Payroll record

What it means

The payroll record summarises one employee’s income and deductions for a tax period. It carries identification data, the tax allowances and child bonus claimed, monthly gross pay, contributions, tax advances and any other deductions.

The employer must keep it and retain it for the long statutory period - the data also serves pension purposes. It is not an internal working sheet but a document prescribed by law.

A payroll record is not the same as a payslip. The payslip is the monthly statement the employee receives with each payment, while the payroll record is the annual summary of the same data kept by the employer. When leaving, the employee receives an employment confirmation and other certificates, not the payroll record itself.

How it works in practice

It is the starting point for the annual reconciliation of tax advances, for income certificates to a bank or authority, for calculating average earnings, and for tracking garnishments.

In an inspection by the Social Insurance Agency, the labour inspectorate or the tax administrator, this is the first document requested. So corrections are made with documentation and an explanation, not by overwriting a figure.

When we take over payroll during the year, the first thing we ask the previous provider for is the payroll records of all employees from January. Without them the annual reconciliation cannot be done correctly, nor can average earnings be calculated, so they are part of every handover and are checked before we run the first payroll.

What to watch out for

It holds personal and special category data, so GDPR applies: only authorised people have access and it is not sent by unprotected e-mail. The employee has the right to confirmation of the data concerning them, and that cannot be refused.

Payroll records kept only in payroll software can disappear along with the licence. If a company changes provider or software without exporting the old data, years later it cannot document the income of a former employee who needs it, for example for a pension. Part of archiving is therefore an export to a format that opens without the original program.