A salary slip, or wage slip, is a statement given to an employee each pay period showing what they earned, what was deducted and what they were paid. Many small businesses skip it and pay in cash or by bank transfer with no paper at all.
That is no longer an option. Under the Code on Wages, 2019, in force since 21 November 2025, employers must issue wage slips to all employees, on paper or in electronic form, on or before the day wages are paid. The position here is as of October 2026, and it is general information and not legal advice. Your state's rules set the exact form.
01Why slips matter beyond the law
- For the employee,
- a slip is proof of income for a bank loan, a rental agreement, a visa or a school admission.
- For you,
- it is a record that wages were paid correctly, with deductions explained.
- For disputes,
- a signed or acknowledged slip settles most "I was paid less" arguments.
- For trust,
- staff who see exactly how their pay is worked out ask fewer questions.
02What a slip should show
At a minimum:
- Employer
- business name and address
- Employee
- name, designation, employee code, date of joining
- Pay period
- such as October 2026
- Days
- days in the period, days worked, leave taken, unpaid absence
- Earnings,
- line by line: basic pay, dearness allowance, other allowances, overtime
- Deductions,
- line by line: PF, ESI, professional tax where it applies, TDS on salary where it applies, recovery of advances, other authorised deductions
- Net pay
- and the date and mode of payment
- PF UAN and ESI number
- where applicable
- Leave balance,
- which is helpful though not always required
03A sample slip
Tile maker, Morbi. Wage slip for October 2026.
Employee: Storekeeper. Designation: Kiln operator. Code: SKC-047. Days in month: 31. Paid days: 30. Unpaid absence: 1.
| Earnings | ₹ | Deductions | ₹ |
|---|---|---|---|
| Basic | 12,000 | PF (12% of basic and DA) | 1,920 |
| Dearness allowance | 4,000 | ESI (0.75% of gross) | 155 |
| House rent allowance | 3,000 | Advance recovered | 1,000 |
| Overtime (12 hours) | 1,625 | ||
| Gross earnings | 20,625 | Total deductions | 3,075 |
Net pay: ₹17,550, paid by bank transfer on 5 November 2026. Earned leave balance: 9 days.
The figures already reflect the one day of unpaid absence. Notice that ESI is worked out on gross wages and PF on basic and DA. ESI of 0.75 percent on ₹20,625 is ₹154.69, shown here as ₹155. Whether a particular employee falls within PF and ESI depends on their wages and the current ceilings. See PF and ESI basics.
04The 50 percent rule and your slip
Under the Codes, wages for statutory purposes include basic pay, dearness allowance and retaining allowance, and if allowances exceed half of total pay, the excess is added back to wages. In the sample above, allowances other than basic and DA are ₹3,000 of ₹19,000 regular pay, well under half, so there is no add-back. A structure where HRA and special allowances make up most of the pay would see part of them counted as wages for PF and gratuity.
05Deductions: what is allowed
The Code on Wages allows only authorised deductions, such as:
- Absence from duty
- Damage or loss caused by the employee, after a hearing
- Recovery of advances and loans
- Fines, after the employee has been given a chance to be heard
- House accommodation and amenities provided, where accepted
- Statutory deductions: PF, ESI, income tax, professional tax
Total deductions in a wage period cannot exceed 50 percent of wages. Every deduction should appear on the slip, by name.
06Timing
Issue the slip on or before the day of payment. For monthly staff, wages are due before the end of the seventh day of the next month, so the slip goes out at the same time. An email, a PDF on WhatsApp or a printed copy all work, as long as the employee gets it.
07Common mistakes
- One lump figure
- with no breakdown.
- Deductions without explanation,
- such as "Other ₹500".
- Wrong days,
- because attendance was not closed before wages were worked out. See staff attendance.
- Different rules for different people,
- such as daily rates on 26 days for some and 30 for others.
- Slips issued weeks after payment,
- or only when an employee asks.
- Cash wages with no record
- Bank payment with a slip is far easier to defend.
08Small and large employers
A shop with three staff can prepare slips in a spreadsheet or on paper, using a fixed format, and give them with the salary. The effort is fifteen minutes a month.
A factory with 120 workers, some on daily rates and some monthly, with overtime and shifts, needs payroll software or a payroll provider. The slip is the last step in a chain that starts with attendance and ends with bank transfers and PF and ESI challans.
09Final settlement slips
When an employee leaves, give a final slip showing wages for the days worked in the last month, leave encashment where it applies, any other dues, and deductions such as recovery of an advance. Under the Code on Wages, dues of a leaving employee are paid within two working days of their leaving, whether they resigned, were dismissed or their employment was ended. Gratuity, where it applies, is paid within 30 days of becoming payable under the Code on Social Security.
10Keep copies
Keep a copy of every slip with the wage register. Under the Code on Wages, wage records are kept for five years, in physical or electronic form.
In MatruOS, attendance and leave feed the pay run, which prepares each payslip and the bank file for your approval.