Payroll errors affect 25% of UK employees

A recent survey from The Global Payroll Association has unveiled a concerning statistic: 25% of UK PAYE employees have received incorrect paycheques from their employers. This issue is more than just a minor inconvenience; it has significant repercussions for both employees and businesses.  In this blog, we will ask why these payroll errors occur, the impact they have, and how managed payroll services can be a game-changer for ensuring accuracy and compliance.

Understanding the scale of payroll errors

The Global Payroll Association’s recent research highlights that one-quarter of UK employees have encountered incorrect paycheques. Of those affected, 46% have experienced these errors more than once. These mistakes are not just rare blips; they are recurring problems that impact a substantial number of workers.

Causes of payroll errors

Human error is a leading cause of payroll inaccuracies. Research shows that 91% of businesses across the UK admit to making payroll errors every month. 72% of companies still use manual processes, causing discrepancies between different departments involved in payroll processing.

Payroll processing often involves multiple departments—HR, finance, and payroll teams. Miscommunications or errors between these groups can lead to mistakes. For example, if HR does not communicate changes in an employee’s status or pay to the payroll department, it can result in incorrect pay amounts.

The time it takes to correct these errors is another issue. In 56% of cases, it took more than a week to resolve the mistake, while only 13% of errors were fixed on the same day. This delay can exacerbate the problem, causing further financial and emotional stress for affected employees.

Impact on employees

The consequences of payroll errors can be severe. Almost half (46%) of UK employees said they missed a bill payment due to inaccurate payroll. This financial strain can lead to increased stress and anxiety, affecting both personal well-being and professional productivity.

Incorrect pay also affects employee morale. When employees feel that their pay is not handled correctly, it can lead to decreased productivity, lower commitment, and even higher turnover rates. Employees want to feel valued and fairly compensated, and repeated payroll errors undermine this sense of fairness and respect.

The crucial role of HR

When payroll errors occur, clear and prompt communication from HR is vital. Employees need to know how the issue is being addressed and what steps are being taken to resolve it. Transparency in handling payroll discrepancies helps maintain employee trust and morale.

The solution? Managed payroll services

Managed payroll is the process of outsourcing payroll to an external specialist. Leaving such a business-critical function in the hands of accredited specialists can increase accuracy and give companies complete peace of mind that they are compliant.

With Phase 3, it’s more than just “handling your payroll” – we become an extension of your payroll department, offering tailored solutions to suit your organisation’s needs. Our team of professionals will ensure that your payroll is in the best of hands, freeing you up to focus on the business at hand.

Other best practices for payroll accuracy

To further ensure payroll accuracy, businesses should consider implementing the following best practices:

1. Invest in Technology: Transitioning from manual payroll processes to automated systems can significantly reduce errors. Automated systems are designed to handle complex calculations and regulatory changes with greater accuracy.
2. Conduct Regular Audits: Regular audits of payroll processes help identify and rectify discrepancies early. Global HR recommends payroll audits at least once a year. Routine checks can ensure that the system is functioning correctly and that any issues are addressed before they affect employees.
3. Continuous Training: Providing continuous training for payroll staff is crucial. Regular training ensures that payroll professionals stay updated on best practices, regulatory changes, and new technologies, which helps maintain accuracy and compliance.

Payroll errors are a serious issue that affects a significant portion of the workforce, leading to financial stress and decreased morale. Managed payroll services offer a reliable solution to these problems by minimising errors and ensuring compliance. By investing in these services and adopting best practices, businesses can enhance payroll accuracy, improve employee satisfaction, and ultimately foster a more productive and engaged workforce.

For more information on how our managed payroll services can benefit your organisation, get in touch with our experts at Phase 3. Addressing payroll errors effectively not only resolves immediate issues but also strengthens overall employee trust and satisfaction.