EY analysis finds these errors cost organisations $289,722 per 1,000 employees annually
Time, attendance, and expense issues have emerged as the most common form of payroll errors impacting workplaces, costing organisations $289,722 per 1,000 employees annually, according to a new report.
Findings from an EY analysis, commissioned by Paycom Software, recorded a total of 1,139 time, attendance, and expense errors per 1,000 employees a year.
The annual cost of these errors has risen by more than $40,000 since 2022, according to the report.
Errors related to vacation, paid time off, and sick time requests came in second, with 721 errors per 1,000 employees a year at a cost of $255,252.
They were followed by:
- Benefits errors: 503 errors, costing $162,213
- Scheduled earnings and deductions errors: 410 errors, costing $157,540
- Tax withholding (W-4) and tax allocation changes: 229 errors, costing $157,214
- Direct deposit errors: 159 errors, costing $51,948
All figures are per 1,000 employees a year. They cover only the cost of correcting payroll errors and exclude potential compliance costs and other financial consequences for organisations.
Overall, organisations spend an estimated average of $339 to correct each payroll error, nearly 20% more than in EY's 2022 findings. Respondents reported errors occurring in one in every five payrolls.
Most time-consuming errors
The report also identified the payroll errors that take the most time to fix: missing or incorrect time punches, missing expenses, uniform charge errors, sick time not entered, and health savings plan setup errors.
Missing and incorrect time punches topped the list as both the costliest and most time-consuming error. They cost an estimated $93,600 per 1,000 employees a year in combined direct and labour costs and take about 440 hours to resolve.
Together, the five most time-consuming errors take nearly 29 workweeks per 1,000 employees to correct each year. That is more than six months of staff time spent on administrative rework.
Payroll and HR teams also receive an average of 30 employee questions each pay period, the report found.
The 2026 figures are EY's inflation-adjusted update of survey data collected in 2022. The data came from more than 500 respondents with payroll responsibilities, at supervisor or manager level or higher, from US-based companies with 250 to 10,000 employees.
