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2024 state of payroll report: the hidden costs of payroll mistakes
Discover what’s shaping the future of payroll with insights from over 2,500 professionals and 1,300 HR decision-makers around the world. Get the full report and learn how to make payroll work for you. Expect to find:
- The most common errors and how to avoid these risks
- How payroll errors affect 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 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 bill 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, 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 in the payroll process, such as incorrect pay, misclassification of staff, or inconsistencies in tax-related subsidies.
At Remote, we regard payroll as more than simple administration — it’s a central HR function that builds trust, sustains morale and supports motivation. Errors and a lack of transparency in payroll can create uncertainty, anxiety and strain relations between employers and staff.
To assess the global state of payroll and measure the real impact 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, and over 1,300 HR decision-makers responsible for payroll.
How do payroll issues really influence employers and their employees? Let’s examine the data.
Our survey underlines how essential accuracy and transparency are, showing the considerable effects payroll errors can have on both employees and employers. Payroll inefficiencies can harm relationships and create significant 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 experienced payroll issues
53% of the employees surveyed had experienced a payroll issue at some point in their career, with 50% encountering at least one within two years of the survey. 40% had faced a payroll error in the past year, while almost 11% suffered a payroll mistake in the last 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 poll of HR decision-makers found that 71% of organisations outsourcing payroll reported improved accuracy, yet employers must not assume precision is guaranteed — almost half (49%) of HR teams spend five or more hours each month resolving pay-related problems, especially 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 with just 30% of those aged 55 and over. Although Gen Z workers are less likely to check their pay cheques (47% don’t review them every month), their higher error rate may stem from less job stability — younger staff typically change roles more often, 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 reporting a payroll issue in the past three months. A higher pay frequency (many Americans are paid every two weeks) and the notoriously complex US tax system are likely contributing factors.
Remote workers are less likely to encounter payroll issues. Perhaps surprisingly, fewer fully remote employees (17%) 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 pay cheques less often (41% don’t review them monthly, versus 31% of in-person staff), it may be that fully remote companies, out of necessity, operate stricter and more reliable payroll systems.
The survey also found that underpayment is the most common payroll issue. Of those who’d experienced a payroll error, 42% said they had been underpaid, while almost a quarter (24%) reported 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.
Stress and anxiety are the primary effects of payroll mistakes
Among the 53% of employees who had encountered at least one payroll error, nearly a quarter (24%) cited a delayed payment as 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 strain is another common consequence. Almost two-thirds of respondents said late pay led to missed bill or rent payments 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 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 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 is most impacted by payroll mistakes?
Women are more likely to experience 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 reporting stress and anxiety after a late payment, compared with 42% of men.
Younger generations are more prone to stress caused by late payments. Employees aged 55+ report the least stress when faced with a payroll mistake (just 25% say they feel emotionally impacted), while more than half (53%) of those aged 35–44 feel stressed or anxious — possibly because they have greater financial and family commitments.
Employees in the US are more anxious about payroll mistakes.While American workers are more likely to encounter a payroll issue, they are also more likely to feel stress or anxiety as a result. 56% of US employees reported high levels of stress caused by a late payment, compared with 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 stress. This compares with 51% of hybrid workers and 44% of in-house employees.
Payroll errors can affect employee–employer relations
Another notable effect of payroll mistakes is a potential breakdown in trust between employer and employee. While more than half of employees said their relationship with their employer remained the same after a payroll issue, 42% reported some deterioration.
There is also reputational risk. When asked what they would do if a payroll error left them underpaid, over a fifth of employees (21%) said they would 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 reveals a possible disconnect: almost a quarter (24%) of respondents see faster payments as the primary feature they would like a payroll solution to provide. A reduction in errors (21%) ranks sixth, suggesting employers may underappreciate the full impact payroll mistakes have compared with other priorities.
How are employee–employer relations impacted by payroll issues?
Increased caution and reduced trust are the most likely negative outcomes. Nearly a third (32%) of employees who experienced a payroll mistake said it left them more cautious about or less trusting of their employer. Just over one in ten 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. Sixty per cent of remote workers reported no change in their relationship with their employer, which could reflect greater confidence in payroll tools to correct mistakes or simply less direct contact with 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 with 53% in the United States and 64% in Germany — where employees are less likely to form a negative view of their employer.
Overpayments pose a risk to businesses
Although underpayment is the most common payroll issue, in around 10% of pay-related errors the employee is paid too much. Overpayments can represent a significant financial risk to businesses, particularly if such mistakes go unnoticed and recur regularly.
We asked employees what they would do if a payroll mistake resulted in an overpayment across various amounts. In every case most respondents said they would inform their employer (on average 61% would do so regardless of the sum), yet 5% said they would spend the money without thinking.
More than 1 in 10 (11%) said they wouldn’t notice an overpayment of $100 or under, with that proportion falling as the amount increased. This is affected by the fact that over a third (34%) of employees don’t check their pay cheques every time they receive one. While rarely malicious, this highlights a hidden financial risk to businesses from 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 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 an overpayment of up to $100, compared with 55% of men. However, more women than men (13% vs 9%) also said they wouldn’t notice if they had 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 would return the money only if asked. Older age groups were more likely to be honest, with 67% of those aged 55+ saying they would tell their employer.
Employees are more likely to keep overpaid wages if they don’t like their employer. 23% would choose to keep money mistakenly paid if they disliked the company they worked for, while 13% who were happy with their employer would do the same — underscoring how company culture influences payroll behaviour and perceptions of benefits.
Employees are more likely to return money if asked by their employer.Across 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 underlines the responsibility on employers to spot overpayments quickly.
Payroll insights across countries and sectors
Our major study into the state of global payroll in 2024 captures the views of employees and HR decision-makers in 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 findings such as how often payroll mistakes occur, the effects these errors have on employees, and what employers are doing to reduce them.
Payroll must be treated as more than a back-office function by employers
Our study highlights the real consequences of getting payroll wrong. The financial effects for employees can be serious — including missed rent or bill payments — but employers must recognise that the emotional impact of a serious payroll discrepancy can be even greater.
Naturally, the two are often linked — the risk of missing a scheduled payment or being unable to afford essentials is a common source of stress and anxiety, particularly for younger people who may have less financial stability and more family responsibilities. But late payment of wages can also have a damaging effect on mental health.
This is why, as Jonathan Goldsmith highlights, employers must recognise that payroll is more than merely an administrative task:
"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’ve pointed to the erosion of trust as a likely outcome of payroll errors (with more than 15% of employees saying a payroll issue had reduced their trust in their employer), but the consequences for businesses can be much broader: a poor, error-prone payroll process can sap motivation, harm 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.”
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 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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