After conducting a survey of 4,000 employees, new research reported by CIPD.co.uk found that a staggering 44 per cent of European employees have been paid late at some point during their career. And of those that were paid late, a worrying percentage of them were also paid incorrectly. The research found that 48% of those paid late were also paid incorrectly.
The biggest reason provided for the late payments was “late payments from third parties disrupting cash flow”, 34 per cent of respondents claimed this as the main reason. This was followed closely by “system outages and errors, including payroll system problems”, which 23 percent of respondents claimed was the biggest reason for late payments.
Understandably, this has had a big effect on staff. The survey shows that an alarming 44 percent of respondents stated that they would strongly consider leaving their careers after not receiving their salary on time. A truly remarkable 88 per cent of the respondents who had been paid late, stated that they now had an undesirable perception of their employer.
Some of the UK’s most prestigious and most popular retailers have suffered greatly as a result of claimed payroll errors in recent months.
In May 2017, John Lewis announced publicly that it would need to restate its profits by 6 million after the prestigious retailer breached minimum wage laws. The company blamed the issue on a payroll error, namely, its pay average practice, which has the purpose of making sure staff take home the same amount of money in pay each month regardless of the precise number of hours they worked in that period of time.
In March 2017, Tesco, another notable high street name, much like John Lewis, publicly revealed that it had paid staff less than the minimum wage. They cited an error that occurred while they were introducing their new payroll system. The mistake was widespread and lead to 140 thousand of the company’s workers being short changed by almost £10 million between them.
Finally, in February this year, well known department store Debenhams earned the number one slot on HMRC’s most “shameful” companies list for its huge breach of minimum wage rules. Debenhams also blamed the issue on payroll calculation errors.
So, as is apparent from the above, a worrying number of European employees are both being paid late and being paid incorrectly, which is having a big effect on how those employees perceive the company they are working for, with just under half of them considering leaving a company that pays them late.
Further, the biggest reason companies are giving for their employees being paid late and incorrectly are payroll processes, software and practices. Specific examples of companies that have blamed payroll for them not meeting their employment rights include; John Lewis who underpaid employees by 6 million, Tesco who underpaid employees by 10 million and Debenhams who underpaid employees by an unknown amount but that was large enough for them to be publicly shamed by HMRC.