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2024 state of payroll report: the hidden costs of payroll mistakes
Discover what is shaping payroll’s future, drawing on input from over 2,500 professionals and 1,300 HR decision-makers across the globe. Get the full report and learn how to make payroll work for you. Here is what to expect inside:
- 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 bill 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, Remote’s VP of Payroll, 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 error or discrepancy that arises during the payroll process, including incorrect pay, misclassification of workers, or inconsistencies in tax-related subsidies.
At Remote, we regard payroll as far more than a routine administrative task — it is a core HR capability that helps build trust, sustain morale, and drive motivation. Errors or a lack of transparency in payroll create uncertainty and anxiety and can harm relationships between employers and their workforce.
To assess the state of global payroll and measure the tangible effects payroll problems have on employees worldwide, we surveyed over 2,500 professionals across different demographics and sectors in the UK, US, and Germany, and more than 1,300 HR decision-makers responsible for payroll.
How do payroll issues genuinely affect employers and their employees? Let us 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 experienced payroll issues
53% of employees surveyed reported encountering a payroll issue at some point in their career, while 50% had experienced at least one within the two years prior to the survey. Forty per cent had faced a payroll error in the last year, and almost 11% had a payroll mistake within the previous month alone.
Among respondents who reported a payroll error in the past year, 43% encountered it only once, but more than 18% experienced at least three separate payroll mistakes during a single year — with the highest incidence observed among younger workers aged 16 – 24.
Although our survey of HR decision-makers shows seven in ten organisations (71%) that outsource payroll report improved accuracy, employers must not assume perfect precision — in fact, nearly half (49%) of HR teams spend five or more hours each month resolving pay-related issues, 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 those aged 16 – 24 surveyed reported a payroll error in the past two years, compared with only 30% of respondents aged 55 and over. While Gen Z workers check their payslips less regularly (47% do not check every month), the higher error rate may be linked to lower job stability — younger staff typically change roles more often, for example.
Payroll mistakes are more common in US workplaces. Employees in the US are 26% more likely to encounter a payroll error than those in the UK, with one quarter of American workers reporting a payroll issue within the previous three months. A higher frequency of pay cycles (many Americans are paid fortnightly) coupled with the complex US tax system are likely contributing factors.
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 found that underpayment is the most common payroll issue. Among those who had experienced a payroll error, 42% said they had been underpaid, nearly a quarter (24%) received their pay late, and overpayment accounted for roughly one in ten cases.
In cases of late payment, most problems are resolved within a week (60% of those reporting a late payment said they received their wages within seven days). However, some employees waited longer — about 18% waited more than two weeks, and nearly 7% experienced delays of a month or more.
Stress and anxiety are the biggest impacts of payroll mistakes
Of the 53% of employees who had encountered at least one payroll error, almost a quarter (24%) reported that a delayed salary payment was one of the issues they faced.
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 common. Almost two-thirds of respondents said late pay caused them to miss bill or rent payments 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 revealed that, while 95% of employers acknowledge payroll discrepancies affect employees, under a quarter (24%) believe the impact is significant . A larger share (30%) regard the impact as small or negligible — pointing to a possible disconnect between employees’ experience and HR leaders’ perceptions.
Who is most impacted 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 ones: over half (52%) of women reported stress and anxiety after a late payment, versus 42% of men.
Younger generations are more prone to stress caused by late payments. Employees aged 55 and over report the least stress from payroll mistakes (25%), whereas more than half (53%) of those aged 35–44 feel stressed or anxious — likely reflecting greater financial and family responsibilities.
Employees in the US are more anxious about payroll mistakes.US workers not only encounter payroll issues more often, they also report higher levels of stress as a result: 56% of US employees cited significant stress from late payment, compared with 35% of the UK workforce.
Remote workers have higher stress levels around delayed payments. Potential isolation when issues occur may explain why two-thirds (66%) of remote employees say delayed pay has caused them stress, compared 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.
There is also reputational risk for companies. When asked how they would react to being underpaid, over one-fifth of employees (21%) said they would either “make a complaint” or “post about it on social media,” actions that could have broader consequences 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 either made them more wary of their employer or reduced their trust. Just over one in ten indicated they would be less willing to raise issues in future.
Younger employees are more likely to have a negative opinion of their employer due to a payroll issue. Seventy-one per cent of employees aged 16 – 24 reported a negative shift in their view of their employer after a payroll error. By contrast, almost two-thirds (65%) of those aged 45–54 said there was no change in the relationship.
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, possibly due to greater confidence in payroll tools to resolve mistakes or less direct exposure to leaders and payroll teams.
UK employees are more likely to change their opinion of their employer because of a payroll mistake. Just under half of UK-based employees said their relationship with their employer remained the same, compared with 53% in the US and 64% in Germany — where workers are less prone to form a negative view of the company.
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 how they would react if a payroll error left them overpaid by various amounts. While most respondents said they would inform their employer (on average, 61% would do so regardless of the overpayment amount), 5% admitted they would spend the money without reflection.
More than one in ten (11%) said they would not notice an overpayment of $100 or under, with that share falling as the amount increased. This is influenced by the fact that over a third (34%) of employees do not check their payslips every time they receive them. While not necessarily malicious, this reveals a hidden financial exposure for businesses from frequently overlooked 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."
What would employees do when overpaid?
Women are more likely to tell their employer about an overpayment than men. Fifty-eight per cent of women would notify their employer if a payroll error resulted in an overpayment up to $100, compared with 55% of men. However, a higher share of women than men (13% vs 9%) also said they would not notice being 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 tell their employer about an overpayment up to $100, while 23% would only return the money if asked. Older age groups were more likely to report the error, with 67% of those aged 55 and above saying they would inform their employer.
Employees are more likely to keep overpaid wages if they don’t like their employer. Twenty-three per cent said they would keep money mistakenly paid if they disliked their company, compared with 13% of those who are satisfied with their employer — emphasising the influence of company culture on payroll conduct 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 requested by their employer, compared with an average of 9% who would do so proactively. This highlights the responsibility on employers to identify and address overpayments.
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 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 captured 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 how often payroll errors occur, the effects on employees, and the steps employers take to mitigate them.
Employers must treat payroll as more than a back-office function
Our research highlights the real consequences of not getting payroll right. The financial effects on employees can be severe — for example, missed rent or bill payments — but employers should also appreciate that the emotional impact of a major payroll discrepancy can be even more pronounced.
These two elements are often interconnected — the risk of missing a scheduled payment or being unable to afford essentials is a direct source of stress and anxiety, particularly for younger workers who may have less financial resilience and greater family responsibilities. Late wage payments can therefore harm employees’ mental health.
This is why, as Jonathan Goldsmith explains, employers must recognise that payroll is more than an administrative task:
“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.”
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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