Regulation delays payroll projects but AI tools beckon

Regulatory uncertainty has led 61% of payroll leaders to delay or change projects, according to new research from Vistra based on a survey of 251 payroll leaders in the UK and US.

The findings point to a growing compliance workload for payroll teams and a shift in priorities for organisations that want to modernise payroll operations. Respondents cited barriers that centred on technology spend, legislative change, and staffing for compliance work.

Compliance burden

Payroll leaders said they spend an average of 16% of their time monitoring regulatory updates. The figure rises to more than 20% in larger organisations.

Almost half of respondents, 46%, said the cost and difficulty of upgrading technology stood out as a major barrier to keeping pace with new requirements. A further 44% highlighted the burden of staying up to date with legislative changes. Another 44% pointed to the challenge of training and resourcing payroll compliance teams.

The research also found gaps in automation and systems integration. Only 33% of organisations said they had fully integrated payroll with HR, time and finance systems. Just 16% said they had achieved complete payroll automation.

Technology shift

Despite the impact of regulatory uncertainty, the survey indicates broad readiness to adopt new tools. Vistra reported that 95% of payroll leaders said they were prepared to implement AI-powered anomaly detection and forecasting.

The survey results also indicate a change in how organisations describe payroll's role. Some 93% of respondents said they viewed payroll as a strategic enabler of growth, rather than a purely administrative function.

Vistra said respondents most frequently associated modern payroll solutions with improved workforce planning and better financial information. In the survey, 63% cited improved workforce planning as a key benefit. Another 63% cited greater financial visibility and cost control. A further 60% cited enhanced employee engagement.

Employee experience

The research highlights payroll experience as a component of employment propositions. In the survey, 97% of respondents said payroll experience formed a key part of their employee value proposition. Vistra also found that 92% planned to invest in improving payroll experience over the next year.

Vistra linked the emphasis on experience to broader expectations of timeliness and accuracy. The figures sit alongside adoption plans for automation and AI-driven tools, as payroll teams face scrutiny from employees and finance leaders.

Cross-border plans

The survey also suggests that payroll teams expect continued growth in international employment models. Some 69% of payroll leaders said they planned to expand cross-border hiring in the next 12 months.

That expansion raises the complexity of payroll operations. Organisations need to manage pay, tax and reporting requirements across multiple jurisdictions. Respondents also flagged the effort required to track legislative updates and keep internal processes aligned.

Vistra positioned the findings as evidence of mounting pressure on payroll teams and a growing focus on operational change, as organisations balance compliance work with investment decisions.

Vistra provides business services including global payroll, according to the company. It operates in more than 50 markets and employs more than 9,000 people.

Vistra said payroll leaders increasingly see technology investment as part of wider transformation agendas in HR and finance. The company also pointed to low levels of full payroll automation and integration as indicators of unfinished work in many organisations.

Vistra's research also indicates that regulatory uncertainty has a direct effect on project timelines and spending decisions. Respondents linked uncertainty to delayed upgrades and changes in programme scope, particularly where technology investments require long lead times and coordination across departments.

One practical effect of the compliance workload is time allocation. The share of time spent on regulatory monitoring reduces capacity for other work, according to the survey. That pattern becomes more pronounced as organisational size increases.

"Payroll has become central to how global businesses grow, adapt, and build trust. It's no longer a back-office job but one that drives strategic growth and employee satisfaction," said Curtis Holmes, Executive Vice President, Global Payroll, Vistra.

Holmes also addressed the regulatory environment and the role of technology in shaping payroll operations.

"While payroll teams still face significant challenges, in particular managing varying regulations across different jurisdictions, technology is making payroll less fragmented. Payroll solutions are increasingly freeing up time for HR and finance leaders to focus on strategic planning, employee engagement, and financial control," said Holmes.

"As we look towards 2026, the future of payroll is about intelligence. As global workforces evolve, it's no longer about paying people correctly, but enabling smarter decisions across the enterprise," said Holmes.