Progress in seeking perfection: Payroll error resolution procedures and controls

May 28, 2026

Sara Maginn Pacella

“Pobody’s nerfect” is an expression that emphasizes how easily mistakes can happen. Payroll professionals aim for accurate, efficient and correct work; unfortunately, sometimes errors occur. Something as simple as a data error in timekeeping can drift systems out of alignment, causing paycheque errors. Robust error-resolution procedures and controls are essential to prevent, reconcile and correct payroll errors.

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What are the most common payroll errors?

HR Executive reports that one in three employees have found payroll errors, and one in six experience stress over payroll accuracy.

Below are some of the most causes of common payroll errors.

Use of disconnected systems that don’t “talk to each other.”
Manual data entry errors.
Incorrect gross pay calculations.
Incorrect employee classification (i.e., an employer treats an employee as if they were an independent contractor, or an employer treats an employee or intern as a student intern).
Mishandling of income tax, garnishments and other deductions.
Improper workers compensation board payroll reporting or use of benefits.
Organizational disregard for pay equity.
Incorrect or late remittance and reporting to Canada Revenue Agency or applicable provincial bodies (including T4/T4A slips, Records of Employment, etc.).
Miscalculations of benefits and taxable benefits.
Sloppy, incomplete, inconsistent or incorrect record-keeping and documentation.
Pay period errors, including late or missing payroll periods.
Missing or incorrect overtime or vacation pay.
Incorrect number of hours or days worked.
Wrong hourly rates or salary amounts.
Missed or incorrect bonus payments.
Delays in payments due to seeking managerial approvals.

” Payroll errors undermine employee satisfaction, so it’s critical to have measures in place to identify and resolve payroll errors swiftly and accurately ”

How can payroll professionals diagnose an error?

Payroll errors undermine employee satisfaction, so it’s critical to have measures in place to identify and resolve payroll errors swiftly and accurately. HR Morning reports that 64 per cent of surveyed employees “experienced financial stress due to paycheque errors or delays – and more than half (53 per cent) said they’d consider leaving if payroll problems continued.”

SU Consulting offers a step-by-step guideline for resolving payroll errors in Canada.

- Gather all relevant data (including your last 12 to 24 months of payroll runs, employee contracts, timekeeping records, remittance slips, T4/T4A slips, Records of Employment issued, as well as payroll policy documentation and records of system logs).
- Reconcile payroll inputs and benefits.
- Review your remittance schedule and amounts to ensure they are accurate and that deadlines were met.
- Verify that all T4/T4As were accurate and timely.
- Get feedback from employees on any inconsistencies or complaints.
- Complete root cause mapping to find out why an error occurred, whether it was a one-off or systematic, any missing controls, and what changes would prevent it from happening again.
- Prioritize findings to rectify the problem based on:
  - Financial impact;
  - Legal and regulatory risk; and

Employee trust and operational impact.

Best practices for preventing payroll errors

Catching and correcting payroll errors quickly, as well as preventing future errors, should be a part of any organization’s overall payroll strategy. Important steps to prevent payroll errors include the below.

Using reliable, connected systems and payroll software that can seamlessly integrate.
Automating data entry.
Regularly synchronizing data for verification (best practice indicates that this should be completed every pay period).
Using checklists to ensure that all payroll cycle steps are followed accurately.
Keeping human capital management staff informed of current laws and regulations through continued professional development.
Practicing internal controls for fraud prevention, including:
- Segregation of duties (processing and approval);
- Multi-factor authentication and secure handling of data;
- Thorough and regular training; and
- Audits and monitoring.
Providing an open environment for payroll professionals and all employees to ask questions about payroll and deductions, to allow them to understand their pay cheques and report any possible errors.
Completing regular audits (quarterly is recommended), and documenting and reporting audit results to the appropriate stakeholders (leadership in finance, human resources and payroll).

Best practices for payroll issue tracking

Clear documentation of record-keeping will help an organization prevent future errors and serve as a guide for future audits. Train staff on the importance of maintaining detailed, accurate logs and retaining records, including timecards. According to the Government of Canada, “As an employer, you must keep employment and payroll records for each employee for at least 36 months. When employment ends, you must also keep the employee’s records for another 36 months.” All payroll documentation and correspondence must be kept in a central, secure location that is easily accessible to those who need it. Your audit trail for payroll mistake correction should also include noting who identified the payroll error, who authorized the appropriate resolution and when the correction was finalized.

Communicating errors to staff

No one wants to hear that there has been an error on their paycheque. Whether an error is discovered by an employee or through a regular audit, clear and thoughtful communication is an important part of rectifying the error. It is recommended that the staff affected be notified of the error, receive an apology, and be shown what caused the error and the steps being taken to rectify it. Allow impacted employees to ask questions and speak to someone in person about any concerns they may have following the error.

Addressing mistakes head-on to avoid repetitive errors, and doing so transparently, is critical to achieving effective, compliant and accurate payroll

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