Payroll errors risk financial crisis for workers

Payroll mistakes and delays are leaving many UK workers financially exposed, with new research suggesting that one in three employees would struggle to cope if their main pay packet was wrong or late even once.

A survey of 2,000 UK employees by workforce management platform HBHR found that payroll errors are already affecting financial stability across the workforce. Almost a quarter of employees (24%) said pay mistakes have made it harder to afford essential costs such as rent, mortgage payments, food, and energy, while one in five (20%) reported missing a bill or regular payment because their payslip was incorrect or delayed.

The findings arrive ahead of significant changes to UK payroll and tax reporting due to take effect on 6 April 2026, when HMRC will introduce new rules designed to modernise payroll systems and improve reporting accuracy. The timing means many organisations face additional complexity at a moment when payroll processes are already under strain.

London workers appear particularly exposed. The research shows that 34% of employees in the capital have been unable to cover a bill following a payroll error, while 31% say they have borrowed money — through credit cards, overdrafts, or loans from friends and family — to bridge the gap.

Younger employees are experiencing the sharpest financial impact. Among Gen Z workers, 37% say they have fallen into arrears because of payroll mistakes, and 31% report borrowing money to manage the shortfall. At the same time, 38% say they would struggle to cope if their pay were incorrect or late even once.

Confidence in payroll systems also varies sharply across age groups. Just 29% of Gen Z and millennial respondents say they feel very confident that payroll processes will avoid mistakes, compared with 43% of baby boomers.

The research suggests payroll errors may also create retention risks for employers. If pay mistakes continued for six months, 61% of workers say they would consider looking for a new job. Among younger staff, that rises to 76% of Gen Z respondents and 72% of millennials.

Payslip mistakes themselves appear relatively common. Almost a quarter of employees (23%) say they have spotted an error on their payslip in the past year. Yet many workers do not regularly review the details of their pay. Nearly half (49%) say they either skim through their payslip or rarely check it at all.

Younger employees are more likely to review the information, with 40% of Gen Z workers and 42% of millennials saying they scan their payslips, compared with 27% of baby boomers.

Communication between employers and staff around payroll also appears limited. Fewer than half of respondents (41%) say their payroll or HR system clearly flags changes in pay, tax, or deductions between payslips. One in five workers (20%) actively disagree that their system highlights these changes.

Awareness of the upcoming HMRC payroll changes is similarly low. Only 36% of employees say their employer has informed them about the new rules coming into effect in April 2026, while 30% say they have received no communication at all.

Callum Pennington, CEO and co-founder of HBHR, said the findings highlight how payroll accuracy has become a frontline issue for employees.

“Payroll has always been treated as a back office function, but these numbers make it brutally clear that it now sits on the front line of the cost-of-living crisis. When employees are missing bills because their payslip is wrong, that is not a minor admin issue — it is a systemic failure,” he said.

“Employees need payslips that are right the first time, clear communication about any change, and technology that makes errors visible and fixable. HMRC’s changes are a golden opportunity for businesses to assess and evolve their payroll, but if they try to navigate this shift with spreadsheets or outdated systems, they risk pushing more employees into debt and driving out their best talent.”

Employees themselves appear clear about the solutions they expect. The survey shows that 85% believe organisations should use up-to-date payroll technology to minimise errors, while 72% say modern systems increase confidence that pay will arrive accurately and on time.

Workers also highlighted communication improvements, with 33% calling for advance explanations of pay changes and 29% wanting a named payroll contact to handle questions.

With HMRC’s new payroll reporting framework approaching, the research suggests companies have a narrowing window to review systems and communication before the changes come into force.