A recent survey by global payroll leader Remote has unveiled that a significant number of UK businesses might be underestimating the far-reaching consequences of payroll errors.
The study highlights the potential emotional, reputational, and financial damage that can result from these errors, affecting both employees and businesses alike.
The survey, part of Remote’s State of Global Payroll report, gathered insights from 1,006 employees and 508 HR decision-makers across the United Kingdom. The findings paint a stark picture of the prevalence and impact of payroll issues. Nearly half (47%) of UK employees reported experiencing payroll errors, including incorrect payments and delayed pay checks, within the past year. Alarmingly, 59 percent of those affected experienced multiple errors during this period.
Disconnect Between HR Perception and Employee Experience
While a vast majority (97%) of HR decision-makers acknowledge that payroll issues impact employees, only about a quarter believe the impact is significant. This contrasts sharply with employee experiences, where 59 percent reported increased stress, anxiety, and family pressures due to payroll errors. Also, 55 percent faced financial repercussions, such as late bill payments or overdraft fees, as a direct result of these mistakes.
Eroding Trust and Damaging Relationships
Payroll mistakes not only strain employee finances but also erode trust between employees and their employers. The survey found that 42 percent of UK employees reported a negative impact on their relationship with their employer following a payroll error. This loss of trust can lead to decreased motivation, lower retention rates, and an overall decline in employee satisfaction.
Reputational Risks and Financial Implications
Beyond internal relations, payroll errors can also tarnish a company’s reputation. While most employees would report a payroll error to HR or their manager, a concerning 14 percent said they would file a complaint, and 4 percent would even voice their frustrations on social media. Such actions could harm a company’s image both internally and externally.
Financially, the risks are significant. Overpayment errors, which account for around 10 percent of payroll mistakes, can lead to substantial losses if not promptly identified and corrected. With 38 percent of UK employees admitting they do not regularly check their payslips, the likelihood of unnoticed overpayments—and subsequent financial loss—increases.
The Case for Outsourcing Payroll
The survey also explored the potential benefits of outsourcing payroll. Despite only 15 percent of UK companies currently outsourcing this function, those that do report substantial improvements in accuracy, security, and time management. Specifically, 67 percent of businesses that outsource payroll noted a positive impact on accuracy, addressing a critical need given the high incidence of payroll errors.
Jonathan Goldsmith, VP of Payroll at Remote, emphasised the strategic importance of payroll management, stating, “Payroll is a highly strategic asset. If you’re treating payroll as a back-office function, you’re already behind the times. Payroll errors can have profound effects on employee retention, sentiment, and motivation.”
Goldsmith also highlighted the importance of accuracy in payroll, noting that even well-paid employees may lose trust in their employer if they are not paid correctly. “A lot of companies say, ‘We pay our employees well,’ but this doesn’t matter if they’re not paying them correctly,” he added.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
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