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2024 State of Payroll report – how payroll mistakes add hidden costs
Discover what’s driving payroll’s future, informed by over 2,500 professionals and 1,300 HR decision-makers worldwide. Get the complete report and learn practical ways to make payroll work for your organisation. Here’s what you’ll find inside:
- Frequent payroll mistakes and steps to reduce the risk
- How payroll errors affect productivity, morale and even staff retention
- Advice for shifting payroll into a strategic business function
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Most of us will at some stage have faced a payroll slip-up, from late pay to an underpayment. But what are the consequences for the people who go through these errors?
For an employee, a payroll problem is often more than a nuisance — it can disrupt banknote payments, family plans and even social life. Beyond the immediate financial effect, pay errors can seriously dent morale and harm mental wellbeing.
As Jonathan Goldsmith, Remote’s VP of Payroll, notes, “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 inconsistency in the payroll process, which can include incorrect pay, misclassification, or discrepancies in tax-related subsidies.
At Remote, we regard payroll as far more than routine administration — it’s a vital part of HR for every business and central to building trust, keeping morale up and sustaining motivation. Errors and a lack of transparency around payroll create uncertainty, anxiety and can strain the relationship between employers and their staff.
To map the state of global 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 more than 1,300 HR decision-makers responsible for payroll.
How do payroll problems truly affect employers and their staff? Let’s examine the data.
Our survey underscores the critical need for accuracy and openness: payroll mistakes have measurable consequences for both employees and employers. Inefficient payroll can strain 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 faced payroll issues
53% of the employees surveyed had experienced a payroll issue in their career, with 50% reporting at least one within the two years before the survey. 40% had come across a payroll error in the past year, while almost 11% had experienced a payroll mistake in the last month alone.
Among respondents who had a payroll error in the past year, 43% had only one incident, while over 18% suffered three or more mistakes in a single year — with the highest incidence seen in younger workers (aged 16–24).
Our survey of HR decision-makers showed that 7 in 10 organisations (71%) who outsource payroll reported improved accuracy, but employers should not assume perfection — almost 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 experience a payroll error?
Younger employees face payroll errors more often. Over 70% of 16–24-year-olds surveyed encountered a payroll error in the past two years, compared to 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 lower job stability — younger employees tend to change roles more frequently, 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 having encountered a payroll issue in the last three months. A higher payslip frequency could be a factor (most Americans are paid fortnightly) along with a notoriously complex US tax system.
Remote workers are less likely to encounter payroll issues. Perhaps surprisingly, only 17% of fully remote employees reported a payroll error in the past three months, compared with 22% of hybrid and fully in-person workers. While fully remote staff check their payslips less often (41% don’t check theirs every month, compared to 31% of in-person workers) it may be that fully remote companies, out of necessity, have stricter and more dependable systems in place.
The survey also revealed that underpayment is the most common payroll issue. Among those who’d experienced a payroll error, 42% reported they’d been underpaid, while almost a quarter (24%) had received a late payment. Overpayment was the issue in roughly 1 in 10 cases.
When a payment is late, most late-payment 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 and learn how to reduce payroll errors
What happens when payroll goes wrong? Download our State of Payroll Report to see how payroll mistakes affect staff and learn practical steps to minimise your risk.
Stress and anxiety are the primary consequences of payroll errors
Among the 53% of employees who had faced at least one payroll error, almost a quarter (24%) reported delayed payment as one of the problems they experienced.
Respondents said the single most common effect of a late payment was “stress and anxiety” (47%). “Family pressure” ranked third (23%), showing the emotional toll of late pay can be as severe as the financial one.
However, financial strain is also frequent. Almost two-thirds of respondents said receiving late payslips led them to make late payments for banknotes and rent 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 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 comparison, our poll of HR decision-makers found that although 95% of employers accept payroll discrepancies affect employees, fewer than a quarter (24%) consider they have a significant impact. A larger share (30%) think payroll problems have either a minor impact or none at all – pointing to a likely mismatch between employees’ and HR leaders’ perceptions of payroll harm.
Who is most affected by payroll mistakes?
Women are more prone to payroll-related anxiety. The emotional toll of payroll errors hits female employees harder than males, with over half (52%) of women reporting stress and anxiety after a late payment, versus 42% of men.
Younger workers are more susceptible to stress from late payments. Employees aged 55+ report the lowest emotional impact from payroll mistakes (only 25% say they feel affected), whereas more than half (53%) of those aged 35–44 report feeling stressed or anxious – possibly because they have greater financial and family commitments.
Employees in the US show higher anxiety about payroll mistakes. While US workers are not only more likely to meet payroll problems, they also report higher stress or anxiety from errors. 56% of US employees said they felt high levels of stress from a late payment, compared with 35% of the UK workforce.
Remote workers report higher stress over delayed payments. It may be that feeling more isolated when problems arise, two-thirds (66%) of remote employees say delayed wage payments have caused them stress. This compares with 51% of hybrid workers and 44% of on-site employees.
Payroll errors can damage employee–employer relations
Another major consequence of payroll mistakes is the potential erosion of trust between employer and employee, as discrepancies often lead to reduced confidence. While more than half of employees say their relationship with their employer stayed the same following a payroll issue, 42% indicated some kind of deterioration.
There is also reputational risk for organisations if a payroll error occurs. When asked how they would react to being underpaid because of a payroll mistake, over a fifth of employees (21%) said they would either “make a complaint” or “post about it on social media,” which could harm the business more widely.
“Functions like payroll exist to serve employees, and organisations must acknowledge and take responsibility for that impact. Poorly run payroll affects retention, sentiment and motivation — and those are major issues for any business.” - Jonathan Goldsmith, VP of Payroll at Remote
Our survey of HR decision-makers exposes a possible disconnect, with almost a quarter (24%) naming faster payments as the main feature they want from a payroll solution. A reduction in errors (21%) ranks as only the sixth-most desired capability, suggesting employers may underestimate how deeply payroll mistakes affect staff compared with other priorities.
How do payroll issues affect employee–employer relations?
Increased caution and reduced trust are the likeliest negative outcomes. Almost a third (32%) of employees who went through a payroll mistake said it made them more wary of their employer or reduced their trust. Just over 1 in 10 would be less willing to raise problems in future.
Younger employees are more likely to form a negative view of their employer after 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 alter their opinion of their employer after a payroll error. 60% of remote workers reported no change in their relationship with their employer, which may reflect greater confidence in payroll tools to fix mistakes or simply less day-to-day contact with leaders and payroll teams.
UK employees are likelier to change their view 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 United States and 64% in Germany – where staff are less likely to form a negative view of the company.
Overpayments pose a risk to businesses
Although underpayment is the most frequent payroll issue, in about 10% of pay-related errors the employee is overpaid. Repeated or unnoticed overpayments can create a material financial risk for businesses if they are not identified and corrected promptly.
We asked employees what they would do if an overpayment occurred at different amounts. While most said they’d report it to their employer (on average 61% across amounts), about 5% admitted they would spend the money without thinking.
More than one in ten (11%) said they wouldn’t notice an overpayment of $100 or less, with that share dropping as the amounts rose. This is partly because over a third (34%) of employees don’t check payslips every time — which emphasises the hidden financial risk of unnoticed errors.
“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 they were overpaid?
Women are more likely than men to tell their employer about an overpayment. 58% of women would inform their employer if a payroll error resulted in them being overpaid up to $100 USD, 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 least likely to inform their employer if they’ve been overpaid. Just over a third (35%) of 16–24-year-olds would notify their employer about an overpayment up to $100 USD, with 23% saying they would return the money only if asked. Older groups were more likely to be honest, 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 keep money mistakenly paid if they disliked the company they worked for, while 13% of those happy with their employer would do the same – underlining how company culture influences payroll behaviour and employees’ views of benefits.
Employees are more likely to return money when asked by their employer. In every scenario, on average, 13% of employees would return an overpayment if their employer requested it, compared with an average of 9% who would do so without prompting. This emphasises the responsibility on employers to spot overpayments.
Payroll insights by country and sector
Our major study of global payroll in 2024 gathers views from employees and HR decision-makers across several countries and industries, showing how those most affected assess payroll operations today.
We surveyed 2,539 working professionals across 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 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
How much harm can payroll mistakes cause? Download our State of Payroll Report to discover the impact of payroll errors on employees and learn how to minimise your risk.
Employers should regard payroll as more than a back-office task
Our research exposes the tangible consequences of payroll failures. The monetary fallout for staff can be severe — from missed rent or cashflow problems, for example — yet employers should understand that the emotional impact of a serious payroll discrepancy can be felt even more keenly.
Often the financial and emotional effects are linked — the prospect of missing a scheduled payment or not being able to buy essentials is a major source of stress, particularly for younger people with less financial stability and greater family commitments. But even without financial strain, late wages can damage mental health.
That is why, as Jonathan Goldsmith observes, employers must recognise payroll as more than a simple administrative task:
“Payroll is a strategic asset. If you treat payroll as a back-office function, you’re already out of step. Payroll plays a role in recruiting staff and creating a positive experience. If you don’t give employees clarity about what they are paid, how they are paid and why, you’re doing them a disservice.”
We have pointed to trust erosion as a possible outcome of payroll errors (with more than 15% of employees saying a payroll issue reduced their trust in their employer), but the business impacts go further: flawed payroll operations can reduce motivation, harm productivity, and make it harder to attract and retain top talent.
“Many companies claim, ‘We pay our employees well’, but that doesn’t mean much if pay isn’t processed correctly. It’s a simple point that often gets overlooked.”
Keen to learn more about how employees and HR decision-makers view payroll's importance? 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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