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Nearly half of staff have been paid late because of cashflow and payroll issues

2 Jun 2017 By Hayley Kirton

HR warned that delayed wages cause employees to become ‘actively disengaged’

Almost half (44 per cent) of European employees have been paid late at some point, with system problems among the top reasons for not getting wages on time, new research has found.

The survey of 4,000 employees by payroll service provider SD Worx also discovered that, of those workers who had been paid late, 48 per cent had been paid incorrectly as well.

Late payments from third parties disrupting cashflow topped the reasons that were given for delayed pay, cited by 34 per cent of respondents, but system outages or errors, including payroll system problems, came in second place with 23 per cent.

Not being able to pocket their pay as expected has left staff less than impressed. More than two out of five (44 per cent) said they would consider leaving their jobs after receiving their salary late. Meanwhile, 88 per cent of those who had been paid late said they now had a negative perception of their employer.

“The results of this survey are shocking in regards to the impact that payroll error has on employee engagement,” said Jan Van Mol, head of global alliance at SD Worx. “An increasing number of employees are becoming actively disengaged in their workplace because of late or incorrect payments, something that employers need to fix to ensure their employees have high morale and trust in the workplace.”

Last month, John Lewis announced that it would need to restate its profits to the tune of £36m after the retail giant breached minimum wage laws. It blamed the mishap on a payroll error – more specifically, its pay averaging practice, which aims to make sure staff take home the same pay each month regardless of the precise number of hours they worked in that period.

In March, Tesco revealed that it had paid staff less than the minimum wage, citing an error that occured while it was introducing its new payroll system. The mistake lead to 140,000 of the supermarket’s workers being shortchanged almost £10m between them.

Meanwhile, in February, Debenhams took the infamous number one slot on HMRC’s ‘list of shame’ featuring businesses breaching minimum wage rules, again blaming a slip-up in its payroll calculations.

However, it’s not just grumpy employees companies have to worry about when they make mistakes with their payroll. Research by accountancy firm UHY Hacker Young, which was published last year, revealed that HMRC had collected £737m in taxes and penalties after the taxman decided to crack down on payroll errors.

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