Common payroll management mistakes that can be costly for your company

Payroll is one of the most sensitive aspects of labour management and a major source of conflicts, claims, and inspections in companies.

Seemingly minor mistakes, a miscalculated allowance, incorrect social security contributions, or a wrong interpretation of the collective agreement can result in penalties, surcharges, back pay, or even legal claims.

In this post, we analyse the most common payroll management mistakes, their legal consequences, and key recommendations for companies to avoid them.

Why payroll management is a legal risk hotspot

Payroll directly reflects compliance with multiple labour and social security obligations. It not only certifies salary payment but also:

• The correct application of the collective agreement.
• The calculation of contribution bases.
• The correct classification of salary and extra-salary items.
• Compliance with working hours, overtime, and rest periods.
• Fulfilment of tax withholdings.

Any inconsistency between payroll, contract, collective agreement, and actual work can be detected by both the Labour Inspectorate and the employee.

Most frequent payroll management mistakes

Incorrect application of the collective agreement

One of the most common mistakes is using an agreement that does not correspond to the company’s actual activity or misapplying its pay scales, bonuses, or job categories. This error is not a simple calculation mistake but a failure to comply with a binding regulation governing the employment relationship.

• Consequences: Claims for unpaid amounts, back pay adjustments, and inspection reports by the Labour Inspectorate.

Confusing salary and extra-salary items

Allowances, bonuses, reimbursements, or benefits may have different legal nature. Misclassifying them can lead to:

• Common mistake: Paying as extra-salary items (exempt from contributions) compensations that actually remunerate work performed.
• Consequences: The General Treasury of Social Security (TGSS) may initiate a regularisation procedure, issuing contribution adjustment reports with corresponding surcharges and late interest.

Incorrect calculation of overtime and supplementary hours

Failure to properly record working hours or apply surcharges can result in accumulated pay differences that are later claimed retroactively.

• Consequences: In addition to claims for unpaid amounts, the Labour Inspectorate can impose sanctions for non-compliance with working hours and time recording regulations.

Errors in Social Security contributions

Incorrect contribution bases, outdated limits, or improper exclusions generate:

• Additional settlements.
• Surcharges and interest.
• Inspection reports.

Note: IRPF Table for 2026

Lack of consistency between contract, payroll, and reality

When job category, working hours, or functions do not match the payroll, the risk increases, especially in dismissals or inspections. The Workers’ Statute also establishes that issuing the payroll is not enough; it must be clear and understandable.

• Consequences: An opaque or confusing payroll can trigger collective dispute procedures and weakens the company’s position due to non-compliance with legal obligations.

 

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Other consequences of poorly managed payroll

Incorrect payroll management impacts more than finances. It can cause:

• Employee claims for unpaid amounts.
• Sanctions by the Labour Inspectorate.
• Regularisations with surcharges before Social Security.
• Loss of credibility in legal proceedings.
• Additional risks in dismissals and terminations.

In many cases, the issue is structural, affecting months or even years of payroll.

Frequently asked questions about payroll management

Can an employee claim past payroll errors?

Yes. Salary claims generally expire after one year, but some contribution errors may emerge later via inspections. However, Social Security debts from incorrect contributions can be claimed by TGSS within four years.

Is the company responsible if the error is caused by the payroll service provider?

Yes. Responsibility toward employees and authorities always rests with the company.

Is it mandatory to provide payroll in paper format?

No. Payroll can be delivered electronically, as long as receipt is verifiable.

What happens if payroll does not accurately reflect actual working hours?

It can result in salary claims, inspection reports, and evidentiary issues in the case of dismissal.

How to reduce risks in payroll management

To minimise contingencies, it is key to:

1. Regularly review the application of the collective agreement.
2. Ensure correct classification of salary items.
3. Maintain consistency between contract, payroll, and actual working hours.
4. Update contribution bases and parameters.
5. Have an expert team supervise and validate the process.

How Adlanter can help

At Adlanter’s Labour area, we support companies in comprehensive payroll management, combining daily operations with legal expertise.

• Full payroll outsourcing.
• Review and regularisation of risk situations.
• Coordination with Social Security and Labour Inspectorate.
• Support in sensitive decisions (dismissals, modifications, labour audits).

Proper payroll management is not only operational: it is a way to protect your company.

👉 Contact our labour team and review your payroll system with full assurance.