||The examples and perspective in this article may not represent a worldwide view of the subject. (August 2012)|
A paycheck is traditionally a paper document (a cheque) issued by an employer to pay an employee for services rendered. In recent times, the physical paycheck has been increasingly replaced by electronic direct deposit to bank accounts. Such employees may still receive a pay slip, but any attached cheque is marked as non-negotiable and cannot be cashed. A pay stub, paystub, payslip, pay advice, or sometimes paycheck stub, is a document an employee receives either as a notice that the direct deposit transaction has gone through, or is attached to their paycheck. It will typically detail the gross income and all taxes and any other deductions such as retirement plan or pension contributions, insurances, garnishments, or charitable contributions taken out of the gross amount to arrive at the final net amount of the pay, also including the year to date totals in some circumstances. Pay slips are labor analogs of remittance advice letters (which are used for invoices).
In most countries with a developed wire transfer system, using a physical cheque for paying wages and salaries has been less common. However, vocabulary referring to the figurative "pay cheque" persists in some languages, but this commonly refers to a payslip or stub rather than an actual cheque. Some company payrolls have eliminated both the paper cheque and stub, in which case an electronic image of the stub is available on a website. Most of the provinces and territories in Canada allow employers to issue electronic payslips if the employees have confidential access to it and are able to print it.
For employees that do not have access to a bank account, there is a solution offered by most major payroll service providers. Instead of an employee receiving a cheque and paying to cash the cheque, the employee can have his pay loaded onto a debit card. In this, a company can save money on printing cheques and not have to worry about cheque fraud. A payroll card is a plastic card similar to a debit card that allows an employee to access their pay by using the payroll card like a debit card. A payroll card can be more convenient than using a cheque cashier, because the card can be used at participating automatic teller machines to withdraw cash or in stores to make purchases. Some payroll cards are cheaper than payday loans available from cheque cashing stores, but others are not. Most payroll cards will charge a fee if used at an ATM more than once per pay period. The payroll card account may be held as a single bank account in the employer's name. In that case, the bank account holds the payroll funds for all employees of that company using the payroll card system, and an intermediary limits each employee's draw to an amount specified by the company for a specified pay period. Some payroll card programs establish a separate account for each employee. Most payroll card accounts in the United States are insured by the Federal Deposit Insurance Corporation. In May 2013, CrewCash Card, a payroll and benefits platform, launched a service allowing crewmen employed by participating shipping and trading firms to receive direct deposit paychecks on a MasterCard branded prepaid debit card. The program’s initial participants included Akron Trade & Transport, Lotus Shipping, Leon Shipping & Trading, Kyla Shipping Enterprises Corp., Entrust Shipping and Tsakos Shipping & Trading.
Payroll warrants look like checks and clear through the banking system like checks and are therefore often called paychecks by their recipients. But they are not checks because they are not drawn against a checking account. Instead they are drawn against "available funds" that are not in a bank account so the issuer can delay redemption. In the U.S., warrants are issued by government entities such as the military and state and county governments for payroll to individuals and for accounts payable to vendors. Deposited warrants are routed to a collecting bank which processes them as collection items like maturing treasury bills and presents the warrants to the government entity's Treasury Department for payment each business day. In the UK, warrants are issued as payment by the National Savings and Investments bank when a premium bond is chosen.
- Understanding Payroll Debit Cards
- Villarreal, Alexandra (May 17, 2013). "CrewCash Card to allow crewmen direct deposit paychecks via MasterCard prepaid". Bank Credit News. Retrieved 18 July 2013.
- Glossary of Accounting Terms