Payslips are a legal document that record pay, deductions and key employment details. For employers and HR professionals, the ability to interpret every element on a payslip is non-negotiable. Under section 8 of the Employment Rights Act 1996, workers are entitled to an itemised pay statement showing gross pay, net pay and each deduction, and since April 2019 the payslip must also show the number of hours worked where pay varies by the amount of time worked. Although the legislation does not prescribe which abbreviations must be used, the payslip must be readily comprehensible in practice. When staff do not understand what they are being paid or why deductions have been taken, employers face increased queries, risk of complaints and potential exposure to non-compliance under the Employment Rights Act 1996.
What this article is about: This guide explains the most common payslip abbreviations used across UK payroll systems and how to interpret them. It sets out the statutory abbreviations employers must recognise, the pension and benefits codes that arise under auto-enrolment and workplace schemes, and the employer-specific codes that HR teams often need to explain. It also outlines legal obligations on payslip clarity, the risks associated with unclear deductions and the steps employers can take to maintain payroll accuracy and minimise disputes.
Understanding the meaning of each payslip abbreviation allows employers to respond quickly to employee queries and maintain confidence in payroll processes. This article provides a structured, comprehensive explanation of the abbreviations found on UK payslips and how HR professionals should approach compliance, documentation and communication when interpreting these codes, so that payslips remain accurate, lawful and readily understandable to workers.
Section A: Understanding payslip abbreviations
Payslip abbreviations are widely used across UK payroll systems because they allow pay information to be communicated concisely within fixed formatting constraints. However, the reliance on abbreviations means HR professionals must understand the full meaning behind each code to identify statutory deductions, contractual payments and employer-created terminology. This section sets out why abbreviations are used, how they link to legal requirements and what employers must do to ensure clarity and accuracy when issuing payslips, bearing in mind the underlying obligation for payslips to be readily comprehensible in practice.
Abbreviations are primarily used because payroll software compresses information into a limited space, especially when payslips are produced in compact or multi-line formats. Standardised codes allow the system to present a full breakdown without cluttering the payslip. While the approach is efficient, abbreviations can vary between providers, which is why employers must remain familiar not only with statutory terms but also with software-specific and company-specific codes. Without this understanding, there is a higher risk that errors, such as incorrect deductions or misallocated payments, will go unnoticed.
Employers have a legal duty to provide itemised and clear payslips under the Employment Rights Act 1996. A payslip must show gross pay, net pay and itemised deductions, and where pay varies by the amount of time worked it must also show the hours being paid for. The law does not prescribe the specific abbreviations used, but employers must ensure that any abbreviation is intelligible or can be promptly explained to the employee. The employer’s obligation is not satisfied merely by providing a payslip; the information must be understood. Where abbreviations are unclear, disputes or misunderstandings can arise, particularly around tax, National Insurance or pension deductions, and employees may challenge the lawfulness of deductions if they cannot see what a code represents.
HR professionals must also recognise the difference between statutory abbreviations, which broadly follow HMRC terminology, and employer-specific codes, which often arise in relation to benefits, allowances or internal accounting processes. Statutory deductions such as tax, National Insurance and student loan repayments tend to use consistent abbreviations because they derive from HMRC guidance. Employer-specific codes, however, may differ significantly and require an internal key or payroll reference guide to ensure accuracy across the organisation. This internal documentation becomes particularly important evidence if an employee later raises a formal complaint or tribunal claim about pay.
Another layer of complexity arises where abbreviations appear in connection with variable pay, including overtime, bonuses, shift premiums and commission structures. Employers must ensure these codes are internally consistent and that managers understand how they map to underlying entitlements or contractual terms. When a code is misunderstood or applied inconsistently, employees may raise questions about the calculation of their pay, which can delay payroll processing and erode trust in the employer’s processes. Inconsistent use of variable pay abbreviations can also make it harder to demonstrate compliance with National Minimum Wage rules, especially where pay fluctuates.
For HR teams, maintaining a shared understanding of payslip abbreviations supports transparency and reduces the administrative burden associated with repeated queries. Clear communication also improves employee trust and mitigates the risk of formal complaints about deductions or pay accuracy, particularly where statutory payments, salary sacrifice arrangements or benefits in kind are involved. Regular reviews of payroll outputs and terminology, alongside clear internal guidance, help ensure that abbreviations remain accurate, up to date and aligned with the organisation’s contractual and legal obligations.
Section Summary: Payslip abbreviations are necessary for efficient payroll presentation, but employers must ensure they are clear, consistent and properly understood. HR professionals must recognise the distinction between statutory and employer-specific codes, maintain internal clarity around variable pay abbreviations and ensure employees can obtain explanations for any abbreviation used. By doing so, employers reduce payroll errors, support compliance with statutory requirements and National Minimum Wage rules, and maintain confidence in pay processes.
Section B: Core statutory abbreviations
Statutory abbreviations are the most important codes for employers and HR professionals because they relate directly to legal deductions, HMRC reporting obligations and statutory entitlements. These abbreviations are generally consistent across payroll systems, as they follow HMRC terminology, and they must be applied accurately to ensure compliance. This section explains the most widely used statutory payslip abbreviations and the compliance points HR teams must be able to address when employees raise queries.
The most widely recognised abbreviation on any payslip is PAYE, which stands for Pay As You Earn. This is the income tax deducted from the employee’s taxable pay under HMRC rules. The PAYE amount varies based on the worker’s tax code, taxable benefits, salary level and any adjustments notified by HMRC. Employers must ensure that PAYE deductions are accurate, that tax codes applied match HMRC instructions and that any employee query about unexpected tax changes is reviewed promptly. If an employee disputes a tax deduction, HR may need to cross-check RTI submissions and the latest tax code notice to ensure accuracy.
National Insurance contributions typically appear as EE NI (employee National Insurance) and ER NI (employer National Insurance). Only the employee NI reduces net pay, although listing both amounts supports transparency. Some payslips also show NIC as a combined label. Employers must also be aware of the employee’s NI category letter, which determines the applicable rates. Common letters include:
- A – standard category
- C – employees over State Pension age
- H – apprentices under 25
- M – employees under 21
- Z – employees under 21 with reduced rate
- X – no NI liability (often used for under-16s or very low earners)
In addition, payroll systems may show NI thresholds, such as PT (Primary Threshold), ST (Secondary Threshold), ET (Earnings Threshold) and LT (Lower Threshold), which determine at which points contributions start and at what rates. HR should be able to explain how NI thresholds affect deductions, particularly where employees experience fluctuating earnings.
Student loan deductions normally appear as SL for undergraduate repayment plans and PGL for postgraduate loan deductions. As of current guidance, employers must be aware that student loan repayment plans include Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate Loan. Deductions must only begin when HMRC issues a start notice, and they must stop when HMRC issues a stop notice. Incorrect student loan deductions are one of the most common sources of payroll disputes, so HR must ensure employee records are accurate and notices are actioned promptly.
A range of statutory payments also appear on payslips as abbreviations. These include SSP (Statutory Sick Pay), SMP (Statutory Maternity Pay), SPP (Statutory Paternity Pay), SAP (Statutory Adoption Pay) and ShPP (Statutory Shared Parental Pay). Each statutory payment must be itemised separately on the payslip, ensuring employees can distinguish statutory entitlements from any enhanced or contractual arrangements the employer provides. HR must be able to explain the eligibility rules, payment periods and calculation method for each statutory payment.
YTD, meaning Year to Date, appears on many payslips to show cumulative totals for pay, tax, NI or pension contributions from the start of the tax year. Employee queries about YTD figures are common, especially after pay changes, bonuses or periods of absence. HR must be able to explain how YTD accumulations work and identify any discrepancies caused by adjustments made in earlier payroll runs.
Some payroll systems include technical markers connected to Real Time Information (RTI) submissions. These may indicate whether a payment has been reported to HMRC or whether adjustments were made retrospectively. However, RTI markers are generally used in back-office systems and are uncommon on employee-facing payslips. If they do appear, HR professionals should be aware of their meaning so that they can explain them accurately.
Section Summary: Statutory payslip abbreviations reflect mandatory deductions and statutory entitlements. Employers and HR professionals must understand PAYE, NI categories, student loan plans (including Plan 5), statutory payments and YTD figures to ensure accuracy and provide clear explanations to employees. Proper understanding of these codes supports HMRC compliance, prevents unlawful deductions and reduces payroll disputes.
Section C: Pension and benefits-related abbreviations
Pension and benefits deductions are often the most complex elements of a payslip, largely because terminology varies between pension providers, benefit schemes and payroll systems. HR professionals must understand these codes to ensure compliance with the Pensions Act 2008, auto-enrolment duties, salary sacrifice rules and HMRC benefit taxation processes. This section sets out the most common pension and benefits abbreviations and the compliance issues that employers and HR teams should be aware of.
The most frequently used pension abbreviations relate to contribution types. EE Pen or EE Pens refers to employee pension contributions deducted from pay. ER Pen refers to employer pension contributions, which do not reduce net pay. In some payroll systems these appear simply as Pens, Pension, EE, ER or by scheme name. HR must confirm whether deductions are taken on a net pay arrangement or relief at source basis, as this affects both the payslip presentation and the employee’s tax position.
Auto-enrolment abbreviations such as AE (auto-enrolment) and AEC (auto-enrolment contributions) indicate compliance with statutory duties. Some payroll systems may also show postponement markers or staging references. Although these typically appear in payroll reports rather than employee payslips, HR teams should still understand them because they evidence compliance with the employer’s legal duties under the Pensions Act 2008.
Salary sacrifice arrangements introduce further abbreviations and compliance considerations. Codes such as SAL SAC, Salsac, SS, SC or Sacrifice indicate that the employee has agreed to contractually reduce their salary in exchange for an employer pension contribution or another benefit. Because salary sacrifice reduces contractual salary, employers must ensure that the arrangement does not reduce pay below the National Minimum Wage, one of the most frequent compliance failures. HR must hold written evidence of the employee’s agreement and ensure payroll processing accurately reflects the sacrificed amount.
Pension scheme identifiers also appear across payroll systems. Common codes include GPP (Group Personal Pension), NEST (National Employment Savings Trust), NOW (NOW: Pensions), and TPP (The People’s Pension). Employees may also pay AVCs (Additional Voluntary Contributions), which must be shown distinctly from standard contributions. HR must ensure that voluntary contributions are clearly itemised and not confused with compulsory deductions under auto-enrolment.
Benefits in kind give rise to additional payslip abbreviations. These may include BIC, BIK or scheme-specific identifiers. Employers that have registered to payroll benefits in kind instead of submitting P11Ds will show tax on those benefits directly on the payslip. Where benefits are processed through salary sacrifice—such as cycle-to-work, healthcare or dental plans—employers must ensure proper documentation is held and that the deductions reflect the employee’s written agreement.
Other employer-provided benefits may also generate abbreviations, including company car contributions, mileage recoveries, taxable expense adjustments or subsistence allowances. Codes such as EXP, MILE, TRV or SUB may appear, but meanings vary by employer. For this reason, HR teams should maintain and regularly update an internal payslip terminology guide to ensure consistent explanations to employees across the organisation.
Section Summary: Pension and benefits-related abbreviations vary widely, reflecting differences in scheme design, payroll software and employer offerings. HR professionals must understand employee and employer pension contributions, auto-enrolment codes, salary sacrifice arrangements, payrolled benefits in kind and scheme identifiers such as NEST, NOW and TPP. Clear understanding of these abbreviations supports compliance with pension legislation, National Minimum Wage rules and HMRC benefit taxation requirements.
Section D: Employer-specific abbreviations
Employer-specific abbreviations are unique to each organisation or payroll provider. They reflect internal processes, pay structures, benefit schemes and accounting references. Unlike statutory or pension-related abbreviations, these codes have no universal meaning. As a result, they present the highest risk of confusion for employees and require clear documentation, consistent application and transparent communication. HR teams must ensure these codes are properly recorded, regularly updated and clearly explained on request, as unclear deductions can raise concerns about the lawfulness of pay under the Employment Rights Act 1996.
Many employer-specific abbreviations relate to variable earnings, such as overtime, shift payments, bonuses or commission. Payroll systems commonly use codes such as OT, OT1.5 or OT2 for overtime at different premium rates. Shift allowances may appear as SA, Shift or codes assigned to specific shift patterns. Bonuses may be identified as BON, BNS or PRB, while commission may appear as COM, CMS, Sale or similar. HR teams must ensure these codes are applied consistently across departments so that variable pay remains transparent and traceable, particularly where it interacts with National Minimum Wage calculations.
Deductions for employer-provided benefits also generate internal abbreviations. Payroll systems may show codes for healthcare schemes, dental cover, gym memberships, season ticket loans or childcare voucher arrangements. These may appear as HC, MED, DEN, GYM or STL. Where employees contribute financially towards these benefits, the deduction must be lawful, meaning it must be either required by law, authorised by the employment contract or authorised by written consent from the employee. HR must maintain documentation to evidence the employee’s agreement to any deduction that is not statutory.
Where employers operate travel, mileage or subsistence schemes, abbreviations such as EXP, MILE, TRV or SUB may appear to show reimbursements or taxable adjustments. The meaning of these codes varies significantly between employers, making it essential that HR maintains a clear internal glossary of all deductions, payments and allowances. Payroll teams should review these codes periodically to ensure they still reflect current policies and benefit structures.
Some employers include internal accounting references or cost-centre identifiers on payslips. These codes assist internal reporting but rarely benefit the employee and can cause confusion if not clearly explained. While such references may be useful for audit trails, they should never obscure the meaning of pay or deductions. If codes do appear, HR should ensure they are supported by internal documentation so employees can obtain explanations if required.
To maintain consistency and reduce disputes, employers should create and regularly update an internal “payslip key” or terminology guide that lists every employer-specific abbreviation in use. This should be made available to HR, payroll administrators and employees. HR teams should also train managers to use the correct codes when authorising overtime, approving allowances or processing benefits. Inconsistent use of abbreviations can lead to inaccuracies that are difficult to identify once payroll has been processed and may undermine employee trust in pay accuracy.
Section Summary: Employer-specific abbreviations carry a higher risk of employee confusion because they have no standard meaning outside the organisation. HR teams must maintain accurate internal documentation, ensure deductions are lawfully authorised, and promote consistency in how codes are used across the business. Clear explanations and reliable internal records protect the employer from disputes, support payroll accuracy and strengthen employee confidence in pay processes.
FAQs
What abbreviations must legally appear on a payslip?
UK law does not require specific abbreviations. However, under section 8 of the Employment Rights Act 1996, employers must show gross pay, net pay, each deduction with its purpose and, where pay varies by time worked, the hours being paid for. Any abbreviation used must be readily comprehensible and capable of being explained to the employee on request.
How should employers respond if an employee disputes a deduction shown as an abbreviation?
The employer must provide a clear explanation of the deduction, the underlying calculation and the legal or contractual basis for making it. For statutory deductions such as PAYE, NI or student loans, HR may need to cross-check HMRC notices, NI category letters or the student loan plan (including Plan 5). For employer-specific deductions, HR should consult the internal payslip terminology guide and ensure that the deduction is contractually authorised or supported by written employee consent.
Are statutory payment abbreviations always consistent across payroll systems?
Most payroll systems use widely recognised HMRC-aligned abbreviations such as SSP, SMP, SPP, SAP and ShPP. Nevertheless, employers should confirm how their payroll provider labels statutory payments to avoid misinterpretation or confusion, especially where enhanced payments are also made.
What happens if abbreviations on payslips are unclear or inconsistently used?
Unclear abbreviations create a heightened risk of misunderstandings, incorrect assumptions about deductions and formal complaints. Employers remain legally responsible for ensuring payslips are understandable, and inconsistent abbreviations can undermine transparency, delay payroll resolution and expose the organisation to allegations of unlawful deduction from wages.
Can employers create their own abbreviations for allowances and benefits?
Yes. Employers can use bespoke codes for allowances, benefits or internal accounting references. However, these must be applied consistently, clearly documented and supported by contractual or written employee consent where they relate to deductions. Failure to maintain clarity may lead to disputes or challenge under the Employment Rights Act 1996.
Should HR maintain a payslip glossary for employees?
Yes. Maintaining an internal payslip glossary or terminology guide is best practice. It reduces employee queries, enhances transparency, ensures consistency across departments and supports payroll accuracy.
Why do some payslips show more abbreviations than others?
This typically reflects differences in payroll systems, pay structures and benefits provided. Employers offering variable pay, salary sacrifice arrangements, payrolled benefits or multiple pension schemes will naturally have more abbreviations on the payslip.
Do abbreviations differ between weekly and monthly payroll?
The abbreviations themselves remain broadly the same. However, the frequency of payments or deductions may cause differences in YTD values or cause certain codes to appear more often in weekly payroll cycles.
Conclusion
Payroll clarity is a core employer responsibility and a fundamental aspect of legal compliance. Payslip abbreviations allow payroll systems to present complex information in a manageable format, but this efficiency carries an obligation for employers and HR professionals to ensure every abbreviation is clearly understood, accurately applied and lawfully supported. When employees cannot interpret their payslip, confidence declines, disputes increase and the organisation may face allegations of unlawful deduction from wages.
Statutory abbreviations such as PAYE, National Insurance and student loan deductions (including Plan 5) must be interpreted correctly to ensure compliance with HMRC requirements. Pension and benefits codes require careful attention to auto-enrolment rules, salary sacrifice arrangements and payrolled benefits in kind. Employer-specific abbreviations must be supported by clear internal documentation, contractually or legally authorised deductions and consistent terminology across the organisation.
Employers who maintain clear internal guidance, review payroll outputs regularly and ensure HR teams understand the meaning behind every abbreviation strengthen payroll accuracy and employee trust. By providing employees with accessible explanations and maintaining transparent payroll processes, organisations minimise the risk of payroll disputes and uphold their statutory duties under UK employment and tax legislation.
Glossary
| AE | Auto-enrolment. Indicates the employee has been automatically enrolled into a qualifying workplace pension scheme. |
| AEC | Auto-enrolment contributions made under the employer’s statutory duties. |
| AVC | Additional Voluntary Contributions paid by the employee into their pension. |
| BIC / BIK | Benefit in kind. A taxable non-cash benefit such as medical cover or a company car. |
| BON / BNS / PRB | Bonus or performance-related bonus payments. |
| COM / CMS | Commission payments linked to sales or performance targets. |
| EE Pen | Employee pension contribution deducted from salary. |
| ER Pen | Employer pension contribution paid on the employee’s behalf. |
| EE NI | Employee National Insurance contributions. |
| ER NI | Employer National Insurance contributions. |
| EXP | Expenses paid or recovered through payroll. |
| GPP | Group Personal Pension scheme. |
| HC / MED | Healthcare or medical insurance deductions. |
| LT / PT / ST / ET | National Insurance thresholds: Lower, Primary, Secondary and Earnings thresholds. |
| NEST | National Employment Savings Trust pension scheme. |
| NIC | National Insurance contributions (combined label). |
| NI Category X | No National Insurance liability, often for under-16s or very low earners. |
| NOW | NOW: Pensions workplace pension scheme. |
| TPP | The People’s Pension workplace scheme. |
| OT / OT1.5 / OT2 | Overtime codes representing different pay rates. |
| PAYE | Pay As You Earn income tax deducted under HMRC rules. |
| PGL | Postgraduate loan repayment deduction. |
| SL Plan 1 / 2 / 4 / 5 | Student Loan repayment plans administered via payroll. |
| SAL SAC / Salsac | Salary sacrifice arrangement for pension or benefits. |
| SAP | Statutory Adoption Pay. |
| SMP | Statutory Maternity Pay. |
| SPP | Statutory Paternity Pay. |
| ShPP | Statutory Shared Parental Pay. |
| SSP | Statutory Sick Pay. |
| STL | Season Ticket Loan deductions. |
| YTD | Year-to-date totals for pay, tax or deductions. |
Useful Links
| GOV.UK – Payslips | Official government guidance on payslip requirements and employee rights. |
| GOV.UK – PAYE for Employers | HMRC guidance for employers on PAYE deductions and reporting. |
| GOV.UK – National Insurance | Information on NI categories, thresholds and contribution rules. |
| GOV.UK – Student Loan Repayments | HMRC information on repayment plans, including Plan 5 and postgraduate loans. |
| GOV.UK – National Minimum Wage | Compliance rules relevant to salary sacrifice and overall pay structure. |
| The Pensions Regulator – Employers | Authoritative guidance on workplace pensions and auto-enrolment duties. |
