.png?width=3840&quality=90&auto=webp&disable=upscale)
State of payroll report 2024: uncovering the hidden costs of payroll mistakes
Discover what is shaping the future of payroll, based on input from 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 will find:
- 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
Download now
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 bill 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, 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 discrepancy within the payroll process, including pay errors, misclassifications or inconsistencies in tax subsidies.
At Remote, we see payroll as more than a routine administrative task — it is a core HR function that builds trust, sustains morale and drives motivation. Errors and a lack of transparency around payroll create uncertainty, anxiety and can damage relationships between employers and staff.
To assess the state of global payroll and the real impact payroll problems have on employees, we surveyed more than 2,500 professionals across various demographics and sectors in the UK, US and Germany, and over 1,300 HR decision-makers responsible for payroll.
How do payroll issues really affect employers and their employees? We examine the data below.
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
Over half of employees report encountering payroll issues
Fifty-three per cent of employees surveyed said they had experienced a payroll issue during their career, with half (50%) encountering at least one within the two years before the survey. Forty per cent reported a payroll error in the past year, and almost 11% faced a mistake within the last month.
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).
Although our survey of HR decision-makers found that 7 in 10 organisations (71%) that outsource payroll saw improved accuracy, employers must not assume precision is guaranteed — nearly half (49%) of HR teams spend five or more hours each month resolving pay-related issues, particularly in larger organisations.
Which groups are most likely to encounter payroll errors?
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 with just 30% of respondents aged 55 and over. While Gen Z workers check their paychecks less regularly (47% do not check each month), the higher error rate may reflect less employment stability, with younger people typically changing roles more frequently.
Payroll mistakes are more common in US workplaces. US employees are 26% more likely to experience a payroll error than UK workers, with a quarter of American employees reporting a payroll issue in the last three months. More frequent pay cycles (many Americans are paid fortnightly) and the complex US tax system likely contribute to this higher error rate.
Remote workers are less likely to encounter payroll issues. Surprisingly, only 17% of fully remote employees reported a payroll error in the past three months, compared with 22% of hybrid and 22% of fully in-person workers. Although fully remote staff check paychecks less often (41% do not check monthly, versus 31% of in-person workers), remote companies may operate with stricter payroll controls that reduce errors.
The survey also found that underpayment is the most common payroll issue. Among those who had experienced an error, 42% reported being underpaid, almost a quarter (24%) received a late payment, and overpayment accounted for roughly one in ten cases.
In cases of late payment, most issues are resolved within a week (60% of respondents who reported a late payment said they received wages within seven days), though around 18% waited more than two weeks and nearly 7% experienced delays of one month or longer.
Stress and anxiety are the primary consequences of payroll mistakes
Of the 53% of employees who had experienced at least one payroll error, almost a quarter (24%) cited a delayed payment as one of their issues.
Respondents identified “stress and anxiety” as the single most common effect of a late payment (47%). “Family pressure” was the third most cited outcome (23%), showing the emotional impact of late pay is often as significant as the financial consequences.
Financial strain is also common: almost two thirds of respondents said late pay caused them to miss bill or rent payments or to use their 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%) consider the impact to be significant. A larger share (30%) feel payroll errors have a small or no impact — suggesting a gap between employee experience and HR perception.
Which employees are most affected by payroll mistakes?
Women are more likely to experience payroll-related anxiety. The emotional toll of payroll errors is felt more acutely by female employees than male, with 52% of women reporting stress and anxiety after a late payment, compared with 42% of men.
Younger generations are more prone to stress from late payments. Employees aged 55 and over report the least stress from payroll mistakes (25%), while more than half (53%) of those aged 35–44 feel stressed or anxious — likely reflecting greater financial and family responsibilities.
Employees in the US feel greater anxiety over payroll mistakes. American workers are not only more likely to encounter payroll issues, they also report higher stress: 56% of US employees said a late payment caused high stress, compared with 35% in the UK.
Remote workers report higher stress levels around delayed payments. Possibly due to isolation when issues occur, two thirds (66%) of remote employees say delayed pay caused them stress, compared with 51% of hybrid workers and 44% of in-house staff.
Payroll errors can harm 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 mistakes occur. Asked how they would react to 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 broader consequences 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
Our HR decision-maker survey highlights a potential disconnect: nearly a quarter (24%) prioritise faster payments as the top feature they want from a payroll solution, while a reduction in errors (21%) ranks sixth — suggesting employers may underestimate the broader impact of payroll mistakes.
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 error said it made them more cautious about their employer or reduced their trust. Just over one in ten would be less willing to raise issues in future.
Younger employees are more likely to form a negative view of their employer after a payroll issue. Seventy-one per cent of 16–24-year-olds reported a worsened relationship with their employer after a payroll error. By contrast, almost two thirds (65%) of employees aged 45–54 said there was no change.
Remote workers are less likely to change their opinion of their employer after a payroll error. Sixty per cent of remote workers reported no change in their relationship with their employer, which may reflect greater confidence in payroll systems to correct mistakes or simply less direct contact with leaders and payroll personnel.
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 remained the same, compared with 53% in the US and 64% in Germany — where employees are the least likely to develop a negative view of their employer.
Overpayments create risks for 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.
We asked employees how they would react if a payroll mistake resulted in an overpayment at various amounts. While most said they would inform their employer (on average 61% would do so irrespective of the amount), 5% said they would spend the unexpected funds without further thought.
More than one in ten (11%) said they would not notice an overpayment of $100 or less, a share that falls as the amount increases. This is influenced by the fact that over a third (34%) of employees do not check their paychecks each time they receive pay. Although not necessarily malicious, this behaviour exposes a hidden financial risk for employers due to undetected errors.
“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.”
How would employees respond to being overpaid?
Women are more likely than men to report an overpayment to their employer. Fifty-eight per cent of women would inform their employer about an overpayment up to $100, compared with 55% of men. However, a higher share of women than men (13% versus 9%) said they would not notice such an overpayment.
Young people are least likely to report an overpayment. Only about a third (35%) of 16–24-year-olds would notify their employer about an overpayment up to $100, while 23% said they would return the funds only if asked. Older groups are more likely to be forthcoming — 67% of those aged 55+ would report it.
Employees are more likely to keep overpaid wages if they dislike their employer. Twenty-three per cent would keep mistakenly paid funds if they disliked the company, compared with 13% of those satisfied with their employer — underscoring the role of company culture in 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 would return an overpayment if asked by their employer, versus 9% who would do so without prompting. This highlights the responsibility on employers to detect and address overpayments.
Payroll insights by country and sector
Our leading study on the state of global payroll in 2024 gathers views from employees and HR decision-makers across multiple countries and industries, revealing how those most affected evaluate current payroll practices.
We surveyed 2,539 working professionals in the United Kingdom, Germany and the United States.
We also collected the views of 1,352 HR decision-makers responsible for payroll across the United Kingdom, Germany, France, the Netherlands and the United States.
The survey highlights key findings such as the frequency of payroll mistakes, their effects on employees, and employer strategies to mitigate those errors.
Employers must regard payroll as more than a back-office function
Our research highlights the tangible consequences of failing to get payroll right. Financial effects for employees can be severe — for example, missed rent or bill payments — yet the emotional impact of a major payroll error can be even more profound.
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.
For this reason, as Jonathan Goldsmith points out, employers need to accept that payroll is more than administrative work:
“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 find out more about what employees and HR decision-makers think about the importance of payroll? Download the full State of Payroll Report for in-depth insights into the common causes of payroll issues, the impact on staff and business operations, and the advantages of outsourcing payroll for organisations.
-1.png?width=3840&quality=90&auto=webp&disable=upscale)
