15m affected by payroll errors, yet employees not checking pay thoroughly

• Over half of UK employees have been affected by a pay error

• One in ten don’t regularly check their payslip

• Three quarters don’t understand information on their payslip

Winter 2007: Over half (59%) of the UK’s employees have been affected by a payroll error, according to research by ADP Employer Services and YouGov. Despite this, many employees are not aware of the importance of reading their payslips and what to look out for – 11% do not regularly check their payslip whilst almost one in five (18%) wouldn’t even notice a pay error.

Employers are significantly more likely to underpay employees: of those affected by a payroll error, 41% have been underpaid, whilst only 17% have been overpaid. But unsurprisingly, employees are more likely to report an underpayment than an overpayment – only 2% said they didn’t report a shortfall compared to 20% who have kept quiet about an extra generous pay packet.

Employees need to be wary though as they can be prosecuted for spending money that they have not legally earned. Royal Bank of Scotland employee, Lisa Masters, was recently given a nine-month suspended prison sentence and ordered to do 200 hours of unpaid work for blowing a £30,000 overpayment by her employer.

Not only are employees not checking their payslips regularly enough, the research also shows they don’t fully comprehend the information they contain. Almost three quarters (73%) said they don’t understand information on their payslip, with the greatest confusion arising over tax codes (16%) and National Insurance contributions (12%).

“ADP’s research shows that a worrying number of pay errors are occurring, yet employers are not doing enough to ensure their staff remain vigilant,” commented Ian Sparrow, ADP freedom product director, ADP Employer Services. “Payroll errors could not only cause both employers and employees to be out of pocket, they also cost payroll and HR professionals time in rectifying problems.

“One way of minimising pay errors and their effects is by outsourcing the payroll process to an external provider. This will introduce best practice processes to minimise errors, whilst also transfer any risk to the supplier. Many payroll services now make it even easier for staff to view pay information and even check for errors before they are paid, through self service functionality. Employers should encourage employees to consistently check this information and educate them on what to look out for,” concluded Ian.

ENDS