Research · Europe · HR & Payroll

HR & Payroll Pulse 2026: a reality check for Europe

Last updated: 2026-08-06 · ~7 min read · Citește în română

Europe entered 2026 with a stack of pressures that hit the same weak points at once: skills, cost, compliance and trust. The SD Worx Research Institute surveyed 16,500 employees and 5,936 HR decision-makers in 16 European countries in January and February 2026. Below are the numbers, laid out so you can read the state of European HR by scrolling.

Executive summary

The year in six numbers

54%

actively explore AI's potential for the workplace

only 40% see significant outcomes in HR

51.4%

say workforce planning is a critical or high priority

67%

of employees say payroll is accurate and reliable

32% of employers hit compliance issues in 12 months

62%

of employers feel ready for the EU Pay Transparency Directive

only 34% of employees know their rights

27%

of employees are dissatisfied at work overall

48% are dissatisfied with work-life balance

62%

now see HR as part of strategic decision-making

Chapter 0

The biggest HR challenges in 2026

Wellbeing, retention and talent acquisition remain the top three — a sign these are structural issues, not cyclical ones. The notable movement is underneath: workforce planning and skills gaps are rising.

20252026

Employee well-being27.6% → 26.8%

Employee retention and turnover24.8% → 23.8%

Talent acquisition and recruitment24.1% → 22%

Employee experience and engagement23.3% → 21.6%

Flexible working21.5% → 20.2%

Compensation and benefits21.7% → 19.2%

Workforce planning16.1% → 18.7%

Skill gaps, upskilling and reskilling17.2% → 18.5%

Conflict resolution and employee relations17.5% → 18.1%

Internal communications and transparency20.8% → 17.8%

The 2026 pattern suggests HR challenges are becoming increasingly ‘backbone’ problems, rooted in how work is designed, planned and supported.

Chapter 1

AI is everywhere, but is it adding value?

Adoption is not the issue. Making AI work in practice is.

54%

of organisations actively explore AI's potential for the workplace

40%

have already seen significant outcomes from using AI in HR

Adoption vs. measurable value

Younger workers move fast

37%of under-25s use AI regularly

41%say their usage is increasing

Older workers move slower

21%of employees aged 50–64 use AI regularly

17%feel their organisation helped them build AI skills

Leaders and employees view skills differently

44%

of HR directors say they invest in upskilling employees for AI

23%

of employees agree

“AI delivers the most value when organisations repurpose human capability, not when they simply automate existing tasks.”

Gille Sebrechts · Chief Digital Officer at SD Worx

Fear of AI-related job redundancy differs strongly by country

Poland34%

Ireland33%

Spain32%

Romania30%

The Netherlands22%

Sweden21%

Finland18%

Norway18%

Only 1 in 2 employees are confident about how their organisation uses AI. HR leaders in Norway (67%) and the UK (60%) are most confident about responsible AI governance; employee trust is highest in Ireland (60%), Spain (58%) and Romania (58%).

Human-tech blend preferred

Learning and development — 41% hybrid
Payroll management — 40%
Workforce planning — 39%
Performance management — 38.7%
Careers and mobility — 37.4%

Human leadership essential

Wellbeing — 51% fully human
Engagement and experience — 44%
Recruitment — 44%
Onboarding — 43%

Full automation embraced

Time and attendance — 44% fully automated
Reporting and analytics — 37%

Chapter 2

Workforce planning is now unavoidable

Pressure comes from staffing shortages, rising labour costs, continuity risk and uncertainty about how AI will change tasks — while planning models stay static.

51.4%

see workforce planning as a high or critical priority

35.3%

say it is a moderate priority

13.3%

still treat it as a low priority

Top reasons planning is urgent in 2026

Ensuring sufficient staffing levels and scheduling efficiency48.2%

Optimising workforce costs40.1%

Improving service continuity and customer satisfaction39.2%

Dealing with talent shortages and turnover33.8%

Meeting compliance requirements31.2%

64%

say planning aligns to business strategy

61%

say managers have the data they need

55%

are shifting from roles-based to skills-based planning

Urgency is rising faster than capability. Many organisations still rely on manual inputs and limited forecasting, and only 1 in 3 employees finds it easy to move roles internally.

“Although the pressure is very real, HR is not yet well equipped to respond to it.”

Jan Laurijssen · HR Evangelist at SD Worx

Chapter 3

Payroll at the core of how work runs

Every employee interacts with payroll, every month. When it works, it goes unnoticed. When it fails, the impact is immediate.

67%

say payroll is accurate and reliable

69%

say payslips are clear

32%

of employers faced compliance issues in the past year

Compliance readiness in European organisations

17%

rank labour law and compliance among their most urgent issues

32%

don't feel ready to adapt to new legislation

75%

prioritise data protection

63%

feel protected in the event of a breach

Payroll sourcing models are changing

TodayIn the next 3 years

Managed Payroll Services (MPS)43.9% → 47.2%

Full BPO6.2% → 10.2%

Own software and people18.8% → 14.4%

“Payroll is the trust checkpoint where your people systems converge.”

Tarryn Lewis · Head of Portfolio International at SD Worx

Chapter 4

Build trust and engagement with pay transparency

Employer readiness and employee understanding are moving at different speeds — and the gap weakens trust before transparency is fully implemented.

62%

of employers say they have everything in place to comply with the EU Pay Transparency Directive

34%

of employees say they understand the directive or their rights

The employee awareness gap · 54% of employers are actively investing in greater pay transparency

How important is pay transparency when choosing to join or stay?

Very important25.3%

Important38.6%

Neutral25.9%

Unimportant6.2%

Very unimportant4%

Nearly two thirds (63.9%) rate transparency as important or very important — placing it alongside pay itself as a driver of attraction and retention.

Fixing the gender pay gap

2 in 5

organisations acknowledge having a gender pay gap

27%

of employees believe there is a gender pay gap in their organisation

39%

of employees believe their employer is committed to closing pay gaps

“You can fix a lot with communication, but you can also destroy a lot. Managers need the language and confidence to explain pay decisions properly.”

Brecht Mangelschots · Reward Manager at SD Worx

Chapter 5

Employee experience: one in four are dissatisfied at work

If the backbone of work is strong, employees feel it in the basics: manageable workloads, clear priorities and a sense that work is sustainable.

27%

are dissatisfied with their work overall

48%

are dissatisfied with their work-life balance

22%

say work negatively impacts their mental health

23%

say their manager's behaviour is toxic or damaging

46%

feel their talents are fully used

Top 10 drivers of employee experience

Fair and competitive pay53%

Job security and stability49.9%

Supportive colleagues and positive team atmosphere43.4%

Recognition and appreciation38.8%

Support for work-life balance37.8%

A healthy and respectful workplace culture36%

A convenient commute or location34.7%

A sense of purpose in the work31.5%

Autonomy26.5%

Opportunities to learn and develop25.6%

Employees place fair pay and job security at the top because these are the clearest signals of stability and fairness. Overall, the list points to a preference for reliable foundations rather than headline benefits.

What to do

Six moves that strengthen the backbone of work

Start AI with outcomes, not tools

Define measurable improvements — speed, accuracy, quality, experience — before deploying AI, then redesign workflows task by task. Automate where rules are clear and errors are costly; keep people central where judgement and care matter.

Make workforce planning continuous

Start with the business need, build a granular view of the work, replace static annual plans with rolling updates, plan for multiple scenarios and share accountability between business, finance and HR.

Treat payroll as core infrastructure

Position payroll alongside HR and finance systems as business-critical, integrate it with time and finance platforms, and build compliance and cyber-security readiness into the operating rhythm.

Build pay structure before pay disclosure

Consistent job families, levels and ranges come first. Then define decision rules, review pay data regularly and assign clear ownership.

Prepare managers to explain pay

Help managers understand how pay decisions are made and give them the language to explain them clearly. Communicate early what transparency includes and what it does not.

Protect the day-to-day experience

Diagnose work design and workload, strengthen manager capability and accountability, act on talent underutilisation and align rewards with what employees actually value: fair pay and security.

FAQ

Questions employers ask about Pulse 2026

What is the SD Worx HR & Payroll Pulse 2026?

It is Europe's largest annual HR research project, conducted by the SD Worx Research Institute. In January and February 2026 the institute surveyed 16,500 employees and 5,936 HR decision-makers across 16 countries. The study focuses on five themes: HR challenges, Payroll, Time & Planning, Reward, and AI.

Is AI delivering value in European HR?

54% of organisations say they are actively exploring AI's potential for the workplace, yet only 40% have already seen significant outcomes from using AI in HR. Adoption is not the issue — making AI work in practice is.

How ready are European employers for the EU Pay Transparency Directive?

62% of employers say they have everything in place to comply and 54% say they are actively investing in greater pay transparency. But only 34% of employees say they understand the directive or their rights — an awareness gap that weakens trust before transparency is fully implemented.

How reliable is payroll in Europe in 2026?

67% of employees say payroll is accurate and reliable and 69% say payslips are clear. At the same time, 32% of employers faced payroll-related compliance issues or audit findings in the past 12 months, 32% do not feel ready to adapt to new legislation, and while 75% prioritise data protection only 63% feel protected in the event of a breach.

What do employees value most at work?

The top drivers of employee experience are fair and competitive pay (53%), job security and stability (49.9%), supportive colleagues and a positive team atmosphere (43.4%), recognition and appreciation (38.8%) and support for work-life balance (37.8%).

Source: SD Worx Research Institute, HR & Payroll Pulse 2026 — A Reality Check for Europe. Figures are reproduced as published; read the full report.

MERAKI HR is not affiliated with SD Worx; the data is cited for informational purposes. (MERAKI HR nu este afiliat cu SD Worx; datele sunt citate în scop informativ.)

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