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All employees receive a payslip, in paper or electronic format, at the same time as their pay. The employer is legally obliged to give it to you, and it is the only tool you have to check your salary.

To read it properly, you need to break everything down into several parts: the details of the company and the employee, the gross salary, the social security and employer contributions and, finally, the net salary.


First, identify sections

A payslip is read from top to bottom, so the first section is at the very top. This is the most intuitive part, indicating the identity of the two parties involved in the employment contract: the employer and the employee.

The gross salary

The second part to look at in order to understand a payslip is the part relating to gross pay. This indicates the remuneration to which the employee is entitled, on a monthly basis, for the work performed over the working period, before the various social security contributions are deducted.

This gross salary is already the result of a calculation, since it is established on the basis of the amount predefined in the employment contract and the monthly benefits that may be added to the gross salary.

The various possible benefits are:

  • seniority bonus
  • exceptional bonuses
  • paid holiday
  • overtime or on-call duty paid at a higher rate
  • a company car or the loan of goods such as a work computer.

Taxes and social security contributions

The gross salary does not correspond to the salary that the employee will receive at the end of the month; various contributions will be deducted from this amount. These contributions are used to ensure that social security benefits are available in the future. The employee social security contributions (12.45%) are:

  • Sickness fund (care) 2.80%;
  • Sickness fund (cash) 0.25%;
  • Pension fund 8%;
  • Long-term care insurance 1.4%.

In addition, the employer must pay employer's social security contributions (at rates ranging from 12.73% to 14.89%). These employer social security contributions are calculated on the basis of the employee's salary. The employer must therefore pay both the employee's gross salary and additional employer contributions.

Once the social security contributions have been deducted, the net additions (not subject to contributions) need to be taken into account. The most common examples are reimbursements made by the employer for expenses or transport costs.

The net pay

The final step in understanding a payslip is to convert it from gross to net pay. To do this, you need to deduct all the payroll charges and taxes deducted from the gross salary. The net salary is the closest to the amount the employee will actually receive at the end of the month. But it doesn't stop there. Payroll costs are important, but so is tax.

Income tax is deducted at source by the employer. It is on the basis of the tax deduction form that the tax to be paid by the employer to the tax authorities is calculated. This amount is therefore deducted directly from gross pay.

The tax class - 2, 1a and 1 - is determined according to several criteria:

  • marital status
  • parental status
  • resident or non-resident status
  • age.

It is on the basis of this tax class and taking into account the amount of income that the tax rate is calculated. The higher the income, the higher the tax rate.

Paid holidays

uxembourg, the employer is not obliged to list any remaining holiday entitlement on the payslip, nor is he obliged to list any compensation for overtime worked. However, a final insert on the payslip generally provides additional information on paid leave earned and taken during the reference period.