What is the difference between gross pay and net pay in payroll?

Gross pay is what an employee earns before deductions. Net pay is what reaches their bank account after income tax and social contributions are withheld. Payroll is the process that runs the calculation from one to the other and pays the withheld amounts to the authorities.

How often is payroll run?

It depends on the pay cycle set by the employer and local norms: weekly, fortnightly, semi-monthly or monthly are all common. Monthly is standard in much of Europe, while weekly and biweekly are common elsewhere. Each cycle has its own cut-off date, calculation run and payment date.

Who is responsible if payroll gets it wrong?

The legal employer is responsible for correct payroll, including any tax and contributions withheld and remitted. If figures are wrong or filings are late, the employer faces the penalties, not the employee. Where an employer of record is the legal employer, that responsibility sits with the provider.

Can payroll be run in-house or does it need a provider?

Both are possible. In a single country with the right expertise, a business can run payroll in-house. Across several countries, the volume of differing rules, deadlines and currencies leads many companies to use a payroll provider or an employer of record that handles compliant local payroll for them.

Glossary

Payroll

Payroll is the process by which an employer calculates and pays employee compensation each cycle, working out gross wages, withholding income tax and social contributions, remitting them to the authorities, and paying the remaining net amount to the worker.

Reviewed by Teamed's in-house employment-law team·Last updated 28 July 2026

Also known as: payroll processing

What is Payroll?

Payroll is the recurring process of paying a workforce correctly and on time. Each pay cycle, an employer works out what each employee has earned, subtracts the right income tax and social contributions, pays those amounts to the tax authority, and transfers the net pay to the employee.

Payroll is as much a compliance function as a financial one. The calculations follow statutory rules that differ by country: tax bands, contribution ceilings, filing deadlines and reporting formats. Getting a figure wrong, or missing a deadline, can trigger penalties for the employer, so accuracy and record-keeping sit at the heart of the process.

Running payroll in one country is demanding enough. Running it across several multiplies the complexity, because each jurisdiction adds its own rules, currency and calendar. This is why many companies employing people abroad rely on a provider that runs compliant local payroll for them rather than building the capability in-house.

What steps does running payroll involve?

Each cycle you gather what has been earned, calculate gross pay, apply statutory deductions for income tax and social contributions, and work out net pay. You then pay the employee, remit the withheld amounts to the authorities, issue payslips, and file the required returns. Records are kept for each run.

Why is payroll a compliance issue and not just accounting?

Because the calculations and filings are set by law. An employer must apply the correct tax and contribution rates, meet filing deadlines, and report in the format the authority requires. Errors or late submissions can bring fines and interest, so payroll carries legal exposure well beyond simply moving money.

What makes payroll harder across multiple countries?

Every country has its own tax bands, contribution rules, filing calendar, payslip format and currency. Multi-country payroll means running all of that in parallel and keeping each one current as rules change. The compliance surface grows with each new country, which is why local expertise matters so much.

Key facts

UK real-time payroll reporting: Under HMRC's Real Time Information system, UK employers must report each employee's pay, tax and National Insurance in a Full Payment Submission on or before every payday.RTI reporting has been mandatory since April 2013; late or missing submissions can trigger automatic penalties.Source: GOV.UK· verified 2026-07-28

Frequently asked questions

What is the difference between gross pay and net pay in payroll?
Gross pay is what an employee earns before deductions. Net pay is what reaches their bank account after income tax and social contributions are withheld. Payroll is the process that runs the calculation from one to the other and pays the withheld amounts to the authorities.
How often is payroll run?
It depends on the pay cycle set by the employer and local norms: weekly, fortnightly, semi-monthly or monthly are all common. Monthly is standard in much of Europe, while weekly and biweekly are common elsewhere. Each cycle has its own cut-off date, calculation run and payment date.
Who is responsible if payroll gets it wrong?
The legal employer is responsible for correct payroll, including any tax and contributions withheld and remitted. If figures are wrong or filings are late, the employer faces the penalties, not the employee. Where an employer of record is the legal employer, that responsibility sits with the provider.
Can payroll be run in-house or does it need a provider?
Both are possible. In a single country with the right expertise, a business can run payroll in-house. Across several countries, the volume of differing rules, deadlines and currencies leads many companies to use a payroll provider or an employer of record that handles compliant local payroll for them.

Related terms

Note

This is general information, not legal advice. Statutory rules vary by country and change over time.

Glossary

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Last verified 2026-07-28