UK’s largest employers pay their workforces incorrectly

Employees at some of the largest organisations in the UK are regularly being paid incorrectly or late, reveals a new Censuswide survey on behalf of MHR.

The survey of 251 HR and payroll managers in companies with 1000 employees or more in the private sector was commissioned to examine if the payroll function at some of the UK’s largest companies has evolved to keep pace with the demands of the modern workplace and complexity of the process.

Shockingly it found that more than three-quarters (76 per cent) of companies had admitted to failing to pay their employees correctly or on time on one or more occasions in the past year.

On average, respondents admitted that their employees had been paid incorrectly or late four times in the last 12 months.

Over a quarter (27 per cent) of respondents admitted errors or late payments had occurred one to three times in the past 12 months.

Alarmingly, 12 per cent of large companies paid their employees incorrectly or late 7-9 times with the worst offenders (8 per cent) confessing to doing so over 12 times.

The challenge facing HR and payroll teams to deliver accurate and punctual payments is compounded by the fact that over half of large organisations are still using spreadsheets (52 per cent) as part of their payroll process, and over a third (34 per cent) relying on paper timesheets.

When asked why their organisations stuck with these methods that are open to errors and miscalculations, more than half of respondents using spreadsheets (62 per cent) and paper (58 per cent) said it was because it had always been done that way.

David Crewe, head of service operation for outsourced payroll at MHR, says: “Our research shows that bigger isn’t always better, with a widespread failure of some of the UK’s largest and most successful organisations to modernise their payroll process. Worryingly many are still using outdated manual processes for gathering and inputting data resulting in an awful lot of people suffering from incorrect pay.

“This can have a profound impact on people, not only impacting their ability to pay the bills on time but affecting their overall wellbeing, morale and productivity, which over time can force them to leave their jobs.

“The responses to the survey highlight that organisations are either blind to the problems their HR and payroll teams face, reluctant to change their way of working or simply don’t have the time to undertake a digital transformation project to fix the problem.

“With payroll professionals already facing many arduous tasks and under pressure to meet compliance obligations to ever-changing employment legislation, it’s inconceivable that organisations of this size can even consider doing their payroll manually rather than with a secure, automated system.

“With Government plans to make tax fully digital already underway, the sooner organisations introduce new digital ways of working the better.”

The full results of the survey together with the implications of relying on outdated processes and the benefits organisations can achieve by undertaking a digital transformation of the payroll process are explored in our report ‘The inconvenient truth of large payroll’, which is available to download below:

The inconvenient truth of large payroll

Our research conducted in partnership with Censuswide, reveals new insight on the current state of payroll processes, showing that there's much opportunity for organisations to become more streamlined, efficient and impactful in the markets they serve. Download the report and find out how you can improve your processes.