29/05/2025
Nearly a quarter of UK employers have ramped up investment in AI in the last 12 months
The UK is leading the way in AI adoption within payroll, with 42% of employers already using AI-powered agents or chatbots to support employee queries – nearly 12% ahead of the European average. New research from leading European HR solutions provider, SD Worx, shows this number is expected to rise, as British employers increasingly prioritise automation, efficiency, and employee experience in their payroll operations.
Year-on-year investment in generative AI has jumped from 14% in 2024 to 22% in 2025, reflecting a wider shift away from manual administration and towards more scalable, tech-driven solutions. Despite this progress, only 28% of employees currently report access to these tools, revealing a disconnect between implementation and practical usage.
Payroll optimisation a growing priority
This rise in AI adoption coincides with growing pressure to optimise payroll processes. 18% of UK employers now cite payroll optimisation as a top challenge — up from 13% the previous year. As a result, many organisations are stepping up broader investment in modern payroll systems, with 51% focusing on data security, 49% on adapting to changing labour legislation, and 44% on improving sustainability.
Self-service functionality is also on the rise, with 43% of employers now enable staff to manage tasks such as viewing payslips or booking leave, compared to 35% in 2024. From the employee side, 59% say they already handle a significant share of their HR admin through these tools. Early results show this approach is delivering clear benefits, with cost savings already reported by many companies embracing digital transformation.
Payroll outsourcing and hybrid models expected to rise
Looking ahead, UK businesses are anticipating increased use of external payroll support.
AI and external expertise deliver cost savings
Modernising payroll is paying off. Among UK businesses using their own software supported by external experts, 72% report significant cost savings. That figure stands at 60% for those fully outsourcing, and 53% for those partially outsourcing.
By comparison, only 27% of companies using SaaS models and 52% of those with fully in-house systems report notable savings.
“Payroll outsourcing is becoming increasingly important in a rapidly changing world. Thanks to technological innovations such as AI and cloud software from specialised developers, payroll is not only becoming more low-priced and more accurate, but also more transparent, user-friendly and personalised. Modern payroll solutions are scalable and meet the desire of employers to have the most accurate information at all times. But employees also get instant access to their payroll information and can get answers to all their payroll and HR questions 24/7 through smart technology,” concludes Andrea Eschle, Chief Product Officer at SD Worx.
About the international survey
SD Worx, the leading European HR service provider, assists smaller and larger organisations with their HR and payroll challenges. To keep a finger on the pulse of employers and employees, SD Worx regularly conducts in-depth surveys. The analysis of the most recent “HR & Payroll Pulse” provides organisations with valuable insights to focus and future-proof their HR and payroll strategy.
The survey was conducted in February 2025 in 16 European countries: Belgium, Croatia, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Poland, Romania, Serbia, Slovenia, Spain, Sweden and the United Kingdom by the SD Worx Research Institute. A total of 5,625 employers and 16,000 employees were surveyed. The results provide a representative picture of the labor market in each country.
About SD Worx
SD Worx believes that success starts with people. A thriving workforce doesn’t just build a thriving company, it also contributes to society. Together with its customers, SD Worx sparks successful HR that benefits work, life and society.
As the trusted leading European HR and payroll solutions provider for all organisations and workers, SD Worx delivers software, services and expertise across payroll & reward, human capital management and workforce management. SD Worx has deep roots across Europe and has been leading the way for eight decades together with its customers, employers big and small, to spark employee engagement that ignites success at the heart of their business.
About 95,000 small and large organisations across Europe place their trust in SD Worx. The almost 10,000 colleagues operate in 27 countries. SD Worx calculates the salaries of approximately 6 million employees and ranks among the top five worldwide. It achieved a revenue of EUR 1.180 billion in 2024.
Original Article: HRnews
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