Salary Slip — What Must Appear and How to Read It?

Introduction — Why is a Salary Slip Important?

A common question from our salaried clients: "I receive a salary slip every month, but I'm not sure I understand it." And that's fine. A salary slip is an accounting document that on one hand records your gross salary, and on the other hand details every deduction and addition that may affect your actual take-home pay.

Why is this important? Because any error in your slip — whether it's a double deduction of national insurance, or a missing education fund contribution — could cost you money. Additionally, when you file taxes at the end of the year or start your own business, you'll need to be confident in the figures that appear on your slip.

This guide will help you understand every line on your salary slip, what must appear in it according to law, and how to identify errors that should be corrected immediately.

What is a Salary Slip and Who Does It Apply To?

A salary slip (or payroll slip) is a document that an employer is required to issue to an employee for each pay period — typically monthly. The slip contains several components: the gross salary, any additions (benefits, bonuses, overtime), and all mandatory deductions (income tax, national insurance, education fund, and compensation if applicable).

Who needs to understand their salary slip? Actually, every employee in Israel. But it's especially important to understand it if:

• You are a permanent or temporary employee and received a salary slip for the first time
• You are planning to start your own business and will need to report previous income
• You are entitled to a tax refund at the end of the year and will need to verify the figures on your slip
• You are abroad or a new immigrant and need to understand taxation in Israel
• You suspect there is an error in your slip (double deduction, missing education fund contribution, etc.)

In short — if you receive a salary, your salary slip is a document you should understand thoroughly.

What Must Appear on a Salary Slip — Essential Details

Every legal salary slip must contain basic identifying information and all financial details. Let's go through each one:

1. Employer and Employee Details
At the top of the slip, the employer's name, business number (or other identification number), employee's name, ID number, and address must appear. This is basic, but if there's an incorrect name or mismatched ID number, it's worth correcting immediately.

2. Pay Period
Every slip must display the start and end date of the pay period (typically a calendar month). This is important so you can track your salary throughout the year.

3. Gross Salary (Base Salary)
This is the salary stipulated in your employment contract. If you work 40 hours per week with a monthly salary, this will be your monthly salary. If you work hourly, the slip will show the number of hours worked and your hourly rate.

4. Additions (If Applicable)
If you received benefits, a bonus, overtime, or employee expenses (such as recognized travel allowances), they must appear separately on the slip. Each addition should be documented separately so you can track it.

Mandatory Deductions — What Should Be Deducted From Your Salary

This is where the part begins that confuses many employees. Every slip must display your mandatory deductions separately, so you can see exactly where your money is going.

Income Tax
This is typically the largest deduction. Income tax is calculated according to a tax table and depends on your salary and family status (whether you are married, have children, etc.). The employer is required to deduct income tax each month and it appears on the slip separately. If the deduction seems too high, it's worth checking whether you are entitled to personal deductions that were not applied.

National Insurance
This is an additional deduction that must appear on the slip. The employee pays part of the national insurance (approximately 3.45% of salary up to a certain cap), and the employer pays an additional portion. Only the employee's deduction should appear on the slip. If you see "national insurance" deducted twice, that's an issue that needs to be corrected.

Education Fund
This is a deduction intended for your future savings. Typically the employee pays 2.5% of salary and the employer pays an additional 2.5% (or another rate according to the agreement). The employee's deduction should appear on the slip. If you don't see an education fund on your slip, it's worth asking your employer — you are supposed to be in an education fund.

Other Deductions (If Applicable)
Depending on your employment contract, additional deductions may appear such as pension, compensation, or loan repayments. Each deduction should be documented separately.

Net Salary — How Much Money You Actually Receive

At the bottom of your pay slip, you should see "net salary" or "amount due" — this is the amount of money you actually receive in your bank account or by check. This is your gross salary minus all deductions.

Practical example: If your gross salary is 8,000 shekels, and the total deductions (income tax, national insurance, severance pay fund) amount to 2,000 shekels, then your net salary is 6,000 shekels. This is the amount you actually receive.

If the amount shown as "due for payment" does not match your calculation, this is a sign that there is an error in your pay slip. It is advisable to check it immediately.

Common Pay Slip Errors — and How to Avoid Them

In our work with employees, we see several errors that repeat themselves on pay slips. Some are minor, while others can affect your salary in the future:

• Double national insurance deduction — Sometimes both the employee's deduction and the employer's deduction appear by mistake on the pay slip. This means you are paying twice. If you see "national insurance" two or three times on your pay slip, this is a problem.
• Missing severance pay fund — Sometimes an employer forgets to transfer an employee to a severance pay fund, and the deduction does not appear on the pay slip. This means you are not saving for your future. Check this on your first pay slip.
• Income tax calculation error — If you are married or have children, you are entitled to personal deductions that reduce your income tax. If the employer has not applied these deductions, you are paying too much tax. You can receive a refund at the end of the year, but it is advisable to correct this in time.
• Pay slip that does not present all details — A pay slip must show all deductions separately. If you see a pay slip that only shows "total deductions" without details, this is a problem. You need to know exactly where your money is going.
• Pay slip that is not signed or does not record a date — A valid pay slip must be signed or digitally signed by the employer, and must contain an issue date. If your pay slip is missing this, it is not a valid pay slip.
• Base salary that does not match your contract — Sometimes a pay slip shows a base salary that differs from the salary specified in your employment contract. This could be an error or a change you were not notified of. Check this with your employer.

When Should You Contact an Accountant Regarding Your Pay Slip?

If you are a regular employee who receives a monthly salary and a clear pay slip, you typically do not need an accountant to understand your pay slip. However, there are cases where it is advisable to consult:

If you suspect there is an error in your pay slip — If a deduction appears twice, or if the severance pay fund does not appear when it should, it is advisable to check this with an accountant or with your employer. Such errors can affect your refund at the end of the year.

If you are planning to claim a tax refund — If you are an employee with recognized expenses (transportation fees, parking, work clothing), or if you are entitled to personal deductions that were not applied, it is advisable to review your pay slips with an accountant. This can help you understand if you are entitled to a refund.

If you are starting your own business — If you worked as an employee in a certain year and then opened a business, you will need to report employment income in your tax return. Reviewing your pay slips with an accountant will ensure that you use the correct information.

If you are abroad or a new immigrant — If you are a new immigrant to Israel or living abroad, your taxation may be more complex. An accountant can help you understand your reporting in Israel and abroad.

Understanding Your Pay Slip — A Practical Example

Let's go through a "standard" pay slip with a real example:

Employee Name: David Cohen | ID Number: 123456789
Period: January 2026
Base Salary: 8,500 shekels
Recreation Allowance: 200 shekels
Overtime: 300 shekels
Total Income: 9,000 shekels

Deductions:
Income Tax: 1,200 shekels
National Insurance: 310 shekels
Severance Pay Fund: 225 shekels
Total Deductions: 1,735 shekels

Net Salary Due for Payment: 7,265 shekels

In this example, David receives a total income of 9,000 shekels (base salary plus allowances), but after mandatory deductions, he actually receives 7,265 shekels in his bank account. Each deduction appears separately, so he can track it.

If David sees in his pay slip "national insurance" appearing two or three times, or if the severance pay fund does not appear, this is a sign that there is an error.

Employee Rights — What You're Supposed to Receive

When you read your payslip, it's important to know what you're supposed to receive according to the law. It's not just income tax and national insurance — there are other rights that must appear on the payslip or at least be processed by your employer.

Severance Fund (Keren Hitkamlut) — Every employee should be enrolled in a severance fund. This is mandatory savings intended for your future. If you don't see the severance fund on your payslip, ask your employer immediately.

Recuperation Fee (Dmei Heraah) — Usually NIS 50 per month for a permanent position (the amount changes annually). This should appear on your payslip or be processed separately. If you work part-time, you may be entitled to more or less.

Overtime Hours — If you worked more than 40 hours per week, you're supposed to receive payment for overtime at a higher rate (usually 125% of your hourly wage). This should appear separately on your payslip.

Severance Pay (Pitzuyim) — If you leave your job, you're supposed to receive severance pay. This is not part of your monthly payslip, but it's something you should be aware of.

If you suspect you're not receiving something you're supposed to get, it's advisable to check with your employer or with an accountant.