In recent years, the demands placed on payroll functions have intensified considerably, driven in large part by increasing global complexity, shifting tariff regimes, and persistent foreign exchange volatility.
For businesses operating across borders, payroll is no longer just a routine administrative task, it is a sensitive, high-stakes area where mistakes can result in not only financial inefficiencies but also damage to employee trust and broader reputational harm.
Read more: Payroll errors impact 25% of UK employees
This year, HMRC named more than 500 employers for failing to pay over 60,000 workers the national minimum wage, resulting in £7.4m in back pay. The cases, which covered a broad range of sectors and included several well-known businesses, were linked to payroll inefficiencies such as failure to update pay rates or unpaid working time. These avoidable errors highlight the operational and reputational risks associated with payroll. As scrutiny continues to grow, it is increasingly clear that accuracy is not optional but an essential part of responsible business practice.
According to recent research from my own team at Caxton, payroll professionals now spend approximately 16% of their time correcting errors, and 35% of employees who experience a late payment report waiting more than 48 hours for resolution. This doesn’t just disrupt the day-to-day employee experience, it creates lasting impressions that can impact engagement and retention. Compounding this is the finding that over a third of payroll teams lack a BACS backup system, leaving them exposed to risks that could otherwise be avoided with better planning and infrastructure.
Read more: Taking the pain out of international payroll
Foreign exchange (FX) volatility introduces a further layer of complexity as paying international employees with fluctuating exchange rates can cause discrepancies between the intended and actual amount received. For employees, this can lead to confusion and frustration, particularly when personal budgets are affected. For employers, it adds uncertainty to cost forecasting and complicates the payroll process, especially in regions with unstable currencies or significant geopolitical risk.
Mitigating payroll risk
To navigate this environment effectively, payroll and HR professionals must adopt a more strategic, risk-aware approach. One of the most impactful steps is investment in training and automation. Well-trained teams supported by modern, automated systems are less prone to error and better equipped to handle complex, multi-country payrolls with accuracy and consistency.
In regions where FX volatility is a persistent concern, locking in currency rates with the help of a trusted payments provider can bring greater predictability to payroll outcomes. This not only supports employee satisfaction by ensuring consistent net pay but also helps businesses manage costs more reliably over time.
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Contingency planning should also be treated as an operational priority. Organisations must have clearly defined and regularly tested protocols for system outages, payment delays, or currency disruptions as well as clear communication plans for employees. For UK-based payments, this includes having backup BACS processing capabilities. International payroll should have alternative payment partners in place to ensure continuity beyond the limitations of UK-only systems.
Another crucial step is to invest in the infrastructure supporting the payroll function. Resilient, cloud-based systems that offer real-time tracking, strong integration capabilities, and built-in redundancies will help ensure business continuity even under pressure. These systems also provide the flexibility needed to adapt to shifting market demands and regulatory requirements.
Payroll today is more than an administrative process; it is a reflection of how a business values its people, manages its risks and delivers on its promises. By combining technology, training, financial planning and contingency thinking, organisations can reduce their exposure to payroll risk and ensure a reliable, professional experience for employees across all markets.
By Jane-Emma Peerless, director of people, Caxton
