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2024 state of payroll report — hidden costs of payroll mistakes
Discover the forces shaping payroll's future, informed by insights from over 2,500 professionals and 1,300 HR decision-makers around the world. Download the full report to learn how to make payroll work for your organisation. Inside you will find:
- The most common mistakes and how to avoid these risks
- The impact of payroll mistakes on 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 small annoyance for an employee — it can have a tangible effect on daily life, from paying bills and arranging family commitments to even socialising. Beyond the financial consequences, payroll errors can hit an employee’s morale and mental health just as hard.
As 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 problems or inconsistencies in the payroll process — for example, incorrect pay, worker misclassification, or mismatches in tax subsidies.
At Remote, we regard payroll not merely as a basic admin task — it’s a critical HR function for every organisation, essential for building trust, maintaining morale and keeping people motivated. Errors and a lack of transparency around payroll create uncertainty, raise stress levels and damage the relationship between employers and their teams.
To measure the state of global payroll and the real effect payroll problems can have on employees worldwide, we surveyed more than 2,500 professionals across various demographics and sectors in the UK, US, and Germany, along with over 1,300 HR decision-makers responsible for payroll.
In what ways do payroll issues really affect employers and their employees? Let’s dig into 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
Over half of employees have experienced 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% said it happened only once, while more than 18% had at least three payroll mistakes in that year — with younger workers (aged 16-24) recording the highest incidence of errors.
Our survey of HR decision-makers showed that 7 in 10 organisations (71%) that outsource payroll reported improved accuracy, but employers shouldn’t assume precision is guaranteed — nearly half (49%) of HR teams spend five or more hours each month resolving pay-related issues, especially in larger organisations.
Which groups are most likely to encounter a payroll error?
Payroll errors are more common among younger employees. Over 70% of 16-24-year-olds surveyed reported a payroll error in the past two years, compared to just 30% of those aged 55 and over. Gen Z workers are also less likely to check their payslips (47% don’t check theirs every month); the higher error rate may reflect less stability — younger staff typically change roles more often, for example.
Payroll mistakes are more common in US workplaces. US workers are 26% more likely than their UK counterparts to experience a payroll error, with a quarter of employees in the US reporting a payroll issue in the past three months. Higher pay frequency may be one factor (most Americans are paid every two weeks) along with a notoriously complex US tax system.
Remote workers are less likely to encounter payroll issues. Perhaps surprisingly, only 17% of fully remote employees reported a payroll error in the past three months, compared with 22% of workers in hybrid and fully in-person roles. While fully remote staff check payslips less often (41% don’t check theirs every month, versus 31% of in-person workers), it may be that remote-first companies have, out of necessity, stricter and more reliable payroll systems in place.
The survey also found that underpayment is the most common payroll issue. Of those who’d experienced a payroll error, 42% reported that they’d been underpaid, while almost a quarter (24%) had received a late payment. Overpayment was the issue in roughly 1 in 10 cases.
In the case of late payment, the majority of issues are resolved within a week (60% of those who reported receiving a late payment said their wages came through within seven days). However, some people waited longer — around 18% were left waiting for more than two weeks, and almost 7% experienced a delay of one month or more.
Read the full report and learn how to reduce payroll errors
What happens when payroll goes wrong? Download our State of Payroll Report to discover the impact of payroll errors on employees and learn how to minimise your risk.
Stress and anxiety are the primary effects of payroll mistakes
Among the 53% of employees who had faced at least one payroll error, almost a quarter (24%) reported a delayed payment as one of the problems they experienced.
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 common. Nearly two-thirds of respondents said late payslips led them to make late payments for banknotes and rent, or pushed them into their overdraft.
"Payroll affects people, and it’s an emotional thing. It has a significant impact on the morale of the employees in the organisation. 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 comparison, our survey of HR decision-makers found that although 95% of employers accept payroll discrepancies affect employees, fewer than a quarter (24%) consider the impact significant impact. A larger share (30%) say the impact is either small or non-existent — indicating a likely gap between how employees and HR leaders view payroll issues.
Who is most affected by payroll mistakes?
Women are more likely to suffer payroll-related anxiety. Female employees feel the emotional effect of payroll errors more strongly than males, with over half (52%) of women reporting stress and anxiety as a result of a late payment, compared to 42% of men.
Younger generations are more likely to feel stress from late payments. Staff aged 55+ report the least stress from payroll mistakes (just 25% feel emotionally impacted), whereas over half (53%) of those in the 35-44 age range say they feel stressed or anxious — perhaps reflecting greater financial and family responsibilities.
Employees in the US are more anxious about payroll mistakes. While US workers not only face payroll issues more often, they also report higher stress or anxiety from mistakes. 56% of US employees reported feeling high levels of stress caused by a late payment, compared to 35% of the UK workforce.
Remote workers show higher stress levels over delayed payments. Perhaps due to greater isolation when problems arise, two-thirds (66%) of remote employees say delayed wage payments have caused them stress. This compares with 51% of hybrid workers and 44% of in-house staff.
Payroll errors can strain 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 a reputational risk for companies when payroll mistakes happen. When asked what they’d do if a payroll error resulted in their being underpaid, over a fifth of employees (21%) said they’d either “make a complaint” or “post about it on social media,” which could have wider repercussions 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 do payroll issues affect employee-employer relations?
Increased caution and reduced trust are the likeliest negative outcomes. Almost a third (32%) of employees who went through a payroll mistake said it made them more cautious of their employer or reduced their trust. Just over 1 in 10 said they’d be more hesitant to raise issues going forward.
Younger employees are more likely to view their employer negatively after a payroll issue. 71% of employees aged 16-24 reported a negative shift 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 employee-employer relations.
Remote workers are less likely to alter their view of their employer after a payroll error. 60% of remote workers reported no change in their relationship with their employer, which may reflect greater trust in payroll tools to fix issues or less face time with managers and payroll staff.
UK employees are more likely to change their view of their employer because of a payroll mistake. Just under 50% of UK-based employees said their relationship with their employer stayed the same, compared to 53% in the United States and 64% in Germany — where workers are less likely to form a negative view of the company.
Overpayments create risks for 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.
Our survey asked employees what they would do if a payroll mistake resulted in them being overpaid, up to several different amounts. While in all situations most respondents said they’d tell their employer (on average, 61% would do so regardless of the overpayment amount), 5% of employees would spend the money without consideration.
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 least likely to notify their employer if overpaid. Just over a third (35%) of 16-24-year-olds would notify their employer about an overpayment up to $100, while 23% said they’d return the money only if asked. Older groups were more forthcoming, with 67% of those aged 55+ saying they’d tell their employer.
Employees are likelier to keep overpaid wages if they dislike their employer. 23% would keep money paid in error if they didn’t like their employer, compared with 13% of those satisfied with their employer — showing how company culture influences payroll behaviour and perceptions of benefits.
Employees are more likely to return money if asked by their employer. In every case, on average 13% of employees would return an overpayment if their employer asked, versus an average 9% who would return it without prompting. This emphasises the responsibility on employers to spot overpayments.
Payroll insights by country and sector
Our major study into global payroll in 2024 captures the views of employees and HR decision-makers across several countries and industries, showing how those most affected view payroll operations today.
We surveyed 2,539 working professionals in the United Kingdom, Germany, and the United States.
We also collected opinions from 1,352 HR decision-makers responsible for payroll in the United Kingdom, Germany, France, the Netherlands, and the United States.
The survey reveals key insights like how often payroll mistakes occur, their impact on employees, and the steps employers are taking to reduce them.
Read the full report and learn how to reduce payroll errors
What are the consequences of payroll mistakes? Our State of Payroll Report outlines how payroll errors affect employees and sets out practical ways to minimise your risk.
Employers should regard payroll as more than a back-office task
Our research exposes the concrete fallout from mishandled payroll. The financial consequences for employees can be serious — such as overdue rent or missed bank payments, for example — but employers must realise that the emotional impact of a serious payroll discrepancy is often felt even more acutely.
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.
That’s why, in Jonathan Goldsmith’s view, employers need to recognise payroll as far more than a mere administrative task:
"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 know more about how employees and HR decision-makers view payroll's importance? Download the full State of Payroll Report for extensive insights into typical causes of payroll issues, the effects on employees and business operations, and the benefits of outsourcing payroll for organisations.
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