Can’t raise employee salaries? Then get them right: Payroll errors lead to quiet quitting

With the cost of living increasing and wages stagnant, everyone wants to be paid more. Not every company can afford to raise salaries — especially small businesses — but every company should recognize just how important it is to pay employees correctly and consistently. Payroll errors are more than a simple administrative headache‌ — ‌they could drive people to quit.

As Remote’s latest payroll research shows, payroll mistakes compound financial stress and create negative sentiments from employees toward their employers. This leads to a greater risk of quiet quitting, where employees disengage from their work without outright leaving. Payroll errors, whether they're being paid late or incorrectly, can make employees feel disillusioned and put organizations at risk of losing the faith of their workforce.

Payroll mistakes range from late payments to incorrect amounts

Remote's 2024 Global Payroll Report reveals that 50% of employees have experienced payroll errors within the last two years​. These errors‌ — ‌whether underpayment, late payment, or incorrect deductions‌ — ‌create immediate and long-term financial stress.

Nearly 50% of employees feel stressed or anxious when they experience payroll errors, with almost 40% reporting that late payments have caused them to miss important payments, such as rent or bills​. 

The financial fallout from these mistakes extends beyond just inconvenience‌ — ‌it pushes employees into overdrafts, accrues interest on unpaid bills, and disrupts their personal financial planning.

When employees don’t receive what they’ve earned, it leaves them feeling undervalued and vulnerable. The economic instability caused by these payroll mistakes can be especially damaging today, when inflation is high and many workers live paycheck to paycheck. 

If payroll errors pile on top of existing financial worries, employees may become increasingly disillusioned, viewing their employer as unreliable or indifferent to their struggles. The only way to prevent that from happening is to get payroll right for every person, every time, and to correct errors swiftly and completely when they appear.

Salary remains the most important factor

Salary remains the primary motivator for most employees. Expecting the team just to be happy to be there is an unrealistic expectation. 

Across the board, employees increasingly feel that they are not being paid enough, a sentiment amplified by skyrocketing living costs and inflation. Wage growth has not kept pace with rising expenses, leaving many workers struggling to cover basic needs like housing, healthcare, and food.

A 2023 study by the Pew Research Center revealed that 62% of Americans believe their wages are falling behind inflation, a concern echoed globally as the cost-of-living crisis continues to erode purchasing power. This growing financial strain has intensified demands for higher wages and better compensation packages, with many workers citing pay dissatisfaction as a major factor in job dissatisfaction and quiet quitting trends.

Remote’s 2024 Global Payroll survey data confirms this‌ — ‌salary is consistently ranked as the most important factor influencing job satisfaction​. Yet, payroll errors, especially when they lead to underpayment or late payments, send the message that companies don’t prioritize getting this critical factor right. 

If the general sentiment is “I’m not being paid enough,” and the amount an employee already feels isn’t enough doesn’t hit their bank account on time, or if they’re incorrectly paid even less than what they’ve earned, that employee isn’t likely to feel patient or understanding. They may start looking for other jobs or putting in less effort at work because they don’t feel the work they do is appreciated, at least financially.

Payroll errors devalue employee efforts, and they notice

Employees who experience repeated errors in their pay are more likely to become disengaged from their work, which is no surprise. Even if they don’t leave their jobs, they may “quiet quit” by showing up for work but doing the bare minimum, no longer motivated to innovate or progress to the next level. 

Not everyone wants to keep climbing the company ladder. It’s fine if employees want to stay at their current level and meet their normal goals. That’s not what quiet quitting is. This is about something more insidious: a disdain for the company that leads to absolute minimum effort, a situation that can go on for years before someone notices that things are not going as well as they should be.

For employers, disengagement can be more damaging than turnover, as it results in reduced productivity and a workforce that is physically present but mentally checked out.

Unhappy staff are less likely to reveal they’ve been overpaid 

While overpayment errors may seem like a fortunate accident from the employee's perspective, the reality is more complex. Remote’s 2024 Payroll Report found that many employees, especially those who are already disillusioned with their employer, won’t go out of their way to report overpayments​.

Even a happy employee may be inclined to keep an overpayment — ‌human nature may simply see it as free money, until told otherwise. However, unhappy employees are more likely to stay quiet and keep the money. Remote’s data shows that nearly a quarter of employees who harbor negative feelings toward their employers would keep overpaid funds, and it’s not hard to see why. Not treating employees with respect (by paying them correctly and on time) doesn’t incentivize them to help.

Employees know they might not get away with keeping an overpayment, and they know that reporting an overpayment means paying back the extra funds. To many, it’s worth the risk, and to those who have experienced payroll errors, the reward outweighs the danger.

Are British workers the most dissatisfied at work?

Cultural differences by location play a role in how employees handle overpayment mistakes. Employees based in the UK are the most likely to keep overpaid funds, compared to their counterparts in the US and Germany​. 

This highlights a significant cultural factor, where British workers are less likely to return overpayments unless prompted by their employer. This reluctance might stem from a number of factors: cultural attitudes toward confrontation; a simple lack of loyalty when trust has been eroded by repeated payroll errors; or a general sense of resentment over wage stagnation.

According to data shared exclusively with BBC Panorama in 2023, 15 years of stalling wage growth in the UK has left British workers £11,000 a year worse off.

Gen Z faces more payroll errors and calls them out more often

Payroll errors disproportionately affect younger workers, those from Gen Z. More than 70% of employees aged 16-25 have experienced a payroll error within the last two years, a rate significantly higher than their older colleagues, according to Remote’s data. They are also more likely to keep overpayments and more likely to raise issues regarding underpayment or late payments.

This trend could be attributed to the entry-level or more flexible roles typically held by younger workers, where administrative oversight or complex pay structures may result in higher error rates. However, Gen Z workers also tend to be more open than their older counterparts about how much they make, indicating this trend could continue even as younger workers age out of entry-level roles. 

Many employees find their paychecks confusing

Remote’s data also shows that Gen Z workers are less likely to check their paychecks for accuracy than workers from older generations. Either they don’t see the point, or they don’t fully understand how to read their detailed paychecks using their companies’ payroll software.

Not everyone is a personal finance wizard. Even people who are diligent about saving and spending don’t always know what all the different sections and deductions in their checks mean. 

People can’t spot errors in payslips if they don’t know what to look for, and they certainly can’t spot errors if they don’t know how to access their checks in the first place. Companies can rectify this by showing employees how to navigate payroll and HR systems. Not all optional HR training sessions boast strong attendance, but ask anyone who works in payroll and they will tell you: nothing interests employees more than learning about their money.

Not everyone handles payroll mistakes quietly

Despite facing a higher rate of payroll errors, unlike older generations, Gen Z employees are less likely to suffer in silence. They are far more vocal about payroll discrepancies, with a significant number taking their frustrations public, including on social media platforms.

This generational shift suggests that younger employees not only expect but demand a higher level of transparency and accountability from their employers, and they are not afraid of the backlash of taking the issue public. This is part of a bigger shift toward openness and transparency, factors younger workers value highly. To the new generation at work, no company is safe from criticism, even a company they otherwise like.

If employers know their workforces will not suffer payroll errors quietly, and if payroll errors have so many negative consequences internally, fixing and preventing those errors must become a top priority.

How timely, precise, accurate payroll improves team wellbeing

Payroll accuracy is about more than just avoiding errors: it’s a fundamental pillar of employee trust and wellbeing. Good pay is the basic exchange of employment: a person works, the company pays for the work.

When payroll runs smoothly, employees feel secure and valued, knowing that their work is recognized and compensated fairly. This security fosters a more engaged and motivated workforce, as employees feel less stress and anxiety caused by financial uncertainty.

Running payroll with precision, speed and accuracy

Remote’s research stresses that the majority of payroll errors happen because of human error, such as incorrectly logged hours or miscalculations by payroll staff​. Companies that invest in robust payroll systems, leveraging automation and digital tools, can drastically reduce the frequency of these mistakes.

Offering transparency through easy-to-use employee portals where workers can access and verify their pay in real time helps build trust. Employees are more likely to engage with and feel confident in their paychecks when they know they have easy access to clear information.

Learn more about Remote Payroll

Timely and precise payroll practices positively impact mental health. Employees who don’t have to worry about underpayment or late payments are more likely to focus on their work and contribute meaningfully to an organization. This, in turn, leads to higher productivity, lower turnover rates, and a positive workplace culture.

What type of payroll errors are impacting workers regionally?

Employees in the US report the highest rates of payroll problems, with nearly 60% saying they’ve experienced errors within the last two years compared to 45% in the UK and 50% in Germany​. The nature of these errors varies — underpayment is more common in the US, while incorrect deductions are the most frequent problem in Germany​ (as Germany has many strict laws regarding employee payroll and social contributions, this is not shocking).

Understanding regional nuances is essential for global companies who want to be proactive about improving payroll processes across multiple locations.

In the UK, workers’ reluctance to return overpayments highlights the importance of fostering trust and ethical behavior through consistent, accurate payroll practices. American employees, who are quicker to report both underpayment and overpayment issues, may benefit from companies taking faster action to resolve payroll discrepancies.

Reduce payroll errors to increase retention and morale 

Whether it’s underpayment, late payment, or overpayment, payroll mistakes create significant stress and erode trust between employees and their employers. For employees already feeling the financial pressure from rising living costs, even small payroll mistakes can have long-lasting effects on morale and engagement. When trust erodes, the likelihood of quiet quitting increases, as disengaged employees are less motivated to be creative, innovative and proactive. 

Timely, precise, and accurate payroll is essential and non-negotiable. Investing in automated systems, improving transparency, and being switched on to regional differences in payroll practices can help companies build a more engaged and happy workforce. Addressing payroll errors promptly and minimizing their frequency with smoother payroll runs helps create trusting, motivated teams — and getting payroll right is easier than you think. Check out Remote’s international payroll processing guide for more tips.