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I just got my first pay stub! What does it all mean?

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Answer

It’s official—you’re finally an employee! And you have the pay stub to prove it. But what on earth are all the boxes and fine print about?

A pay stub (also called a pay slip, or a statement of earnings and deductions) is a record of what you’ve earned and what has been deducted (or “held back”) from your earnings. No matter how you’re paid—cash, cheque or direct deposit—your employer must give you a pay stub. It can be printed or online, as long as you have access to it.

Your pay stub will likely show

  • regular and overtime hours you worked
  • your wage rate and, if applicable, your overtime rate
  • details of the earnings you’ve been paid, including vacation pay, holiday pay or overtime
  • deductions from your earnings and the reason for each deduction
  • banked overtime you’ve taken as time off
  • the pay period (start and end dates) covered by the stub

Deductions

It should be easy to spot the place on the pay stub that shows the hours you worked and how much you earned, but new workers are often uncertain about the deductions. There are 2 types of deductions: mandatory and optional.

Mandatory deductions are sums of money that all Canadian employers must take from their employees. They vary somewhat, but must include

  • federal and provincial income tax
  • Employment Insurance premiums (EI)
  • Canada Pension Plan contributions (CPP)
  • any amount authorized by a collective agreement, such as union dues or pension plans
  • deductions resulting from a judgment or court order

Optional deductions, which need to be approved by you in writing, may be unique to each employer and could include

  • medical or dental premiums
  • life insurance premiums
  • personal savings plans

Your total earnings before deductions have been subtracted is called your gross pay. The amount remaining after deductions is called your net pay, or take-home pay.

Vacation Pay

Many employers include vacation pay on every cheque, while others pay it when you take holidays. All must pay it no later than the next payday after your vacation begins.

Pay stubs contain a lot of useful and important information, so take the time to figure them out. And congratulations on being official!