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2024 state of payroll report: uncovering the hidden costs of payroll mistakes
Discover the forces shaping the future of payroll, based on insights from over 2,500 professionals and 1,300 HR decision-makers worldwide. Download the full report to learn how to make payroll work for your organisation. Inside, you will find:
- The most frequent errors and how to mitigate them
- How payroll errors affect productivity, morale and staff retention
- Practical guidance for turning payroll into a strategic business function
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Whether caused by a late payment or an underpaid payslip, many of us will have encountered a payroll fault at some stage in our careers. So, what effect do payroll errors have on the people who experience them?
For an employee, a payroll problem is often more than a mere inconvenience — it can disrupt banknote payments, family plans and even one’s social life. Beyond the financial consequences, payroll mistakes can also harm an employee’s morale and 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 describe any problem or inconsistency within the payroll workflow, which can include pay mistakes, misclassification of workers, or inconsistencies in tax subsidies.
At Remote, we regard payroll as far more than a routine administrative task — it is a vital arm of HR for every business and plays a key role in building trust, safeguarding morale and sustaining motivation. Errors and a lack of transparency around payroll create uncertainty, increase anxiety and can undermine the relationship between employers and their teams.
To assess the global state of payroll and measure the real-world effects payroll issues have on employees worldwide, we surveyed more than 2,500 professionals across multiple demographics and sectors in the UK, US, and Germany, along with more than 1,300 HR decision-makers responsible for payroll.
How do payroll issues really affect employers and their employees? Let us examine the data.
Our survey underlines the critical need for accuracy and openness, demonstrating the substantial harm payroll mistakes can inflict on both staff and employers. Inefficient payroll not only damages relationships but can also 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
More than half of employees have experienced payroll issues
Across the sample, 53% of the employees surveyed had experienced a payroll issue during their career; 50% had experienced at least one within two years of the survey date. 40% had encountered a payroll error in the past year, while almost 11% had suffered a payroll mistake in the last month alone.
Of the respondents who had experienced a payroll error within the past year, 43% had encountered an issue only once, but more than 18% reported at least three payroll mistakes over a single year — with the highest incidence among workers aged 16–24.
While our survey of HR decision-makers found that 7 in 10 organisations (71%) who outsource payroll reported a positive impact on accuracy, employers should not assume perfect precision — indeed, almost half (49%) of HR teams spend 5 or more hours resolving pay-related issues each month, 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 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% do not check theirs every month) this higher error rate may reflect lower employment stability — younger staff typically 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 25% of US workers having encountered a payroll issue in the last three months. A higher payslip frequency (most Americans are paid every two weeks) may contribute to this, alongside a notoriously complex US tax system.
Remote workers are less likely to encounter payroll issues. Perhaps surprisingly, fewer fully remote employees (17%) experienced a payroll error in the past three months than those in hybrid or fully in-person roles (both 22%). Although fully remote workers check payslips less often (41% do not check theirs every month, compared with 31% of in-person workers), it may be that fully remote organisations have, out of necessity, more robust and dependable systems in place.
The survey also found that underpayment is the most common payroll issue. Of those who had 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 7 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 to discover practical ways to reduce payroll errors
What are the consequences of payroll mistakes? Download our State of Payroll Report to see how payroll errors affect employees and to learn practical ways to minimise your risk.
Stress and anxiety are the most significant consequences of payroll errors
Among the 53% of employees who had experienced at least one payroll error, nearly a quarter (24%) identified a delay in payment as one of the problems they faced.
Survey participants indicated that the single most common effect of a late payment was “stress and anxiety” (47%). “Family pressure” ranked third (23%), signalling that the emotional fallout of late pay is often as important as the financial consequences.
Financial strain is also widespread. Almost two-thirds of respondents reported that late payslips forced them to make late payments for banknotes and rent or pushed them into their overdraft.
“Payroll touches people’s lives and carries an emotional weight. It can considerably affect employee morale within the organisation. If someone is paid incorrectly, or receives less than expected, they may miss a medical payment or another essential cost.” - 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 they have a significant impact. A larger share (30%) feel the impact is either small or nonexistent — highlighting a possible disconnect between how employees and HR leaders perceive payroll problems.
Who is most affected by payroll mistakes?
Women are more likely to experience payroll-related anxiety. Female employees feel the emotional effects of payroll errors more keenly than their male colleagues, with over half (52%) reporting stress and anxiety after a late payment, compared with 42% of men.
Younger generations are more prone to stress caused by late payments. Workers aged 55+ report the least stress from payroll mistakes (only 25% say they were emotionally affected), whereas a majority (53%) of those aged 35–44 felt stressed or anxious — potentially reflecting greater financial and family commitments.
Employees in the US are more anxious about payroll mistakes.Although US workers are more likely to encounter payroll issues, they also report higher levels of stress as a result. Fifty-six percent of US employees said a late payment caused them significant stress, compared with 35% of the UK workforce.
Remote workers have higher stress levels around delayed payments. Possibly because they can feel 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 in-house employees.
Payroll errors can affect employee-employer relations
A further important consequence of payroll mistakes is the potential breakdown in trust between employer and employee. While more than half of employees said their relationship with their employer remained unchanged after a payroll issue, 42% reported some degree of deterioration.
There is also a reputational risk to companies when payroll errors occur. When asked what they would do if a payroll mistake left them underpaid, over a 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.
“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 highlights a potential disconnect, with almost a quarter (24%) naming faster payments as the principal function they would like a payroll solution to deliver. A reduction in errors (21%) ranks sixth, suggesting employers may undervalue the broader consequences of payroll mistakes.
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 error said it made them either more cautious about their employer or less trusting of them. Just over one in 10 respondents said they would be more reluctant 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 percent of employees aged 16–24 experienced a negative change in their relationship with their employer after a payroll error. By contrast, almost two-thirds (65%) of those aged 45–54 reported 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 reported no change in their relationship with their employer, which may reflect greater confidence in payroll systems to resolve mistakes or simply less face-to-face contact with leaders and payroll teams.
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 stayed 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 organisation.
Overpayments pose a risk to businesses
Although underpayment is the most common issue, roughly 10% of pay-related errors result in the employee being overpaid. Repeated or unnoticed overpayments can pose a material financial risk to employers.
Our survey asked employees what they would do if a payroll error resulted in them being overpaid, across several different amounts. In every case most respondents said they would inform their employer (on average, 61% would do so regardless of the overpayment amount), while 5% said they would spend the money without thinking about it.
More than 1 in 10 (11%) said they wouldn’t 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 one. Although not usually malicious, this still exposes businesses to the hidden financial risk of undetected 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 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% versus 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, with 23% saying they would return the money only if asked. Older cohorts were more forthcoming: 67% of those aged 55+ said they would inform their employer.
Employees are more likely to keep overpaid wages if they don’t like their employer.Twenty-three percent would choose to keep money paid in error if they disliked the company they worked for, whereas 13% of those content with their employer would do the same — underlining the influence of company culture on payroll-related behaviour and perceived benefits.
Employees are more likely to return money if asked by their employer.Across scenarios, an average of 13% of employees said they would return an overpayment if the employer requested it, versus an average of 9% who would do so without prompting. This emphasises the responsibility on employers to detect overpayments quickly.
Payroll insights across countries and sectors
Our principal study of the global payroll landscape in 2024 captures the perspectives of employees and HR decision-makers across several countries and industries, revealing how those most affected evaluate payroll processes today.
We surveyed 2,539 working professionals in the United Kingdom, Germany, and the United States.
We also gathered the views of 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 effect these errors have on employees, and the steps employers are taking to address them.
Read the full report and learn how to reduce payroll errors
What happens when payroll is processed incorrectly? Download our State of Payroll Report to see how payroll errors impact employees and discover how to minimise your risk.
Employers need to view payroll as more than a back-office function
Our research draws attention to the tangible consequences of getting payroll wrong. The financial fallout for employees can be substantial — for example, delayed rent or missed cash payments — yet employers must realise that the emotional toll of a serious payroll discrepancy is frequently even greater.
Naturally, the two are often connected — the prospect of a missed scheduled payment or being unable to afford basic necessities almost always causes stress and anxiety, especially among younger workers who typically have less financial stability and greater family responsibilities. Nevertheless, late payment of wages can cause real damage to employees’ mental health.
That is why, as Jonathan Goldsmith points out, employers need to recognise that payroll is more than a merely administrative function:
“Payroll is a strategic asset. If you treat payroll as a back office task, you are already behind the curve. Payroll helps attract staff and shapes their experience. If you do not give employees clear information about what they are paid, how they are paid and why payments are structured that way, you are doing them a disservice.”
We highlighted loss of trust as a likely outcome of payroll errors (more than 15% of employees said an issue had reduced their trust in their employer), but the business impact can be broader: an error-prone payroll operation can undermine motivation, lower productivity and hinder 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 a deeper understanding of how employees and HR decision-makers view the importance of payroll? Download the full State of Payroll Report for detailed analysis of the typical causes of payroll failures, their effect on employees and on business operations, and the benefits of outsourcing payroll for organisations.
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