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State of payroll report 2024: the hidden costs of payroll mistakes
Discover the forces shaping payroll’s future, based on input 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. Here’s what you’ll find inside:
- The most frequent payroll mistakes and how to avoid these risks
- How payroll errors affect productivity, morale, and even staff retention
- Guidance on shifting payroll into a strategic business function
Download now · research: impact of payroll mistakes
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From missed pay to the wrong amount, many people will have dealt with a payroll error at some point. But what are the real consequences for those affected?
A payroll problem is often far more than a petty annoyance for an employee — it can disrupt bill payments, family plans, and social life. Beyond the financial consequences, payroll mistakes can equally undermine morale and mental well-being.
As Jonathan Goldsmith, Remote’s VP of Payroll, explains, “Pay is about life as much as it is about work. When wages are processed incorrectly, people can struggle to support themselves and their families. It can disrupt holiday plans or prevent saving for things like tuition or a future home.”
Payroll issues cover any discrepancy or failure in the payroll process, including incorrect pay, misclassification of staff, or tax and subsidy mismatches.
At Remote, we regard payroll as more than routine administration — it’s a core HR capability that builds trust, protects morale, and fuels motivation. Errors and opaque payroll practices create uncertainty, anxiety, and strain the employer‑employee relationship.
To assess the global state of payroll and measure how payroll problems affect employees internationally, we surveyed more than 2,500 professionals across various sectors in the UK, US, and Germany, plus over 1,300 HR decision-makers responsible for payroll.
How do payroll issues really affect employers and their staff? Let’s explore the data.
Emphasising the need for accuracy and openness, our survey reveals how payroll errors harm both employees and employers. Inefficient payroll not only damages relationships but also creates major operational chokepoints.
"Payroll is a fundamental HR responsibility and must centre on people. Maintaining this focus is essential to prevent an erosion of trust and to preserve a company’s reputation among employees." - Jonathan Goldsmith, VP of Payroll at Remote
More than half of employees have encountered payroll problems
Fifty‑three percent of surveyed employees reported experiencing a payroll issue during their career, and half of those had at least one incident within two years of the survey. Forty percent saw an error in the past year, and almost 11% faced a mistake in the last month.
Among respondents who had a payroll error in the past year, 43% dealt with a single incident, while over 18% reported three or more mistakes in a twelve‑month period — with the highest frequency observed among younger workers aged 16–24.
Although 71% of organisations that outsource payroll told us accuracy improved, employers should not assume flawless results — nearly half (49%) of HR teams spend five or more hours each month fixing pay issues, especially within larger firms.
Who is most likely to face a payroll error?
Younger employees tend to experience payroll errors more often. More than 70% of 16–24‑year‑olds in the survey reported a payroll error in the last two years, versus roughly 30% of those aged 55 and over. Gen Z checks pay less regularly (47% don’t review monthly), and their higher error rate may stem from greater job mobility and less role stability.
Payroll mistakes happen more often in US workplaces. American employees are 26% likelier to report a payroll error than UK workers, with one in four US staff citing an issue within the past three months. More frequent pay cycles (many Americans are paid biweekly) and a complex US tax system are likely contributors.
Fully remote employees report fewer payroll issues. Interestingly, only 17% of fully remote workers experienced a payroll error in the last three months, compared with 22% of hybrid and 22% of in‑office staff. Remote employees check pay less often (41% don’t check monthly vs 31% of in‑person workers), but remote-first organisations may have stricter systems that reduce mistakes.
The research also shows that underpayment is the most frequent payroll problem. Of those affected, 42% said they were underpaid, nearly 24% reported late payments, and overpayments accounted for about one in ten incidents.
When pay is delayed, most cases are settled within a week (60% of employees who reported late pay said wages arrived within seven days), but roughly 18% waited longer than two weeks and nearly 7% faced delays of a month or more.
Stress and anxiety are the primary consequences of payroll mistakes
Of the 53% of employees who had faced at least one payroll error, almost a quarter (24%) cited delayed payment as one of their problems.
Participants said the top personal impact of late pay was “stress and anxiety” (47%). “Family pressure” ranked third (23%), underlining that the emotional fallout from delayed wages can match the financial harm.
Financial strain is also common. Nearly two‑thirds of respondents said late pay led to missed 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 acknowledge payroll discrepancies affect employees, fewer than a quarter (24%) believe the impact is significant. A larger portion (30%) think payroll issues have a small or no impact, highlighting a potential gap between employees’ experiences and HR leaders’ perceptions.significant impact. A greater number (30%) feel they have either a small impact or no impact at all — highlighting a potential disconnect in the perceived impact of payroll issues between employees and HR leaders.
Who is most affected by payroll mistakes?
Women are more likely to feel anxiety linked to payroll issues. The emotional impact of payroll mistakes appears stronger among female employees, with 52% of women reporting stress and anxiety after a late payment versus 42% of men.
Younger age groups show greater stress from late payments. Employees aged 55 and over report the least emotional impact (only 25% feel affected), while 53% of those aged 35–44 said they felt stressed or anxious — possibly because of greater financial and family responsibilities.
US workers experience more anxiety about payroll mistakes. Not only are American employees more likely to face payroll errors, they also report higher stress levels as a result: 56% of US respondents felt significant stress from late pay versus 35% in the UK.
Remote employees report greater stress around delayed wages. Possibly due to isolation when issues occur, two‑thirds (66%) of remote workers said delayed pay caused them stress, compared with 51% of hybrid staff and 44% of in‑house employees.
Payroll errors can harm employee‑employer relations
Another major effect of payroll mistakes is a deterioration in trust between employer and employee. While a slight majority of employees said relations remained unchanged after an error, 42% reported some decline in their view of their employer.
There’s also reputational risk for companies. When asked how they would react to being underpaid because of a payroll error, over one in five employees (21%) said they would either lodge a complaint or post about it on social media, which could have broader 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 survey of HR decision-makers shows a possible misalignment: almost 24% prioritised faster payments as the top payroll function they want, while fewer (21%) placed reducing errors high on the list — suggesting employers may underappreciate the full effects of payroll mistakes.
How do payroll problems affect employee‑employer relations?
Heightened caution and reduced trust are the most likely negative outcomes. Almost a third (32%) of employees who experienced a payroll error said it made them more cautious of their employer or lowered their trust. Slightly more than 10% said they’d be less likely to raise issues in future.
Younger staff are more likely to view their employer negatively after a payroll error. Seventy‑one percent of employees aged 16–24 said their relationship with their employer worsened after a payroll mistake. In contrast, almost 65% of those aged 45–54 reported no change.
Remote employees are less likely to alter their opinion of their employer after a payroll error. Sixty percent of remote workers reported no change in their relationship with their employer, perhaps because they trust the payroll systems to fix issues or have less direct contact with leaders and payroll staff.
UK employees are more likely to change their view of their employer following a payroll mistake. Just under 50% of UK respondents said their relationship with their employer remained the same, compared with 53% in the US and 64% in Germany — where staff are least likely to form a negative impression of the company.
Overpayments present a risk to employers
Although underpayment is most common, roughly 10% of pay errors involve overpaying an employee. Recurrent unnoticed overpayments can pose a material financial risk to organisations.
We asked employees how they would respond to being overpaid by various amounts. In most cases, respondents said they would inform their employer — on average 61% would do so regardless of the sum — yet about 5% would spend the funds without thought.
More than one in ten (11%) said they wouldn’t notice an overpayment of $100 or less, and that share fell as the amounts increased. This is influenced by the fact that over a third (34%) of employees don’t inspect their payslips each time, which highlights the hidden financial exposure from undetected mistakes.
“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.”
How would employees act if they were overpaid?
Women are more likely than men to report an overpayment to their employer. Fifty‑eight percent of women said they would inform their employer about an overpayment up to $100, compared with 55% of men. However, more women than men (13% vs 9%) also said they would not notice such an overpayment.
Younger people are least likely to report being overpaid. Only about a third (35%) of 16–24‑year‑olds would tell their employer about an overpayment up to $100, with 23% saying they would return the money only if asked. Older employees were more likely to be forthcoming, with 67% of those aged 55+ indicating they would report it.
Employees are likelier to keep overpaid wages if they dislike their employer. Twenty‑three percent would keep mistakenly paid money if they didn’t like the company, compared with 13% among those satisfied with their employer — underscoring how company culture influences behaviour.
Employees are more likely to return overpaid funds if their employer asks for them. Across scenarios, an average of 13% of employees said they would return an overpayment if requested by their employer, versus 9% who would do so without being prompted. This highlights employers’ responsibility to detect and address overpayments.
Payroll insights by country and sector
Our comprehensive study of global payroll in 2024 captures the views of employees and HR decision-makers across several countries and industries, revealing how affected groups perceive current payroll practices.
We surveyed 2,539 working professionals in the United Kingdom, Germany, and the United States.
We also collected responses 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 findings such as how often payroll mistakes occur, their effects on employees, and employer strategies to reduce them.
Employers must treat payroll as more than a back‑office activity
Our research highlights the tangible consequences of poor payroll practices. The financial fallout for employees can be severe — such as missed rent or bill payments — but the emotional impact of a major payroll error can be even more profound.
The financial and emotional effects are often linked — the prospect of missing a scheduled payment or being unable to afford essentials is typically a source of stress and anxiety, particularly for younger people who may have less financial stability and more family commitments. This does not alter the fact that late wages can damage employees’ mental health.
That is why, as Jonathan Goldsmith explains, employers should acknowledge payroll’s strategic role:
“Payroll is a highly strategic asset. If you’re treating payroll as a back office function, you’re already behind the times. Payroll is a mechanism to help recruit employees and give them a good experience. If you don’t provide them insight into what they’re getting paid, how they’re getting paid, and why they're getting paid that way, you’re doing a disservice to your employees.”
We’ve shown trust erosion as one effect of payroll errors (more than 15% of employees said an issue reduced their trust), but the business impact can be broader: faulty payroll lowers motivation, reduces productivity, and can hinder hiring and retention of top talent.
“Many companies say, ‘We pay our employees well’,” but that claim is meaningless if pay isn’t accurate at the point of payment. That’s an often overlooked reality.”
Want to learn more about employee and HR views on payroll’s importance? Download the full State of Payroll Report for in‑depth analysis on common causes of payroll errors, their effects on staff and operations, and how outsourcing payroll can benefit organisations.
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