7 Biggest Challenges in Hiring Payroll Talent

Payroll recruitment has never been straightforward, but the current hiring landscape presents a uniquely demanding set of obstacles for organisations seeking to build high-performing payroll teams. The profession has undergone a fundamental transformation over the past five years – what was once viewed as a purely transactional function is now widely recognised as a strategic discipline that intersects finance, HR, compliance, and technology. That shift in scope has made hiring the right payroll talent considerably harder.

The ONS reported approximately 734,000 job vacancies across the UK in Q4 2025, and while that figure represents a decline from the post-pandemic peak, the competition for specialist talent within payroll and finance operations remains fierce.

Our Portfolio Payroll Salary Guide 2025/26 explores these dynamics in detail, drawing on 52% more survey responses than the previous edition to paint the most comprehensive picture of the payroll hiring market to date.

Businesses Are Less Willing to Compromise on Quality

One of the most significant shifts in payroll recruitment is that organisations are increasingly unwilling to settle. Where employers might previously have accepted a candidate who ticked most boxes, there’s a much stronger appetite now for restarting the hiring process entirely rather than making a compromise hire. Given that payroll errors carry direct financial, legal, and reputational consequences, this reluctance to compromise is entirely rational.

The UK Government’s Employer Skills Survey 2024 found that 27% of all vacancies were skill-shortage vacancies – positions that employers struggled to fill due to a lack of qualified applicants. Within payroll, where compliance knowledge and technical proficiency are non-negotiable, that figure is arguably higher. Employers are increasingly prepared to absorb the short-term pain of an extended vacancy rather than onboard a candidate who lacks the precise technical or cultural fit required.

The International Payroll Skills Shortage

For organisations operating across multiple jurisdictions, finding payroll professionals with genuine international expertise is one of the most persistent hiring challenges in the market. Multi-country payroll requires knowledge of disparate tax systems, varying employment legislation, and complex cross-border reporting obligations – a skill set that remains in critically short supply.

The demand for international payroll competence has grown significantly as UK businesses expand their global operations, yet the talent pool hasn’t kept pace. Professionals who can manage payroll across the UK, EU, and Asia-Pacific simultaneously command premium salaries and have no shortage of options. The Portfolio Payroll Salary Guide highlights that international executive payroll roles consistently attract some of the highest salary premiums in the profession, reflecting just how scarce this expertise has become.

Salary Expectations vs. Budget Constraints

Payroll salaries have risen sharply in recent years in response to increased demand and the growing complexity of the function. The Open University’s research indicates that the UK skills shortage is costing businesses £6.6 billion per year in recruitment fees, elevated salaries, and temporary cover. Within payroll specifically, salary inflation has outpaced many organisations’ budget expectations, creating a persistent gap between what employers want to pay and what the market demands.

This disconnect is particularly pronounced in mid-to-senior payroll roles, where professionals with systems expertise, compliance depth, and leadership capability command increasingly competitive packages. Organisations that fail to benchmark their salary offerings against current market data risk losing top candidates before the interview stage even begins.

Competition from Outsourced Payroll Providers

The growth of payroll outsourcing and bureau services has created an unexpected hiring dynamic. These providers are actively recruiting experienced payroll professionals, often offering attractive salaries and the appeal of working across multiple client portfolios. For in-house payroll teams, this means competing not only with other employers but also with an expanding outsourcing sector that’s absorbing significant amounts of available talent.

This dual demand – from both in-house teams and outsourced providers – has tightened an already constrained talent pool. Employers seeking to hire a payroll specialist need to move quickly and present a compelling proposition that extends beyond salary alone.

Evolving Compliance and Technology Requirements

The pace of regulatory change in UK payroll has accelerated substantially. From the ongoing complexities of Making Tax Digital and changes to National Insurance thresholds to the expanding scope of payrolling benefits in kind from April 2027, employers need professionals who can not only manage today’s compliance landscape but adapt to tomorrow’s. The CIPP’s Future of Payroll Report consistently highlights technology adoption and regulatory preparedness as top priorities for the profession.

This evolving requirement means that hiring managers aren’t just looking for payroll processing experience – they need candidates with demonstrable knowledge of cloud-based payroll systems, data analytics capability, and the ability to interpret and implement legislative changes at pace.

Retention Challenges in Existing Teams

Hiring challenges don’t exist in isolation from retention problems. When experienced payroll professionals leave, the knowledge gap they create can take months to fill – and in the interim, the pressure on remaining team members often accelerates further attrition. The CIPD estimates that the average cost of hiring an employee in the UK is £6,125, but when you factor in lost productivity, onboarding time, and the impact on remaining staff, the true cost is substantially higher.

Yet building a payroll team that stays requires more than competitive salaries; it demands clear career progression pathways, genuine flexibility, and recognition of payroll’s strategic contribution.

Limited Candidate Pipelines for Senior Roles

At the senior end of the market – payroll managers, heads of payroll, and payroll directors – the candidate pool is genuinely small. These roles require a rare combination of deep technical expertise, leadership capability, stakeholder management skills, and strategic vision. The number of professionals who possess all of these attributes, and who are actively looking for a move, is limited at any given time.

For organisations seeking to fill senior payroll positions, proactive talent mapping and relationship-building with specialist recruiters is far more effective than relying on advertised vacancies alone.

Why Choose Portfolio Payroll

At Portfolio Payroll, we specialise exclusively in payroll recruitment, giving us unmatched access to the profession’s most talented individuals – from payroll administrators through to directors. With over 35 years of experience and a corporate partnership with the CIPP, our deep understanding of the payroll market means we can help you find skilled payroll talent fast and overcome the hiring challenges that are holding your team back.