5 typical payroll mistakes – and what they cost
Short answer: The five payroll mistakes we most often see in companies are incorrect holiday calculation, errors in eIndkomst reporting, incorrect pension basis, parental leave reimbursement that is forgotten, and collective agreement supplements that are not triggered. Most of them can be caught with a fixed monthly check of about an hour.
Most companies do not discover their payroll mistakes themselves. They discover them when an employee calls to ask why the payslip looks wrong, or when SKAT sends a letter. We have corrected the same pattern again and again with new clients, and it is almost always one of the same five things.
1. Incorrect calculation of holiday pay and holiday supplement
Since the Holiday Act was changed in 2020, holiday is earned and taken at the same time. It sounds simple, but it means the calculations have to keep up every single month – and most payroll systems will not calculate it correctly on their own unless they have been set up correctly from the start. The result is often that employees receive too little or too much holiday pay, and this is only discovered months later, when it is much harder to correct.
2. Missing or incorrect reporting to eIndkomst
All pay must be reported to SKAT every month via eIndkomst. If it goes wrong – wrong amounts, wrong codes, or a report that is missing altogether – the company risks fines and demands for back payment. It is one of the easiest mistakes to avoid, but also one of the most painful, because SKAT is not flexible about deadlines.
3. Errors in the pension basis and contributions
We once had a manufacturing company in Jutland with 15 employees that had been paying into the wrong pension scheme for two years. Not because anyone was careless – but because the setup was wrong from the start, and nobody noticed until we reviewed it. Two years is a long time to correct retroactively, and this is exactly the kind of error that becomes more expensive the longer it is allowed to run.
4. Parental leave reimbursement that is not applied for – or applied for too late
This is probably the mistake that costs the most in kroner and øre, because the money simply stays where it is. We helped a service company claim over DKK 360,000 in parental leave reimbursement that had never been applied for, for two employees. The money was there all along – it just had to be applied for. Reimbursement can in many cases be applied for with retroactive effect, but deadlines run, and the longer time passes, the more you risk losing.
5. Collective agreement supplements that are forgotten or calculated incorrectly
A shop on Funen with part-time staff had for a period not paid the collective agreement supplements for evening and weekend shifts. This type of error typically arises when shift schedules and the payroll system do not talk to each other properly – and if it is not caught in time, it can end up as a case with the union.
What the five mistakes have in common
None of them are about someone being lazy or unprofessional. They arise because payroll administration requires you to keep up with legislation changes, system setup and collective agreements at the same time as running the rest of the company. Most owner-managers simply do not have the time to be an expert in all three at once.
If you recognise even one of the five mistakes in your own company, it is worth having your payroll checked properly – before it becomes more expensive to correct.
Why the mistakes happen
Most payroll errors are not caused by unwillingness or lack of knowledge. They arise in the transitions: when the payroll system is set up for the first time, when a collective agreement is revised, when an employee moves from full-time to part-time, or when a parental leave begins. Each of these situations changes a small part of the pay calculation, and if nobody explicitly checks it, the error stays in place for several months.
That is why it is a good idea to have a short list of what to check in each of these situations. It does not need to be long. What matters is that it is used every time something new happens in the company.
Documentation you should keep
If you need to be able to document your payroll runs, you need the right paperwork. Keep the timesheets or time registrations for each month, the holiday statement for each employee, the eIndkomst confirmations and confirmations from the pension provider. If you have employees with special terms, the agreements and any changes should be kept together with the payroll setup.
It sounds dull, but it is exactly the documentation that makes a correction quick to make. Without it, every error becomes a long review of what was actually agreed and paid.
How to correct an error once you have found it
First, find out how far the error reaches: which employees, which months, and whether it has affected reporting to SKAT. Next, agree with the employee how the correction should be handled, and correct the payroll run or the reporting. Finally, write down briefly what went wrong and what has been changed in the setup, so the error does not happen again.
The last step is the one most people skip. A correction without an updated setup is usually an error waiting to happen again.
Frequently asked questions
What is the most common payroll mistake in small companies?
It varies from company to company, but holiday calculation and eIndkomst reporting are the areas where we most often find errors. They typically arise when the payroll system is not set up correctly from the start, and the error then continues month after month.
When must pay be reported to eIndkomst?
A-income must be reported no later than the day the pay is paid out. The payroll run should therefore be checked before it is sent.
Can a payroll error be corrected retroactively?
Yes. The error is normally corrected in the next payroll run. If it has affected reporting to SKAT, the correction must also be reported in eIndkomst. If you are unsure how to do this in your situation, it should be assessed before you correct it.
What does it cost to have payroll checked?
We start with a free call and then provide a concrete quote. Prices for the individual packages are on our pricing page.