I was creating payslips and I saw extra column for employees contributions and deductions.
I can put tax amount in deduction and it goes to payroll liability.
Then, what is the use of contributions on payslips? Isn’t it same as expenses claim? In what kind of situations I should use employees contributions?
Deductions are taken out of gross pay (e.g. payroll tax, union fees)
Contributions are not taken out of gross pay. It is employee benefit not deducted from gross pay and not paid to employee directly. Payment by employer is made to third-party on behalf of employee. (e.g. health insurance, retirement fund contribution)
In some countries, contributions are very common while in other countries, they are rarely used.
Thank you