Your first payslip, explained line by line
Gross vs net, PAYE, UIF, and why your take-home is smaller than your offer letter said. A jargon-free tour of a South African payslip.
7 min read
You signed for R25,000 a month. The money that arrived was R21,455. Nobody stole anything — but nobody explained it either. Here's every line.
Gross salary vs cost to company (CTC)
Your offer letter probably quoted cost-to-company: everything your employer spends on you, including their contributions to pension, medical aid, and UIF. Your gross salary is the cash portion before deductions. Your net (take-home) is what hits your bank account.
PAYE — the big one
PAYE ("Pay As You Earn") is income tax, withheld monthly by your employer and paid to SARS on your behalf. It's calculated from annual tables:
- The first ~R95,750 you earn per year is effectively tax-free (thanks to the primary rebate of R17,235 that everyone under 65 gets).
- Above that, rates start at 18% and climb in brackets to 45%.
Two important ideas:
- Marginal rate: the tax on your next rand. If you're in the 26% bracket, a R1,000 raise gives you R740 extra.
- Effective rate: your total tax as a share of income — always lower than your marginal rate, because your first earnings are taxed at lower brackets.
Run your own numbers in the payslip decoder.
UIF — the tiny one
The Unemployment Insurance Fund takes 1% of your salary, capped at R177.12 per month. Your employer pays another 1% you never see. If you're ever retrenched, on maternity leave, or too ill to work, you can claim from this fund.
Pension or provident fund
If your employer has a retirement fund, your contribution comes off before tax — which lowers your PAYE. This is one of the best deals in the tax system: see TFSA vs RA for how the deduction works.
Medical aid and the tax credit
If you're on a medical scheme, you may see the premium deducted, and your PAYE quietly reduced by the medical scheme fees tax credit: R364 a month for you, R364 for your first dependant, R246 for each one after that. It's a fixed credit, not a percentage — everyone gets the same amount regardless of income. More in medical aid tax credits.
Group life and other deductions
Many employers include group life cover, disability cover, or funeral cover. These lines are usually small, and worth understanding — they may be the only life insurance you have.
The sanity check
Every payslip, check three things:
- Does gross match your contract?
- Is PAYE roughly what a calculator says it should be?
- Are you actually registered for UIF (there's a UIF line)?
Payroll errors happen. Ten minutes once a month is cheap insurance.