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2024 state of payroll report: the hidden costs of payroll mistakes
Discover the trends shaping payroll's future, informed by responses from over 2,500 professionals and 1,300 HR decision-makers around the world. Read the full report to see how payroll can better serve your organisation. Here’s what you’ll find inside:
- The most common errors and how to avoid these risks
- How payroll errors affect productivity, morale and even staff retention
- Advice on shifting payroll into a strategic business function
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Whether it’s a late payment or an inadequate pay cheque, many people will have faced a payroll mistake during their careers. But what consequences do such errors have for those affected?
A payroll problem is often more than a minor irritation for an employee — it can have a direct effect on their finances, disrupt banknote payments and family plans, and limit social activities. Beyond the financial consequences, payroll mistakes can also damage morale and have a serious effect on an employee’s 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 inconsistency in the payroll cycle, which can include incorrect pay, worker misclassification, or anomalies in tax subsidies.
At Remote, we regard payroll as far more than routine administration — it’s a vital part of HR for every business and fundamental to building trust, protecting morale, and sustaining motivation. Errors and a lack of openness around payroll create uncertainty, worry, and can damage relationships between employers and their staff.
To map the global payroll landscape and measure the concrete effect payroll problems have on employees worldwide, we surveyed more than 2,500 professionals across a range of demographics and sectors in the UK, US, and Germany, plus more than 1,300 HR decision-makers responsible for payroll.
How do payroll issues really impact employers and their employees? The data below sheds light on that question.
Emphasising the critical need for accuracy and transparency, our survey shows how payroll errors can affect both staff and employers. Inefficient payroll not only weakens relationships but also creates major 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 had payroll issues
Of the employees surveyed, 53% said they had experienced a payroll issue at some point in their career, with 50% reporting at least one within the two years before the survey. 40% had faced a payroll error during the past year, while almost 11% had a payroll mistake occur in the previous month alone.
Among respondents who’d had a payroll error in the past year, 43% said it happened only once, but over 18% had faced at least three payroll mistakes within a single year — with younger workers (aged 16–24) recording the most errors.
Our survey of HR decision-makers found that 7 in 10 organisations (71%) who outsource payroll reported a positive impact on accuracy. Employers cannot assume flawless precision — almost half (49%) of HR teams spend 5 or more hours resolving pay-related issues each month, especially in larger organisations.
Who is most likely to experience a payroll error?
Payroll errors occur more often among younger employees. Over 70% of 16-24-year-olds surveyed reported a payroll error in the past two years, compared with just 30% of those aged 55 and over. While Gen Z workers are less likely to check their payslips (47% don’t check theirs every month), this higher error rate may reflect less job stability — younger staff tend to change roles more frequently, for example.
Payroll mistakes are more frequent 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 higher payslip frequency may be a 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%) reported a payroll error in the past three months than those in hybrid or fully in-person roles (both 22%). Although fully remote staff check their payslips less often (41% don’t check theirs every month, compared with 31% of in-person workers), it may be that fully remote organisations, out of necessity, have more rigorous and dependable systems in place.
The survey also found that underpayment is the most common payroll issue. Of those who had experienced a payroll error, 42% reported being underpaid, while almost a quarter (24%) had received a late payment. Overpayment accounted for roughly 1 in 10 cases.
In incidents of late payment, the majority are resolved within a week — 60% of those reporting a late wage said it arrived within seven days — but some waited longer: about 18% waited more than two weeks, and nearly 7% endured a delay of a month or longer.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) but others 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 to learn practical steps for cutting payroll errors
What consequences do payroll mistakes have? 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 leading consequences of payroll errors
Among the 53% of employees who had experienced at least one payroll error, almost a quarter (24%) reported that a delayed payment was one of the problems they faced.
Respondents identified “stress and anxiety” (47%) as the single most common effect of a late payment. “Family pressure” was the third most frequent consequence (23%), underlining that the emotional toll of late pay can be as serious as the financial impact.
Financial pressures are also common. Almost two-thirds of respondents reported that late payslips caused them to make late payments for banknotes and rent or placed them in 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 contrast, our survey of HR decision-makers found that although 95% of employers acknowledge payroll discrepancies affect employees, under a quarter (24%) believe these discrepancies have a significant impact. A larger share (30%) think they have a small or no impact at all — highlighting a potential gap between employee experience and HR perception.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 feels the greatest impact from payroll mistakes?
Women are more prone to payroll-related anxiety. The emotional impact of payroll errors is felt more keenly by female employees than their male counterparts, with over half (52%) of women feeling stress and anxiety as a result of a late payment, compared to 42% of men.
Younger generations 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 feel stressed or anxious — possibly due to having more financial and family-related commitments.
Employees in the US are more anxious about payroll mistakes. While American workers face payroll problems more often, they also report higher stress and anxiety when errors occur. 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. Possibly because of feeling more isolated when problems arise, two-thirds (66%) of remote employees say delayed wage payments caused them stress. This compares with 51% of hybrid workers and 44% of in-house employees.
Payroll errors can affect employee-employer relations
Payroll mistakes can also fracture the employer–employee relationship, with discrepancies often eroding trust. While over half of employees said their relationship with their employer remained unchanged after a payroll issue, 42% reported some deterioration.
There is also a reputational risk to companies when payroll errors occur. Asked what they would 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 survey of HR decision-makers shows a possible mismatch: almost a quarter (24%) ranked faster payments as the top capability they want from a payroll solution. A reduction in errors (21%) came sixth, suggesting employers may underestimate the full impact payroll mistakes have compared with other priorities.
How are employee-employer relations affected 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 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 may reflect greater trust 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 the business.
Overpayments pose a risk to businesses
Although underpayment is the commonest payroll problem, in around 10% of pay-related errors the employee is paid too much. This can pose a significant financial risk to businesses, particularly if these mistakes regularly go unnoticed and recur frequently.
The survey asked employees how they would react to being overpaid across a range of amounts. In every scenario most respondents said they’d tell their employer (on average, 61% would do so regardless of the overpayment amount), while 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.
“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 if 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 are more likely to report it, 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 major study of the state of global payroll in 2024 captures the views of employees and HR decision-makers across several countries and industries, revealing how those most affected perceive 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 insights including how often payroll mistakes occur, the effects these errors have on employees, and the steps employers are taking to reduce them.
Read the full report and learn how to reduce payroll errors
What impact do payroll mistakes have? Download our State of Payroll Report to find out how payroll errors affect employees and how you can minimise your exposure to them.
Employers should regard payroll as more than a back-office task
This research exposes the tangible harm that results when payroll is handled poorly. The financial consequences for employees can be significant — for example, missed rent or late banknote payments — but employers must realise that the emotional impact of a serious payroll discrepancy can be felt even more keenly.
Naturally, the two are frequently linked — the prospect of missing a scheduled payment or being unable to afford essential items is often a source of stress and anxiety, particularly among younger people who may have less financial stability and greater family responsibilities. However, that does not alter the fact that late payment of wages can have a damaging effect on employees’ mental health.
For that reason, as Jonathan Goldsmith points out, employers should acknowledge that payroll is more than a purely administrative function:
"Payroll is a highly strategic asset. If you treat payroll as a back-office function, you are already behind the times. Payroll helps recruit employees and gives them a good experience. If you do not provide insight into what they are being paid, how they are paid and why, you are doing your employees a disservice."
We have highlighted the erosion of trust as a potential consequence of a payroll error (with more than 15% of employees saying a payroll issue had reduced their trust in their employer), yet the implications for businesses can be far-reaching: a flawed, error-prone payroll operation can reduce employee motivation, undermine productivity, and even hinder a company’s ability to attract and retain high-calibre talent.
“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.”
Would you like to learn more about how employees and HR decision-makers view the importance of payroll? Download the full State of Payroll Report for detailed insights into the common causes of payroll problems, the effects on employees and business operations, and the benefits of outsourcing payroll for organisations.
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