €4,000 - (PAYE + USC + PRSI + Pension)
= €4,000 - €1,060 = €2,940
7. Year-to-Date (YTD) Figures
Some payslips include Year-to-Date totals, which help you track your:
Total earnings
Total deductions
Total pension contributions
Useful for budgeting, or when completing tax returns or applying for a mortgage.
Why You Should Understand Your Payslip
Understanding your payslip gives you power. You’ll be able to:
Spot errors (yes, they happen!)
Track your tax and pension status
Make informed decisions about salary negotiations, pension planning, or switching jobs
Check what social welfare benefits you’re eligible for based on your PRSI code
If you're unsure about anything on your payslip, speak to your HR or payroll department - or consult Revenue.ie for more detailed information.
Please Note: This is a test payslip provided for example purposes. Actual payslips may vary in format and content.
Your Quick Payslip Checklist
✅ 1. Gross Pay – your full salary before deductions
✅ 2. PAYE – your income tax
✅ 3. USC – a separate social charge
✅ 4. PRSI – social insurance
✅ 5. & 6. Pension Contributions – long-term savings, with tax relief
✅ 7. Net Pay – your take-home salary
✅ 8. Employer Pension – a hidden benefit worth understanding
Moving Forward with Confidence
Understanding your payslip is the first step to managing your money with confidence. It’s not just paperwork - it’s a window into your finances, your benefits, and your future.
👉 Want a quick reference? [Download our handy 1-page payslip breakdown here.]
And if you’re ready to take the next step towards your financial future, book a consultation today or email us at advice@fpms.ie to make sure your financial plan is working for you.
