Remuneration
Net pay: how take-home salary is calculated
Net pay is what actually reaches the employee's account. It is the end of a defined sequence — gross remuneration, allowable deductions, tax, then everything else — and each step can be checked.
The gross-to-net sequence
1. Gross remuneration
Basic salary plus allowances, overtime, commission, bonuses and the value of taxable fringe benefits for the period.
2. Deductions before tax
Retirement fund contributions and other amounts deductible for tax purposes reduce taxable income within legislated limits.
3. Tax and statutory deductions
PAYE is calculated on taxable income after rebates and medical tax credits, and the employee UIF contribution is applied to the capped contribution base.
4. Other deductions
Medical scheme contributions, garnishees, loans and other authorised amounts follow — see statutory deductions. What remains is net pay.
Why identical packages give different net pay
- Medical scheme membership and the number of dependants change tax credits
- Retirement contribution rates differ between employees
- Travel allowance portions are taxed differently to basic salary
- Court-ordered or voluntary deductions differ per person
- Once-off payments such as bonuses distort net pay in the month they are paid
Checking a payslip
Employees can verify their own tax with our PAYE calculator, and employers can model whole packages with the Net Pay Simulator (NPS).
Frequently asked questions
What is net pay?
Net pay is the amount an employee receives after all deductions — PAYE, UIF and any benefit, court-ordered or voluntary deductions — have been subtracted from gross remuneration.
How is net pay calculated?
Start with gross remuneration, subtract deductions allowed for tax purposes, calculate PAYE on the remaining taxable income after rebates and tax credits, deduct UIF, then subtract remaining authorised deductions.
Why did my net pay drop this month?
Common causes are a bonus in the previous month inflating that payslip, an increase pushing you into a higher marginal band, a benefit change, unpaid leave, or a new deduction such as a loan or garnishee.
Can net pay be negative?
It should never be. Where deductions exceed pay, voluntary deductions must be reduced or suspended and recovered later rather than producing a negative payslip.
Patuza produces clear, itemised payslips and can model net pay outcomes before a package change is announced.
Book a consultationRelated services
- Payroll processing →
Monthly and weekly payroll processing, calculations, payslips and statutory deductions.
- Employee administration →
Employee records, onboarding, changes, banking details and statutory data kept accurate and secure.
- Payroll compliance →
PAYE, UIF, SDL, EMP201, EMP501 and IRP5 compliance managed end to end for SARS.
Related topics
- PAYE →
Pay-As-You-Earn: how employees' tax is calculated, withheld, declared and paid to SARS.
- Employee contributions →
What employees contribute to retirement, medical and statutory funds, and its effect on pay.
- Total remuneration →
Total cost to company: how guaranteed pay, benefits and employer contributions add up.
- Statutory deductions →
The full deduction hierarchy: what employers may deduct, in what order and within what limits.
Related insights
- Employer cost vs net pay →
Why the employer's cost and the employee's take-home differ so widely.
- PAYE calculator →
Step-by-step SARS PAYE calculation for the current tax year.
- Net Pay Simulator (NPS) →
Remuneration and net-pay intelligence.