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State of payroll report 2024: the hidden costs of payroll mistakes
Discover the trends shaping payroll's future, informed by the insights of over 2,500 professionals and 1,300 HR decision-makers worldwide. Download the full report to understand how payroll can be made to work for your organisation. The report includes:
- The most frequent errors and practical steps to mitigate them
- How payroll mistakes affect productivity, morale and staff retention
- Practical guidance to shift payroll into a strategic business function
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From late disbursements to short payments, many people will have experienced a payroll error during their careers. But how do payroll mistakes affect those who go through them?
A payroll problem is often more than a mere inconvenience for an employee — it can materially disrupt their life, impacting banknote payments, family arrangements and even social plans. Beyond the financial effects, payroll errors can also harm an employee’s morale and mental well‑being.
As Jonathan Goldsmith, VP of Payroll at Remote, observes, “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, which can include pay errors, misclassification, or inconsistencies in tax subsidies.
At Remote, we regard payroll as more than a routine administrative task — it is a central HR capability for every organisation and essential for building trust, sustaining morale and encouraging motivation. Errors, and a lack of transparency around payroll, create uncertainty and anxiety and can damage the relationship between employers and their workforce.
To assess the global payroll landscape and measure the concrete effects payroll issues have on employees worldwide, we surveyed more than 2,500 professionals across different demographics and sectors in the UK, US, and Germany, and over 1,300 HR decision-makers responsible for payroll.
How do payroll issues really impact employers and their employees? We now examine the data.
Emphasising the critical need for accuracy and openness, our survey reveals the substantial consequences payroll errors impose on employees and employers alike. Payroll inefficiencies can erode relationships and create meaningful 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 faced payroll issues
53% of the employees surveyed had experienced a payroll issue at some point in their career, with 50% reporting at least one within the two years prior to the survey. 40% had encountered a payroll error in the past year, while almost 11% suffered a payroll mistake in the last month alone.
Among respondents who experienced a payroll error during the past year, 43% reported a single occurrence, while more than 18% experienced at least three payroll mistakes within the same year — with younger workers (aged 16-24) showing the highest frequency of payroll errors.
Our survey of HR decision-makers found that 7 in 10 organisations (71%) who outsource payroll reported improved accuracy, but employers must not assume flawless precision — almost half (49%) of HR teams spend five or more hours each month resolving pay-related issues, particularly in larger organisations.
Who is most at risk of experiencing a payroll error?
Younger employees are likelier to encounter a payroll error. 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. Gen Z workers are also less likely to check their payslips (47% do not check them every month); this higher rate of errors may be explained by lower job stability, since younger employees tend to change roles more frequently.
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 reported 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.
Fully remote employees report fewer payroll issues. Surprisingly, only 17% of fully remote workers experienced a payroll error in the past three months, compared with 22% of hybrid and 22% of fully on‑site workers. Although remote staff check payslips less often (41% do not check monthly versus 31% of on‑site staff), it may be that remote organisations maintain more robust payroll systems out of necessity.
The survey also identified 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%) received a late payment. Overpayment accounted for 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 arrived within seven days), but others waited longer — around 18% were left waiting for more than two weeks, with almost 7% experiencing a delay of one month or more.
Please read the full report to learn practical ways to reduce payroll errors
What consequences do payroll mistakes cause? Download our State of Payroll Report to learn how payroll errors affect employees and the steps you can take to minimise your risk.
Stress and anxiety are the primary effects of payroll errors
Among the 53% of employees who had faced at least one payroll error, nearly a quarter (24%) cited a delayed payment as one of the problems they encountered.
Respondents identified “stress and anxiety” (47%) as the single most common effect of a late payment, while “Family pressure” was the third most common (23%), underlining that the emotional impact of late payments can be as significant as the financial one.
Financial strain is also frequently reported. Almost two-thirds of respondents said late payslips caused them to miss payments for banknotes and rent or to go 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 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 poll of HR decision-makers found that, while 95% of employers accept that payroll discrepancies affect employees, fewer than a quarter (24%) believe they have a significant impact. A larger share (30%) say the effect is either small or non-existent — indicating a likely disconnect between employees and HR leaders over the severity of payroll issues.
Who is most affected by payroll mistakes?
Women are more likely to experience payroll-related anxiety. The emotional toll of payroll errors is greater among female staff than their male counterparts, with over half (52%) of women reporting stress and anxiety following a late payment, compared to 42% of men.
Younger generations are more prone to stress caused by late payments. Employees aged 55+ report the least stress when they face a payroll mistake (just 25% feel emotionally affected), while more than half (53%) of those aged 35-44 say they feel stressed or anxious — likely due to greater financial and family commitments.
Employees in the US are more anxious about payroll mistakes. While workers in the United States are more likely to encounter payroll issues, they also report higher levels of stress: 56% of US employees said a late payment caused high stress, compared to 35% of the UK workforce.
Remote workers have higher stress levels around delayed payments. Possibly because they can feel more isolated when problems arise, 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 major consequence of payroll mistakes is the potential damage to employee–employer relations, since discrepancies often erode trust. While more than half of employees say their relationship with their employer remained unchanged after a payroll issue, 42% reported some deterioration.
Similarly, a payroll mistake can damage a company’s reputation. 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,” actions that could have wider repercussions for the business.
"Certain company functions, such as payroll, exist to serve employees; those teams must acknowledge and take responsibility for the impact. Poorly managed payroll can affect retention, employee sentiment and motivation — these are substantial consequences." - Jonathan Goldsmith, VP of Payroll at Remote
Our survey of HR decision-makers exposes a potential mismatch: almost a quarter (24%) identified faster payments as the primary feature they want from a payroll solution, while a reduction in errors (21%) ranked sixth — suggesting employers may underestimate the full impact payroll mistakes have on staff.
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 made them more cautious of their employer or reduced their trust in them. Just over 1 in 10 said they would be more reluctant to raise issues in 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 reported a negative change in their relationship with their employer after a payroll error. Conversely, almost two-thirds (65%) of those aged 45-54 said their relationship remained unchanged.
Remote workers are less likely to change their opinion of their employer following a payroll error. 60% of remote workers said their relationship with their employer did not change, which may reflect greater confidence in payroll tools to fix mistakes or simply reduced 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 stayed the same, compared to 53% in the United States and 64% in Germany — where staff are less likely to form a negative view of the business.
Overpayments pose a risk to businesses
Although underpayment is the most frequent payroll issue, roughly 10% of pay errors result in employees being overpaid. Recurring unnoticed overpayments can create substantial financial exposure for organisations.
Our survey asked employees what they would do if a payroll mistake caused them to be overpaid across several different amounts. In every scenario most respondents said they would inform their employer (on average, 61% would do so regardless of the overpayment amount), while 5% of employees said they 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 as the amount rises. This is influenced by the fact that over a third (34%) of employees don’t check their payslips every time they receive one. While rarely malicious on an employee’s part, this nonetheless highlights the hidden financial risk to businesses from frequently undiscovered mistakes.
"Some employees may mistakenly regard an overpayment on their payslip as 'free' money," says Jonathan Goldsmith. "However, employers have a legal right to recover any overpaid wages. Businesses must act promptly to identify and correct such errors, so payroll vigilance and accuracy are essential."
How would employees respond 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, a higher share of 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 forthcoming, 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% said they would keep money mistakenly paid if they disliked the company they worked for, whereas 13% of employees who were happy with their employer said they would do the same — emphasising the influence of company culture on payroll outcomes 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, compared with an average of 9% who would do so without prompting. This underscores the responsibility on employers to be vigilant in identifying overpayment issues.
Payroll insights across countries and sectors
Our major study into the state of global payroll in 2024 examines the views of employees and HR decision-makers across multiple countries and industries, showing 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 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 insights such as the frequency of payroll mistakes, the impact these errors have on employees, and the steps employers are taking to mitigate them.
Read the full report and learn how to reduce payroll errors
What are the repercussions of payroll mistakes? Please download our State of Payroll Report to assess how payroll errors affect employees and to find out how to minimise your organisation's risk.
Employers should regard payroll as more than merely a back-office function
Our research shines a light on the very real consequences of getting payroll wrong. The financial repercussions for employees can be substantial — for example, delayed rent or missed cash withdrawals — but employers must appreciate that the emotional impact of a serious payroll discrepancy can be felt even more keenly.
Naturally, the two are often linked — the prospect of missing a planned payment or being unable to afford essential provisions is frequently a source of stress and anxiety, especially among younger employees who may have less financial resilience and greater family responsibilities. Nonetheless, late payment of wages can have a damaging effect on employees’ mental health.
This is why, as Jonathan Goldsmith outlines, employers must recognise that payroll is more than just an administrative function:
“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 have already noted the erosion of trust as a possible outcome of payroll errors (more than 15% of employees said a payroll issue reduced their trust in their employer), but the business impact can extend much further: a poor, error‑prone payroll can reduce employee motivation, weaken productivity and even hinder recruitment and retention of top talent.
“Many companies claim, ‘We pay our employees well’, but that assertion is irrelevant if payments are not made correctly in practice. That is an important point to bear in mind, and, I believe, it is often forgotten.”
Would you like further insight into 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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