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2024 state of payroll report: the unseen costs of payroll mistakes
Discover the trends shaping payroll’s future through insights gathered from more than 2,500 professionals and 1,300 HR decision-makers across the globe. Download the full report to learn how to make payroll work in your favour. For your reference, here is 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.
As Jonathan Goldsmith, VP of Payroll at Remote, puts it, “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 encompass any problem or discrepancy within the payroll process, which can include pay errors, misclassification, or inconsistencies in tax subsidies.
At Remote, we regard payroll as far more than routine administration — it is a vital extension of HR that builds trust, safeguards morale, and fuels motivation. Errors and a lack of transparency around payroll can create uncertainty, anxiety, and harm relationships between employers and their workforce.
To assess the state of global payroll and measure the real impact payroll issues can have on employees worldwide, we surveyed more than 2,500 professionals across multiple demographics and sectors in the UK, US, and Germany, along with over 1,300 HR decision-makers responsible for payroll.
How do payroll issues truly affect employers and their employees? Let us examine the data.
Emphasising the critical need for accuracy and openness, our survey shows the substantial effects payroll errors can have on both employees and employers. Payroll inefficiencies can damage relationships and create major 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
A majority of employees have faced 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.
Although our HR decision-maker survey found that 7 in 10 organisations (71%) that outsource payroll reported improved accuracy, employers should not assume precision is guaranteed — nearly half (49%) of HR teams spend five or more hours each month resolving pay-related issues, particularly in larger organisations.
Which employees are most likely to experience a payroll error?
Younger employees are likelier to encounter payroll errors. More than 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 paychecks regularly (47% don’t check every month); the higher error rate may be linked to less job stability, as younger workers typically change roles more often.
Payroll mistakes are more common in US workplaces. Employees in the US are 26% more likely to experience a payroll error than their UK counterparts, with a quarter of American workers reporting a payroll issue in the last three months. A higher pay frequency (many Americans are paid every two weeks) and the famously complex US tax system may be contributing factors.
Remote workers are less likely to encounter payroll issues. Perhaps counterintuitively, fewer fully remote employees (17%) reported a payroll error in the past three months than those in hybrid or fully in-person roles (both 22%). While fully remote workers check paychecks less often (41% don’t check monthly, compared with 31% of in-person workers), remote-first organisations may have, out of necessity, more rigorous and reliable payroll systems.
The survey also found that underpayment is the most common payroll issue. Among those who experienced a payroll error, 42% said they were underpaid, nearly a quarter (24%) reported late payments, and overpayment was involved in roughly one in ten cases.
When payments are late, most cases are resolved within a week (60% of those reporting a late payment received wages within seven days), but some waited longer — about 18% were left waiting more than two weeks, and nearly 7% faced a delay of one month or more.
Stress and anxiety are the primary effects of payroll mistakes
Among the 53% of employees who experienced at least one payroll error, nearly a quarter (24%) reported a delay in payment as one of the problems they encountered.
Respondents identified the single most common impact of a late payment as “stress and anxiety” (47%). “Family pressure” was the third most cited effect (23%), underscoring that the emotional impact of late payments can be as significant as the financial one.
Financial strain is also widespread. Almost two-thirds of respondents said late paychecks caused them to miss bill or rent payments or put 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 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 while 95% of employers acknowledge payroll discrepancies affect employees, fewer than a quarter (24%) believe the impact is significant . A larger share (30%) feel the impact is small or negligible — highlighting a possible disconnect between employees’ experiences and HR leaders’ perceptions.
Which groups are most affected by payroll mistakes?
Women are more likely to experience payroll-related anxiety. The emotional impact of payroll errors is felt more acutely by female employees than by male colleagues, with over half (52%) of women reporting stress and anxiety after a late payment, compared to 42% of men.
Younger generations are more prone to stress caused by late payments. Employees aged 55 and over report the least stress when faced with a payroll mistake (only 25% feel emotionally affected), whereas more than half (53%) of those aged 35–44 report stress or anxiety — likely reflecting greater financial and family obligations.
Employees in the US are more anxious about payroll mistakes. Not only are American workers more likely to encounter payroll issues, but they are also more likely to experience stress as a consequence: 56% of US employees reported high stress from late payments, compared with 35% of workers in the UK.
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 wages caused them stress. This compares with 51% of hybrid workers and 44% of in-house employees.
Payroll errors can strain employee–employer relations
Another notable effect of payroll mistakes is a potential deterioration in the relationship between employer and employee, often leading to a loss of trust. While more than half of employees said their relationship with their employer remained unchanged after a payroll issue, 42% reported some decline.
There is also reputational risk to the company. When asked what they would do if a payroll error left them underpaid, over one in five employees (21%) said they would either “make a complaint” or “post about it on social media,” which could have broader consequences 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 points to a potential disconnect: nearly a quarter (24%) of respondents prioritised faster payments as the main function they want from a payroll solution. Reducing errors (21%) ranks only sixth, suggesting employers may underappreciate the wider impact payroll mistakes have relative to other features.
How do payroll issues affect employee–employer relations?
Increased caution and reduced trust are the most likely negative outcomes. Almost a third (32%) of employees who experienced a payroll mistake said it made them more cautious about their employer or reduced their trust. Just over one in ten would be more reluctant to raise issues in future.
Younger employees are more likely to form a negative opinion of their employer due to a payroll issue. Seventy-one percent 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 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 percent of remote workers experienced no change in their relationship with their employer, which could 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 with 53% in the United States and 64% in Germany — where employees are less likely to form a negative opinion of the business.
Overpayments carry risks for 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.
We asked employees what they would do if a payroll error resulted in an overpayment across various amounts. In every case most respondents said they would tell their employer (on average, 61% would do so regardless of the overpayment amount), while 5% admitted they would spend the money without considering the consequences.
More than one in ten (11%) said they wouldn’t notice an overpayment of $100 or under, with that proportion falling as the amount increased. This is influenced by the fact that over a third (34%) of employees don’t check their paychecks each time they receive one. While not necessarily malicious, this nonetheless highlights the hidden financial risk to businesses from frequently undetected 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 when overpaid?
Women are more likely to tell their employer about an overpayment than men. Fifty-eight percent of women would notify their employer if a payroll error resulted in an overpayment up to $100, compared with 55% of men. However, a larger share of women than men (13% vs 9%) also said they wouldn’t 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 notify their employer about an overpayment up to $100, with 23% saying they’d only return the money if asked. Older cohorts are more 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. Twenty-three percent would opt to keep money mistakenly paid if they disliked the company they worked for, while 13% of those satisfied with their employer would do the same — underscoring how company culture influences payroll-related behaviour 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, versus 9% who would do so without prompting. This highlights the responsibility on employers to identify and address overpayments promptly.
Payroll insights by country and sector
Our flagship study on the state of global payroll in 2024 captures the views of employees and HR decision-makers across several countries and industries, revealing how those most affected perceive payroll operations in today’s environment.
We surveyed 2,539 working professionals in the United Kingdom, Germany, and the United States.
We also gathered 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 mitigate them.
Why employers should treat payroll as more than a back-office function
Our research highlights the concrete consequences of failing to manage payroll properly. Financial effects for employees can be severe — from missed rent to overdue bills — yet employers must also appreciate that the emotional toll of a major payroll error is often even greater.
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.
This is why, as Jonathan Goldsmith explains, employers need to 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 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.
“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.”
Would you like to learn more about employees’ and HR decision-makers’ perspectives on 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 organizations.
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