The payslip system in Ethiopia

In general, a payslip is a physical or electronic document that shows how much you have received as salary and how much has been deducted as tax. A pay check in Ethiopia is an instrument for paying salaries. The firm makes payments by writing checks in the name of each employee or by writing one check for the total net pay for employees. 

The terms payroll and pay check are used interchangeably in Ethiopia. Unless another kind of document is used, the payroll sheet can be used as the legal and official record of collection of net pay using signatures of the employees.

This means that we need to understand the concept of payroll to know what information a pay check gives.

What does a payroll register contain?

A payroll register is the record from which pay checks are generated in Ethiopia. The payroll register contains:

1. Basic wage: This is the gross monthly income of each employee before any deductions.
2. Allowances: In addition to the basic salary, employees are entitled to allowances, which serve as extra income to compensate for specific work circumstances. These allowances include position allowance, housing and hardship allowance, and a special desert allowance. This is given to employees who are stationed in desert areas. Additionally, employees who work beyond their regular hours earn overtime pay, which is governed by laws stipulating the payment for such hours.
3. Deductions: Employees' salaries are subject to payment deductions, such as income tax and pension contributions. In Ethiopia, the tax system is progressive, meaning that individuals with higher salaries are taxed at higher rates.

A column in the payroll register contains the amount of net pay for each employee. The last column has signatures of the employees for pay check collection.

What is the minimum amount of information that a payroll register should record?

A payroll register has to contain names of employees, earnings, deductions, and net pays of the employees. A payroll register records data about jobs and wages. It is important to keep it updated.