There’s a 40% chance your pay was wrong this year

As the cost of living crisis eats into wages, salary has never been more important for staff. Yet a new survey suggests that thousands of UK employee payslips have been calculated incorrectly or sent late this year.

Payroll provider Remote surveyed 1,006 UK workers as part of its State of Payroll report. The findings show that 40% of respondents have experienced a payroll mistake in the past 12 months. Moreover, 59% say they have encountered two or more during this period.

Bosses might tell themselves otherwise, but pay is often the most important factor for staff morale. If an employee gets paid the wrong amount or at the wrong time, the impact can be devastating for both the individual’s financial wellbeing, and wider company culture.

Pay failures cost employers

Most of us view our payslips each month or week we are paid. But aside from a quick glance, few workers will actually dive into the complex information shown, such as tax brackets and National Insurance contributions (NICs).

For HR teams, underpaying an employee might be just a bad day at the office. But if you’re an employee, a delay on earnings can cause you to make late payments for bills like rent, or force them into an overdraft. You might also have a family to feed.

As a result, the Remote survey shows that 59% of employees in the UK reported additional stress, anxiety, and family pressures directly resulting from delayed payments.

In some cases, this has led to workplace conflict. 42% of UK respondents think payroll mistakes have negatively impacted their relationship with bosses. 15% of employees even told Remote they have less trust in the company after experiencing a payroll issue.

Asda pay fail

For a first-hand look at how pay mistakes can affect employee morale, just look at Asda. The grocery retailer is one of the largest supermarket chains in the UK, yet many of its 145,000-strong workforce received incorrect payslips this year.

When Asda migrated to a new payroll system in March, a technical glitch resulted in approximately 10,000 workers being underpaid. The Telegraph reported that some Asda team members had two weeks’ worth of wages erroneously deducted from their payslips.

Occasional payment glitches may be forgiven. Yet GMB, the union that represents Asda staff, said some teams were still facing wage errors three months after the IT glitch. Despite these pay failures, Asda apparently has no problem offering a reported CEO salary of £10M.

In May, Nadine Houghton, GMB National Officer said: “[Asda’s response] is a blatant disregard for the stress and worry they have put on low paid workers who have had to worry about paying the bills and feeding their family when not being paid properly.”

What are the rules if an employee is paid wrongly?

We’ve discussed the repercussions if a worker does not receive enough money in their payslip, but the result can be just as bad if a worker is mistakenly overpaid.

In most cases, employers have the right to claim back any extra money that is paid out. However, the situation should be handled delicately – bosses should not deduct money from future wages without first letting the employee know.

Workers may also feel stressed about suddenly having to pay back a large chunk of their salary. A repayment plan is the fairest and most flexible way to get the money back.

If a worker is underpaid, the mistake is likely to go unnoticed if the individual doesn’t pick up on the error. For employers, fixing it quickly is important to preserve staff relationships and for compliance. Paying under the minimum wage can lead to serious penalties.

Concerned about payroll mistakes? Technology can help. Read about the best small business payroll software and how it improves accuracy when calculating wages.