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Report: 2024 state of payroll — the hidden costs of payroll mistakes
Discover the forces shaping the future of payroll, built on insights from over 2,500 professionals and 1,300 HR decision-makers across the globe. Download the full report to see practical ways to make payroll work more effectively for your organisation. Here are the key items you can expect inside:
- The most common mistakes and practical steps to avoid them
- How payroll errors affect productivity, morale, and staff retention
- Practical guidance for making payroll a strategic business function
Download now · Research: impact of payroll mistakes · research/impact-of-payroll-mistakes
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Whether it’s a delayed salary or an incorrect pay packet, many professionals will have faced a payroll error at some point. But how do these mistakes actually affect the people who experience them?
A payroll problem is rarely just an administrative hiccup for the employee — it can disrupt banknote payments, family arrangements and everyday life. Beyond the direct financial hit, payroll mistakes often have a serious effect on staff morale and mental wellbeing.
As Jonathan Goldsmith, Remote’s VP of Payroll, puts it, “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 discrepancy within the payroll process, including pay errors, misclassification, or inconsistencies in tax subsidies.
At Remote, we regard payroll as more than a basic administrative task — it is a vital arm of HR for every organisation, central to building trust, preserving morale and sustaining motivation. Errors and a lack of transparency around payroll can create uncertainty, heighten anxiety and damage relationships between employers and their workforces.
To assess the global payroll landscape and quantify how payroll problems affect employees, we surveyed more than 2,500 professionals across various demographics and sectors in the UK, US, and Germany, and more than 1,300 HR decision-makers responsible for payroll.
How do payroll issues truly affect employers and their employees? Let us examine the data.
Underscoring the need for accuracy and openness, our survey shows payroll errors can have material effects on employees and employers alike. Inefficient payroll not only damages relationships but also creates operational choke points.
"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
53% of the employees surveyed had experienced a payroll issue during their career, with 50% experiencing at least one within two years of the date of the survey. 40% had encountered a payroll error in the past year, while almost 11% had suffered a payroll mistake in the last month alone.
Among those who reported an error in the previous year, 43% said it happened once, yet over 18% experienced three or more payroll mistakes during a single year — with the highest incidence seen among younger workers (aged 16–24).
While our survey of HR decision-makers showed that 7 in 10 organisations (71%) who outsource payroll reported a positive impact on accuracy, employers cannot assume perfect precision — almost half (49%) of HR teams spend five or more hours resolving pay-related issues each month, particularly in larger organisations.
Who is most likely to experience a payroll error?
Younger employees are more likely to experience a payroll error. Over 70% of 16-24-year-olds surveyed encountered a payroll error in the past two years, compared to just 30% of those aged 55 and over. While Gen Z workers are less likely to check their payslips (47% do not check theirs every month) this higher error rate may reflect less employment stability — younger workers typically change roles more frequently, for example.
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 workers in America having encountered a payroll issue in the last three months. A greater frequency of payslips may be a contributing 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, fewer fully remote employees (17%) have experienced a payroll error in the past three months than those in hybrid or fully in-person roles (both 22%). While fully remote workers check their payslips less frequently (41% do not check theirs every month, compared to 31% of in-person workers) it may also be true that fully remote companies, out of necessity, operate more stringent and reliable systems.
The survey also found that underpayment is the most common payroll issue. Of those who had experienced a payroll error, 42% reported that they had 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 were paid within seven days) but some had to wait longer – around 18% were left waiting for more than two weeks, with almost 7% experiencing a delay of one month or more.
Read the full report and learn how to reduce payroll errors
What consequences stem from payroll errors? Download our State of Payroll Report to see how payroll mistakes affect employees and how to minimise your exposure.
Stress and anxiety are the primary consequences of payroll errors
Among the 53% of employees who had encountered at least one payroll error, nearly a quarter (24%) reported a delayed payment as one of the problems they faced.
Survey respondents identified “stress and anxiety” (47%) as the most frequent consequence of a late payment. “Family pressure” was the third most common (23%), underlining that the emotional toll of late payments can be as substantial as the financial one.
Financial strain is also prevalent. Nearly two-thirds of respondents said that receiving late payslips led them to miss payments on banknotes and rent 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 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
In contrast, our survey of HR decision-makers found that although 95% of employers accept payroll discrepancies affect employees, fewer than a quarter (24%) say they have a significant impact. A larger portion (30%) feel payroll issues have either a minor effect or no effect at all — indicating a possible mismatch between how employees and HR leaders perceive payroll problems.
Who is most affected by payroll mistakes?
Women are more likely to experience payroll-related anxiety. Female employees feel the emotional effects of payroll errors more acutely than males, with 52% of women reporting stress and anxiety after a late payment, compared with 42% of men.
Younger employees are more prone to stress caused by late payments. Employees aged 55+ experience the least stress when faced with a payroll mistake (just 25% feel emotionally impacted), while more than half (53%) of those in the 35–44 age range report stress or anxiety — possibly due to having more financial and family-related commitments.
Employees in the US are more anxious about payroll mistakes. While American workers are not only more prone to payroll issues, they also report higher levels of stress or anxiety as a result of 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 have higher stress levels around delayed payments. Perhaps because they may feel more isolated when issues occur, two-thirds (66%) of remote employees say delayed payment of wages has caused them to feel stress. This compares to 51% of hybrid workers and 44% of in-house employees.
Payroll errors can affect employee-employer relations
Another major consequence is damage to the employee–employer relationship: payroll discrepancies often undermine trust. While a slim majority of employees said their relationship remained unchanged after an error, 42% reported some deterioration.
There is also reputational risk for companies when payroll errors occur. 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.
“Certain company functions, such as payroll, exist to serve employees and must acknowledge and take responsibility for their impact. Poorly managed payroll affects retention, sentiment, and motivation — which are significant business concerns.” - Jonathan Goldsmith, VP of Payroll at Remote
The HR decision-maker survey reveals a possible mismatch: nearly a quarter (24%) prioritise faster payments as the principal capability they want from a payroll solution. A reduction in errors (21%) is ranked sixth among desired functions, suggesting employers may not fully appreciate the wider impact payroll mistakes can have compared with other priorities.
How do payroll issues affect employee-employer relations?
Increased caution and reduced trust are the most likely negative outcomes. Almost a third (32%) of employees who experienced a payroll mistake said this had either made them more cautious of their employer or that it had decreased their trust in their employer. Just over 1 in 10 would be more reluctant to raise issues in the 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 experienced a negative change in their relationship with their employer following a payroll error. Conversely, almost two-thirds (65%) of those aged 45–54 said there was no change in employee-employer relations.
Remote workers are less likely to change their opinion of their employer following a payroll error. 60% of remote workers experienced no change in their relationship with their employer, which could be explained by more confidence in their 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 the business.
Overpayments pose a risk to businesses
Although underpayment is the most frequent issue, roughly 10% of pay errors involve overpayment. Left unchecked, repeated overpayments represent a serious financial exposure for employers.
The 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 1 in 10 (11%) said they wouldn’t notice an overpayment of $100 or under, with that percentage decreasing the higher the amount. This is impacted by the fact that over a third (34%) of employees don’t check their payslips every time they receive one. While far from a malicious act on an employee’s behalf, this nonetheless highlights the hidden financial risk to businesses of frequently undiscovered mistakes.
“Some employees mistakenly treat an overpayment in their pay packet as “free” money,” says Jonathan Goldsmith. “However, employers have a legal right to recover any overpaid wages. Businesses must act swiftly to detect and correct these errors — payroll accuracy and vigilance are essential.”
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 would be more 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% who were happy with their employer would do the same — highlighting the role company culture plays in payroll and employees’ perception of benefits.
Employees are more likely to return money if asked by their employer. In all scenarios, on average, 13% of employees would return an overpayment if requested by their employer, versus an average of 9% who would do so without being asked. This underscores the onus on employers to be vigilant in identifying overpayment issues.
Payroll insights across countries and sectors
Our flagship study on the state of global payroll in 2024 gathers views from employees and HR decision-makers in several countries and across a range of industries, revealing how those most affected perceive payroll operations in the current landscape.
A total of 2,539 working professionals in the United Kingdom, Germany, and the United States were surveyed.
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 the frequency of payroll mistakes, the impact these errors have on employees, and the actions employers are taking to mitigate them.
Read the full report and learn how to reduce payroll errors
How do payroll mistakes affect your workforce? Download our State of Payroll Report to understand the effects of payroll errors on employees and how to minimise your exposure.
Employers must view payroll as more than a back-office function
Our study highlights the tangible consequences of mishandled payroll. The financial repercussions for employees can be significant — with consequences including late rent or banknote payments, for example — but employers must recognise that the emotional impact of a serious payroll discrepancy can be felt even more keenly.
The financial and emotional consequences are often linked — the risk of missing a scheduled payment or being unable to afford essentials naturally causes stress, particularly for younger people with less financial resilience and more family obligations. Late wages can therefore harm employees’ mental health.
This is why, as Jonathan Goldsmith outlines, employers should accept that payroll is more than merely an administrative function:
“Payroll is a strategic asset. Treating it as a back-office function means you are already behind the times. Payroll serves to attract staff and support a positive employee experience. If you do not give them clarity about what they are paid, how they are paid and why, you are doing a disservice to your employees.”
We’ve highlighted the erosion of trust as a likely outcome of payroll errors (over 15% of employees said a payroll issue reduced their trust), but the business impact can be broader: error-prone payroll can lower motivation, harm productivity and weaken an employer’s ability to attract and retain top talent.
“A lot of companies say, ‘We pay our employees well’,” but this doesn’t count if they fail to pay them correctly. That is easily forgotten, and it matters a great deal.”
Want to learn more about how employees and HR decision-makers view 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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