*Part 03:*
Destigmatising financial
discussions
How often are employees checking payslips in detail?
What are the implications of payroll errors on employees?
How confident are employees in getting payroll errors corrected by employers?
Insights from our experts
Despite the frustrations people may feel when trying to understand their pay, our research shows they are still willing to engage. Employees in all sectors have been more active readers of their pay statements over the last 12 months, as they look to manage their finances and gain more control.
Employees who are paid on an hourly basis or variable rate are significantly more likely to check their payslip every time, compared to those on a fixed salary (61% versus 52%). Older workers, aged 55 and above, are significantly more likely to check their payslip than those under the age of 35 (69% versus 53%).
This shows that, despite any barriers, payroll offers a crucial opportunity to connect with employees about their financial health, where and when they are engaging.
Developing the pay process as a hub for better financial empowerment requires trust and clarity. Consistency and accuracy in payroll are always critically important. However, if errors do happen, its just as important to make the correction process as easy as possible.
While many employees struggle to fully understand their payslips, as many as 58% claim even so to have noticed an error on their pay. As you might expect during a cost-of-living crisis, the implications of any missed or underpayments are wide-ranging and, in some instances, profoundly damaging.
On a practical level, nearly half (44%) of employees report that a mistake with their pay would result in them experiencing financial difficulties, such as paying bills or rent on time, and 27% state that they would need to try to borrow money to make up for any shortfall, potentially incurring punitive interest.
On the emotional level, 46% of employees state that a payroll error would lead to added stress and anxiety, while others point to the loss of motivation at work, health concerns, and relationship issues as potential consequences of mistakes in their pay. Once again, younger workers under the age of 35 are far more likely to be impacted by errors in their pay than older workers, in terms of struggling to pay bills, having to borrow money to make up shortfalls, and feeling more stressed and anxious.
Minimising the stress and anxiety impact of a payroll error demands quick action and response from employers. This means having systems in place to quickly respond to queries without judgement or embarrassment on the part of the employee.
Worryingly, the research finds that only half of all employees are fully confident that they would be able to get an error with their pay checked and resolved by their employer. This figure falls to 44% amongst younger employees under the age of 35.
Chief Innovation Officer, Zellis
Employers need to establish and signpost simple, formal processes for employees to ask questions and raise concerns about their pay. And they need to create a feedback loop to show that the system they have in place works effectively. We’re increasingly seeing employers adding greater functionality to their payslips, such as ‘hover-over’ functions which enable people to get more information and context for items on their payslip. They don’t just see how much their National Insurance contribution is, for instance. They are also told why this tax is taken and what it is used to fund. They can then understand the context of these types of deductions. There is also a need to remove any stigma for employees in querying their pay, irrespective of the amounts involved. Even if an employee is being underpaid by only £10, this should be treated in the same way as somebody who is being underpaid by £1,000 or £10,000. The reality is that 25% of the UK population has less than £100 in savings [9] so employers always need to think about the individual and the impact that being underpaid could have on their ability to pay bills or look after their family.
Head of Impact and Inclusion, Wagestream
It's past time for removing the stigma around financial wellbeing by telling people it’s okay to come and ask questions. Lots of companies have realised the benefits of mental health first-aiders. Now we’re beginning to see the value of financial health first-aiders who can champion access to the most effective kinds of support.That said, the real job now is to get employee wellbeing, and financial wellbeing in particular, on the C-suite agenda. As an industry, we need to get the attention of these strategic operators to really understand the cost of financial stress on their business performance and the potential productivity gains from tackling this. Wellbeing provision needs to be approached as an essential part of business growth strategy. If employers can develop and execute the right strategies, the benefits will be felt throughout the whole business.
Non-Executive Director, Zellis Chief People Officer, EMIS Health
People are still too embarrassed to ask questions about their pay. They feel that they should already know the answers and choose not to raise concerns with their employer. Unless it’s a hugely obvious or drastic mistake, people would rather let a minor issue slide rather than risk an uncomfortable conversation.Employers need to create an environment in which people feel that they can speak in confidence to a qualified professional who can help them with pay-related issues. Evidently, people aren’t willing to open up with their day-to-day line managers or even HR colleagues about their pay, so employers need to open discreet channels for employees to get support from payroll experts, whether they are internal or external. They need to build trust around these services. Something that we’ve been trialling is using AI chatbots to communicate with employees so that they can get the information they need without embarrassment about their lack of knowledge. We use this in the induction process and during benefits selection, but there is clearly a strong case to extend this to payroll, so employees can get help at the moment they’re reviewing their pay.