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2024 state of payroll report: the hidden costs of payroll mistakes
Discover what is shaping payroll’s future, based on responses 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 common mistakes and how to avoid these risks
- How payroll errors affect productivity, morale and staff retention
- Practical guidance for turning payroll into a strategic business function
Download now: research/impact-of-payroll-mistakes
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Whether it’s a late salary or an incorrect pay, many people will have dealt with a payroll mistake at some stage. But what are the real consequences for those affected?
A payroll error is rarely just an administrative nuisance for the employee — it can disrupt bill payments, family plans and everyday social life. Aside from the direct financial consequences, payroll mistakes often damage employee morale and mental wellbeing.
As Jonathan Goldsmith, Remote’s VP of Payroll, observes, “Pay is not only about work, it is about life. Being paid incorrectly can prevent you from looking after your family and yourself. It can disrupt holiday plans or stop you saving for things such as school fees or even a new home.”
Payroll issues cover any discrepancy or error in payroll processes, including incorrect pay, misclassification of workers or mistakes in tax and subsidy calculations.
At Remote, we view payroll as more than routine administration — it is a vital HR function that builds trust, supports morale and sustains motivation. Errors and opacity in payroll can create anxiety, uncertainty and strained employer–employee relationships.
To assess global payroll practices and the real impact payroll issues have on employees, we surveyed more than 2,500 professionals across different sectors and demographics in the UK, US and Germany, and gathered input from over 1,300 HR decision-makers responsible for payroll.
How do payroll issues really affect organisations and their people? Let’s examine the data.
Our survey underlines the critical need for accuracy and transparency: payroll mistakes affect both staff and organisations and can create serious operational bottlenecks as well as harm relationships.
"Payroll is a core HR function that must be seen as people-centric. That focus helps prevent erosion of trust and preserves an employer’s reputation with its staff." - Jonathan Goldsmith, VP of Payroll at Remote
More than half of employees have experienced payroll issues
Fifty-three per cent of employees surveyed had faced a payroll issue in their career, with half of respondents reporting at least one incident within two years of the survey. Forty per cent experienced an error in the past year, and nearly 11% had a payroll mistake in the previous month.
Among those reporting an error in the past year, 43% said it happened only once, but over 18% experienced three or more mistakes in a single year — younger workers (16–24) reported the highest frequency.
Although 71% of organisations that outsource payroll reported improved accuracy, precision cannot be assumed — nearly half (49%) of HR teams still spend five or more hours each month resolving pay-related problems, especially in larger companies.
Who is most likely to face a payroll error?
Younger employees are more likely to encounter a payroll error. Over 70% of respondents aged 16–24 reported a payroll error in the last two years, compared with 30% of those aged 55 and above. Gen Z is also less inclined to check payslips regularly (47% do not check monthly), and their higher error rate may reflect greater job mobility and less pay stability.
Payroll mistakes are more common in US workplaces. Employees in the US are 26% more likely to experience a payroll error than those in the UK; one quarter of American workers reported a payroll problem in the past three months. Factors may include more frequent pay cycles (many Americans are paid fortnightly) and the complex US tax system.
Remote workers are less likely to encounter payroll issues. Surprisingly, only 17% of fully remote employees reported a payroll error in the past three months, versus 22% of hybrid and in-person staff. Remote employees check pay less often (41% do not check monthly, compared with 31% of in-office staff), but remote-first organisations may have stricter payroll controls and systems.
The survey also found that underpayment is the most frequent payroll issue. Among those affected, 42% reported being underpaid, nearly a quarter (24%) received late payments and about 10% experienced overpayments.
When payments are late, most cases are resolved within a week (60% of those who reported late pay said they received wages within seven days). However, roughly 18% waited more than two weeks and almost 7% experienced delays of a month or longer.
Stress and anxiety are the main consequences of payroll mistakes
Of the 53% of employees who encountered at least one payroll error, almost a quarter (24%) reported delayed payment as one of the problems they faced.
Respondents indicated that the single most common effect of late pay was “stress and anxiety” (47%). “Family pressure” ranked third (23%), showing that the emotional toll of late payments is often as significant as the financial one.
Financial strain is also common. Almost two-thirds of respondents said late salaries forced them into late bill or rent payments or into overdraft.
"Payroll affects people, and it is an emotional matter. It significantly influences employee morale. If an employee is not paid correctly or does not receive the pay they expect, they could miss an important medical payment or something equally essential.” - Jonathan Goldsmith, VP of Payroll at Remote
In contrast, our poll of HR decision-makers shows that although 95% acknowledge payroll discrepancies affect employees, fewer than a quarter (24%) consider the effect significant. Another 30% believe the impact is small or negligible — revealing a gap between employees’ experiences and HR leaders’ perceptions.
Who suffers most from payroll mistakes?
Women are more likely to experience payroll-related anxiety. The emotional toll of payroll errors is felt more by women than men: 52% of female employees reported stress or anxiety after a late payment, compared with 42% of male employees.
Younger generations are more susceptible to stress from late payments. Employees aged 55+ report the least emotional impact (25%), while 53% of those aged 35–44 say they feel stressed or anxious — likely due to greater financial and family responsibilities.
Employees in the US report higher anxiety about payroll mistakes. US workers not only are more likely to face payroll errors, but also report greater stress: 56% of US employees said late pay caused high stress, compared with 35% in the UK.
Remote workers report higher stress from delayed payments. Possibly due to isolation when issues occur, 66% of remote employees said delayed wages caused stress, compared with 51% of hybrid workers and 44% of on-site employees.
Payroll errors can strain employee–employer relations
Another major consequence of payroll mistakes is damage to the employer–employee relationship, often eroding trust. Although over half of employees reported no change after a payroll issue, 42% said their relationship with their employer worsened.
There is also reputational risk: when asked how they would react to being underpaid, over a fifth (21%) said they would lodge a complaint or post on social media — actions that could harm the employer’s public standing.
“There are functions within a company, like payroll, that exist for the employee and leadership must acknowledge that impact. Poorly run payroll affects retention, sentiment and motivation — those are significant outcomes.” - Jonathan Goldsmith, VP of Payroll at Remote
Our HR decision-maker survey reveals a disconnect: nearly 24% identify faster payments as the main benefit they want from payroll solutions, while reducing errors (21%) ranks sixth — suggesting employers may underestimate the broader impact of payroll mistakes.
How do payroll issues alter employee–employer relations?
Increased caution and reduced trust are the likeliest negative outcomes. Almost a third (32%) of employees affected by a payroll error said they became more cautious or lost trust in their employer. Slightly more than 1 in 10 said they would be less willing to raise issues in the future.
Younger employees are more likely to form a negative view of their employer after a payroll error. Seventy-one percent of 16–24-year-olds reported a negative shift in their relationship with their employer after a payroll mistake. By contrast, almost two-thirds (65%) of those aged 45–54 said relations stayed the same.
Remote workers are less likely to change their view of an employer after a payroll error. Sixty percent of remote employees reported no change in their relationship with their employer, which may reflect greater confidence in payroll systems or less direct contact with payroll and leadership staff.
UK employees are more likely to change their opinion of their employer after a payroll mistake. Just under 50% of UK respondents said their employer relationship stayed the same, compared with 53% in the US and 64% in Germany, where employees were least likely to form a negative view.
Overpayments create financial risk for employers
Although underpayment is most common, about 10% of pay errors result in overpayment — a material risk for businesses if such mistakes are frequent or remain undetected.
We asked employees what they would do if overpaid across various amounts. In every scenario most respondents said they would tell their employer (on average 61% would do so), but 5% said they would spend the extra money without thought.
More than 1 in 10 (11%) said they would not notice an overpayment of $100 or less, with that share falling as the amount increases. This is affected by the fact that over a third (34%) of employees do not check their payslips every time. While typically not intentional, these unnoticed errors highlight a hidden financial exposure for employers.
“Some employees may see an overpayment in a pay packet as 'free' money,” says Jonathan Goldsmith. “However, employers have the legal right to reclaim overpaid wages. Businesses must act quickly to spot and correct these errors, so payroll accuracy and vigilance are essential.”
How would employees respond if overpaid?
Women are more likely than men to report an overpayment to their employer. Fifty-eight percent of women would inform their employer if overpaid up to $100, versus 55% of men. Yet 13% of women (compared with 9% of men) said they would not notice such an overpayment.
Younger people are least likely to notify their employer about an overpayment. Just over a third (35%) of 16–24-year-olds would report an overpayment up to $100; 23% would only return the funds if asked. Older workers were more likely to notify their employer, with 67% of those aged 55+ saying they would report it.
Employees are likelier to keep overpaid wages if they dislike their employer. Twenty-three percent would keep mistaken payments if they disliked the company, while 13% of those satisfied with their employer would do the same — underlining how company culture affects behaviour around payroll errors.
Employees are more likely to return money when their employer asks for it. Across scenarios, an average of 13% of employees would return an overpayment if requested by their employer, compared with 9% who would do so unprompted. This points to employers’ role in identifying and addressing overpayments.
Payroll insights by country and sector
Our major study of global payroll in 2024 captures employee and HR decision-maker views across several countries and industries, revealing how affected groups 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 findings such as how often payroll mistakes occur, the impact on employees and what employers are doing to reduce them.
Employers must treat payroll as more than a back-office task
Our research highlights the consequences of failing to get payroll right. Financial effects for employees can be severe — for example, late rent or bill payments — but the emotional impact of a major payroll error can be even more damaging.
These effects are often linked — the risk of missing a scheduled payment or not affording essentials causes stress and anxiety, especially for younger people with less financial resilience and greater family commitments. Late wages can therefore harm mental health.
That is why, as Jonathan Goldsmith sets out, employers must acknowledge that payroll is more than administration:
“Payroll is a strategic asset. If you treat payroll as a back-office function, you are already out of step. Payroll supports recruitment and helps deliver a strong employee experience. If you do not give people clear insight into what they are paid, how they are paid and why their pay is structured that way, you are doing your employees a disservice.”
We have shown trust erosion as a likely fallout of payroll mistakes (more than 15% said their trust in their employer fell), but the business impacts can be broader: poor payroll leads to lower motivation, reduced productivity and difficulty attracting and retaining top talent.
“Many companies will say, ‘We pay our employees well’, but that claim counts for little if pay is not processed correctly. That is a crucial point, and it is often overlooked.”
Want to learn more about what employees and HR decision-makers think about payroll? Download the full State of Payroll Report for in-depth analysis of common payroll issues, the effects on staff and operations, and the advantages of outsourcing payroll.
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