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2024 state of payroll report: revealing the hidden costs of payroll mistakes
Discover the forces shaping payroll's future through insights from over 2,500 professionals and 1,300 HR decision-makers worldwide. Get the full report and learn how to make payroll work for you. Here's what to expect inside:
- The most frequent payroll errors and practical ways to avoid them
- How payroll errors can undermine productivity, harm morale, and threaten staff retention
- Guidance on elevating payroll into a strategic business function
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At some point in our careers many of us have likely encountered a payroll error—whether a delayed payment or an incorrect paycheck. Yet, what tangible effects do such payroll mistakes have on the people who experience them?
A payroll problem is often more than a small inconvenience for an employee — it can materially affect their ability to pay bills, plan for family needs, or even participate in social activities. Beyond the immediate financial impact, payroll mistakes can equally damage an employee’s morale and mental well‑being.
According to Jonathan Goldsmith, Remote’s VP of Payroll, “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 process, including errors in pay, worker misclassifications, or discrepancies involving tax subsidies.
At Remote, we view payroll as more than a basic administrative function — it’s a vital arm of HR for all businesses, central to building trust, maintaining morale, and supporting motivation. Mistakes and a lack of transparency around payroll can introduce uncertainty, anxiety, and damage relationships between employers and their workforces.
To assess the state of global payroll and measure the tangible impact payroll issues have on employees worldwide, we surveyed more than 2,500 professionals across multiple demographics and sectors in the UK, US, and Germany, and more than 1,300 HR decision-makers overseeing payroll.
How do payroll issues truly affect employers and their employees? Let’s dive into the data.
Emphasizing the critical role of accuracy and transparency, our survey reveals the considerable effects payroll errors can have on both employees and employers. Payroll inefficiencies can undermine 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
Over half of employees have experienced payroll issues
Fifty‑three percent of employees we surveyed reported experiencing at least one payroll issue during their career, and half (50%) had experienced an incident within two years of the survey date. Some 40% encountered a payroll mistake in the past year, while nearly 11% reported a payroll error within the last month alone.
Among respondents who faced a payroll error in the past year, 43% experienced a single occurrence, but over 18% suffered three or more mistakes within a twelve‑month period — with the highest frequency observed among younger workers aged 16–24.
Our survey of HR decision-makers shows that 7 in 10 organizations (71%) that outsource payroll reported a positive impact on accuracy, yet employers cannot assume precision is guaranteed — nearly half (49%) of HR teams spend five or more hours each month resolving pay-related issues, particularly in larger organizations.
Who is most likely to encounter a payroll error?
Younger employees are more likely to encounter a payroll error. 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 paychecks (47% don’t check theirs every month) this higher error rate may be due to less stability — younger workers typically move 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 having encountered a payroll issue in the last three months. A greater frequency of paychecks may be a contributing 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. Surprisingly, fewer fully remote employees (17%) have 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 paychecks less frequently (41% don’t check theirs every month, compared to 31% of in-person workers) it may also be true that fully remote companies may, out of necessity, have more stringent and reliable systems in place.
The survey also found that underpayment is the most common payroll issue. Of those who’d experienced a payroll error, 42% reported that they’d been underpaid, while almost a quarter (24%) had received a late payment. Overpayment was the issue in 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 came through within seven days), but some 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 complete report to learn effective ways to reduce payroll errors
What are the consequences of payroll mistakes? Download our State of Payroll Report to see how payroll errors impact employees and what steps you can take to lower your risk.
Stress and anxiety as primary consequences of payroll errors
Among the 53% of employees who experienced at least one payroll error, nearly a quarter (24%) cited delayed payment as one of the problems they faced.
Survey participants said the most frequent consequence of a late payment was “stress and anxiety” (47%). “Family pressure” ranked third (23%), underscoring that emotional effects of late payments can be as significant as monetary ones.
Financial strain was also prevalent: nearly two-thirds of respondents said late paychecks forced them to pay bills or rent late or pushed their accounts into 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 poll of HR decision-makers found that although 95% of employers accept that payroll discrepancies affect employees, fewer than a quarter (24%) consider the impact to be significant impact. A larger share (30%) say the effect is either small or nonexistent — pointing to a possible gap between how employees and HR leaders perceive payroll problems.
Which groups are most affected by payroll mistakes?
Women are likelier than men to experience anxiety related to payroll issues. Female employees feel the emotional effects of payroll errors more acutely than their male counterparts, with over half (52%) of women reporting stress and anxiety after a late payment, compared to 42% of men.
Younger generations show higher stress from late payments. Workers aged 55+ report the least emotional response to payroll mistakes (just 25% feel affected), while more than half (53%) of those aged 35-44 reported stress or anxiety — possibly reflecting greater financial and family obligations.
US employees report higher anxiety over payroll errors. Although American workers are more likely to encounter a payroll issue, they also report more stress: 56% of US employees said a late payment caused high stress, compared to 35% of the UK workforce.
Remote workers report greater stress from delayed wages. Possibly due to feeling more isolated when issues arise, two-thirds (66%) of remote employees said delayed wages caused stress. This compares with 51% of hybrid workers and 44% of in-house employees.
Payroll errors can strain employee-employer relations
Payroll mistakes can also damage the employer-employee relationship, often eroding trust. While more than half of employees said their relationship with their employer remained the same after a payroll problem, 42% reported some deterioration.
There’s also reputational risk if errors lead to underpayment: 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
HR decision-makers’ responses reveal a possible mismatch: nearly a quarter (24%) prioritise faster payments as the main capability they want from a payroll solution. A reduction in errors (21%) ranks sixth, suggesting employers may underestimate how seriously payroll mistakes affect staff compared with other priorities.
How do payroll issues affect employee-employer relations?
Heightened caution and diminished trust are the likeliest negative results. Nearly a third (32%) of employees who experienced a payroll mistake said this made them more wary of their employer or reduced their trust in them. Just over 1 in 10 would be more reluctant to raise issues in the future.
Younger employees are more prone to view their employer negatively 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 view of their employer after a payroll error. 60% of remote workers experienced no change in their relationship with their employer, which may reflect greater confidence in payroll tools to resolve 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 present risks to businesses
Although underpayment is the most frequent payroll error, in roughly 10% of pay‑related mistakes employees are overpaid. Such errors create a tangible financial risk for employers, especially if they go unnoticed and occur regularly.
The survey asked employees how they would respond to being overpaid at various amounts. In every scenario most respondents said they would tell their employer (on average, 61% would do so regardless of the overpayment amount), while 5% of employees would spend the money without consideration.
Over 1 in 10 (11%) said they would not notice an overpayment of $100 or less, 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 paystubs every time they receive one. Although not typically malicious, this still 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.”
How would employees respond to being overpaid?
Women are likelier than men to inform their employer about an overpayment. 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 would not notice if they had been overpaid.
Young people are least likely to report an overpayment. 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 requested. Older age groups were more likely to be forthright, with 67% of those aged 55+ saying they would inform their employer.
Employees are more likely to keep overpaid wages if they do not like their employer. 23% would choose to keep mistakenly paid funds if they did not like the company they worked for, while 13% who were happy with their employer would do the same — emphasizing the role company culture plays in payroll behavior and employees’ perception of benefits.
Employees are likelier to return funds when the employer asks. 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 findings by country and sector
Our major 2024 study on global payroll includes perspectives from employees and HR decision-makers across several countries and industries, showing how those most affected view 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 including how often payroll mistakes occur, their effects on employees, and the measures employers take to mitigate them.
Read the full report to discover strategies for reducing payroll errors
What consequences follow payroll mistakes? Download our State of Payroll Report to uncover how payroll errors affect employees and learn how to minimize your risk.
Employers need to regard payroll as more than a back-office function
Our research highlights the concrete consequences of payroll errors. The financial fallout for employees can be substantial — for instance, leading to delayed rent or utility payments — but employers must recognize that the emotional impact of a major payroll discrepancy can be felt even more acutely.
The two effects are often linked — the threat of missed payments or inability to afford essentials naturally causes stress and anxiety, especially for younger people with less financial stability and greater family obligations. That said, late wage payments alone can have a damaging effect on mental health.
That is why, as Jonathan Goldsmith notes, employers must accept that payroll is more than an administrative function:
“Payroll is a strategically important asset. Treating it as a mere back-office task means you’re falling behind. Payroll plays a role in attracting talent and shaping the employee experience. If you don’t give staff clear visibility into what they’re paid, how they receive pay, and why their pay is structured that way, you’re doing them a disservice.”
We have highlighted trust erosion as a consequence of payroll errors (with over 15% of employees saying a payroll issue reduced their trust in their employer), but the business impact can be broader: an ineffective, error-prone payroll function can sap motivation, reduce productivity, and harm an organisation’s ability to attract and retain top talent.
“Many companies say, ‘We pay our employees well’, but that means little if they fail to pay them accurately in the end. That point often gets overlooked.”
Want to learn more about how employees and HR decision-makers view payroll’s importance? Download the full State of Payroll Report to access detailed findings on common causes of payroll problems, their effects on employees and business processes, and the advantages of outsourcing payroll for organizations.
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