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2024 state of payroll report: the hidden costs of payroll mistakes
See what's shaping the future of payroll, drawn from insights by more than 2,500 professionals and 1,300 HR decision-makers worldwide. Download the full report to learn how to make payroll work for your organisation. Inside you'll find:
- The most common mistakes and how to avoid these risks
- How payroll mistakes affect productivity, morale and staff retention
- Advice on turning payroll into a strategic business function
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Whether it’s a late payment or an incorrect pay packet, most of us have likely dealt with a payroll error at some point. But what are the real consequences for those affected?
A payroll problem is often more than a minor inconvenience — it can have a tangible effect on an employee’s life, disrupting bill payments, family plans and even their ability to socialise. Beyond the financial consequences, payroll mistakes can also take a serious toll on an employee’s morale and mental wellbeing.
Jonathan Goldsmith, Remote’s VP of Payroll, explains:“Pay is not about work, it’s about life. Getting paid incorrectly can stop you from being able to take care of your family and yourself. It might affect your holiday plans, or mean you’re unable to save for future things such as school fees or even a new home.”
Payroll issues cover any problem or inconsistency within the payroll process, including pay errors, misclassification and discrepancies in tax subsidies.
At Remote, we view payroll as more than a straightforward administrative task — it’s a core HR function for every business and vital for building trust, maintaining morale and driving motivation. Errors and a lack of transparency around payroll can create uncertainty, anxiety and damage relationships between employers and their people.
To gauge the state of global payroll and measure the real effects payroll problems have on employees around the world, we surveyed more than 2,500 professionals across different demographics and sectors in the UK, US and Germany, along with over 1,300 HR decision-makers responsible for payroll.
How do payroll issues genuinely affect employers and their staff? We’ll look at the data.
Emphasising the need for accuracy and openness, our survey reveals how payroll mistakes can harm both employees and organisations. Inefficient payroll not only damages relationships but also causes operational bottlenecks.
"Payroll is a core HR function that should be viewed as inherently people-centric. This is crucial in avoiding an erosion of trust and helping businesses maintain a strong reputation and standing among employees." - Jonathan Goldsmith, VP of Payroll at Remote
More than half of employees have faced payroll issues
Fifty-three per cent of employees surveyed had faced a payroll issue during their career, with half of those seeing at least one problem within two years of the survey. Forty per cent reported an error in the past year, and almost 11% had experienced one in the last month.
Among respondents who reported a payroll error in the past year, 43% had just one incident, while over 18% experienced at least three payroll mistakes in a single year — with the highest rates among younger workers (aged 16–24).
Our survey of HR decision-makers shows 7 in 10 organisations (71%) that outsource payroll report improved accuracy, yet precision cannot be taken for granted — almost half (49%) of HR teams spend five or more hours each month fixing pay-related issues, especially in larger organisations.
Who is most likely to experience a payroll error?
Younger employees are more likely to experience a payroll error. More than 70% of 16–24-year-olds surveyed reported a payroll error in the past two years, compared to around 30% of those aged 55 and over. Gen Z workers are less likely to check their payslips (47% don’t check them each month), and the higher error rate may partly reflect lower job stability — younger people typically change roles more often.
Payroll mistakes are more common in US workplaces. US employees are 26% more likely to experience a payroll error than their UK counterparts, with a quarter of American workers reporting a payroll problem in the last three months. More frequent pay cycles (many Americans are paid fortnightly) combined with thecomplex US tax system may contribute to the higher error rate.
Remote workers are less likely to encounter payroll issues. Perhaps surprisingly, fewer fully remote employees (17%) reported a payroll error in the past three months than those in hybrid or fully in-person roles (both 22%). While remote-only workers check their payslips less often (41% don’t check monthly, versus 31% of on-site workers), fully remote companies may have stricter, more reliable systems in place out of necessity.
The survey also found that underpayment is the most common payroll issue. Of those who’d experienced a payroll error, 42% reported being underpaid, nearly a quarter (24%) experienced a late payment, and overpayment was the issue in roughly one in ten cases.
In the case of late payment, the majority of issues are resolved within a week (60% of those who reported a late payment said their wages arrived within seven days), but some had to wait longer — around 18% waited more than two weeks, with almost 7% experiencing delays of a month or more.
Stress and anxiety are the main consequences of payroll mistakes
Among the 53% of employees who’d encountered at least one payroll error, nearly a quarter (24%) reported payment delays as one of the issues they faced.
Respondents said the most common effect of late pay was “stress and anxiety” (47%). “Family pressure” was the third most common (23%), showing emotional fallout often matches the financial harm of late wages.
Financial pressure is also frequent: almost two-thirds said late pay caused them to miss bill or rent payments or pushed them into overdraft.
"Payroll affects people, and it’s an emotional thing. It has a significant impact on the morale of the employees in the organization. After all, if an employee doesn’t get paid correctly, or they don’t get the pay they expect, this could result in them missing a medical payment or something equally as vital.” - Jonathan Goldsmith, VP of Payroll at Remote
By contrast, our survey of HR decision-makers found that while 95% of employers accept payroll discrepancies affect employees, fewer than a quarter (24%) believe the effect is significant — and a larger share (30%) say the impact is small or negligible, revealing a potential gap between employees’ experiences and HR leaders’ perceptions.
Who is most impacted by payroll mistakes?
Women are more likely to experience payroll-related anxiety. The emotional effects of payroll errors are felt more strongly by female employees than male employees, with over half (52%) of women reporting stress and anxiety from a late payment, compared with 42% of men.
Younger generations are more prone to stress caused by late payments. Employees aged 55 and over report the least stress when payroll mistakes occur (just 25% feel emotionally affected), whereas more than half (53%) of those aged 35–44 report feeling stressed or anxious — likely due to greater financial and family commitments.
Employees in the US are more anxious about payroll mistakes. US workers not only face payroll issues more often, they also report higher stress — 56% of US employees said a late payment caused high levels of stress, compared with 35% in the UK.
Remote workers have higher stress levels around delayed payments. Perhaps because they can feel more isolated when problems occur, two-thirds (66%) of remote employees say delayed wages have caused them stress. This compares with 51% of hybrid workers and 44% of in-house employees.
Payroll errors can harm employee–employer relations
Payroll mistakes can erode trust between employer and employee. While over half of employees said their relationship with their employer was unchanged after an issue, 42% reported some deterioration.
There’s also reputational risk if payroll mistakes happen. When asked what they’d do after being underpaid, over a fifth of employees (21%) said they would either “make a complaint” or “post about it on social media,” which could have wider consequences for the business.
“There are functions within a company like payroll that work for the employee, and they need to remember that and own the impact. The after-effects of poorly running payroll to a business are factors like retention, sentiment, and motivation — those are really big things.” - Jonathan Goldsmith, VP of Payroll at Remote
Our HR decision-maker survey shows a disconnect: almost a quarter (24%) see faster payments as the top capability they want from payroll. Error reduction (21%) ranks sixth, suggesting employers may underestimate the true impact of payroll mistakes.
How are employee-employer relations impacted by payroll issues?
Increased caution and reduced trust are the most likely negative outcomes. Almost a third (32%) of employees who experienced a payroll mistake said it made them more cautious of their employer or reduced their trust. Just over one in ten said they’d be more reluctant to raise issues in future.
Younger employees are more likely to have a negative opinion of their employer due to a payroll issue. 71% of employees aged 16–24 reported a negative change in their relationship with their employer after a payroll error. By contrast, almost two-thirds (65%) of those aged 45–54 said there was no change in their employee–employer relationship.
Remote workers are less likely to change their opinion of their employer following a payroll error. Sixty percent of remote workers experienced no change in their relationship with their employer, which may reflect greater confidence in payroll tools to correct mistakes or simply less exposure to leaders and payroll staff.
UK employees are more likely to change their opinion of their employer because of a payroll mistake. Just under 50% of UK-based employees said their relationship with their employer had stayed the same, compared to 53% in the United States and 64% in Germany — where employees are less likely to develop a negative opinion of their employer.
Overpayments present a risk to businesses
Although underpayment is most common, around 10% of pay errors result in overpayment. Repeatedly missed overpayments can create a substantial financial exposure for employers.
We asked employees what they would do if a payroll mistake resulted in an overpayment, across different amounts. While in all scenarios most respondents said they’d tell their employer (on average, 61% would do so regardless of the amount), 5% admitted they would spend the money without thinking.
More than one in ten (11%) said they wouldn’t notice an overpayment of $100 or less, with that share falling as amounts increased. This is influenced by the fact that over a third (34%) don’t check their payslips each time — highlighting the hidden financial risk of unnoticed errors.
“There can be a misconception among employees that an overpayment in your pay packet amounts to “free” money”, says Jonathan Goldsmith. “But employers have a legal right to reclaim any wages that have been overpaid. Businesses must be quick to identify and rectify these mistakes, meaning payroll vigilance and accuracy are key.”
What would employees do when overpaid?
Women are more likely to tell their employer about an overpayment than men. 58% of women would inform their employer if a payroll error resulted in them being overpaid up to $100, compared to 55% of men. However, more women than men (13% vs 9%) also said they wouldn’t notice if they’d been overpaid.
Young people are the least likely to inform their employer they’ve been overpaid. Just over a third (35%) of 16–24-year-olds would notify their employer about an overpayment up to $100, with 23% saying they’d return the money only if requested. Older age groups were more likely to be honest, with 67% of those aged 55+ saying they’d tell their employer.
Employees are more likely to keep overpaid wages if they don’t like their employer. 23% would opt to keep money mistakenly paid if they didn’t like the company they worked for, while 13% of those satisfied with their employer would do the same — highlighting how company culture influences payroll behaviour and perceptions of benefits.
Employees are more likely to return money if asked by their employer. Across scenarios, an average of 13% of employees said they would return an overpayment if requested by their employer, compared with an average of 9% who would do so without being asked. This underlines the onus on employers to be vigilant in spotting overpayments.
Payroll insights by country and sector
Our leading study into the state of global payroll in 2024 reflects the views of employees and HR decision-makers across multiple countries and industries, revealing how those most affected feel about payroll operations today.
We surveyed 2,539 working professionals in the United Kingdom, Germany and the United States.
We also gathered the views of 1,352 HR decision-makers responsible for payroll in the United Kingdom, Germany, France, the Netherlands and the United States.
The survey reveals key findings such as how often payroll mistakes occur, the effects on employees, and what employers are doing to mitigate them.
Employers should treat payroll as more than a back-office task
Our research highlights the tangible consequences of getting payroll wrong. The financial fallout for employees can be significant — for example, causing late rent or bill payments — but employers must appreciate that the emotional impact of a serious payroll discrepancy can be even more acute.
The financial and emotional effects are often linked — the risk of missing a planned payment or not affording essentials causes stress, especially for younger people with less financial stability. Late wages can therefore harm mental health.
This is why, as Jonathan Goldsmith outlines, employers must recognise that payroll is more than just an administrative function:
"Payroll is a strategic asset. If you treat payroll as a back‑office role, you’re already behind the times. Payroll plays a part in attracting people and shaping their experience. If you don’t give them clear information about what they’re paid, how they’re paid and why those amounts are set that way, you’re doing your employees a disservice."
We’ve noted trust erosion as a consequence of payroll errors (more than 15% of employees said an issue reduced their trust), but payroll failures can also lower motivation, harm productivity and hinder talent attraction and retention.
“A lot of companies say, ‘We pay our employees well’,” but this doesn’t matter if they’re not paying them correctly at the end of the day. That’s an important thing to remember, and I think it gets forgotten a lot.”
Want to find out more about what employees and HR decision-makers think about the importance of payroll? Download the full State of Payroll Report for extensive insights into the common reasons for payroll issues, the impact on employees and business operations, and the benefits of outsourcing payroll for organisations.
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