Once a quiet, back-office function, payroll is now under pressure from all sides – from new compliance demands to workforce strategies that span borders. And employees are raising the bar too – expecting faster access to pay, true financial transparency, and support between paychecks.
Throw in the fact that 67% of companies are dealing with outdated software and it’s clear teams need to work more strategically to keep up.
Here’s a closer look at the five trends redefining what payroll looks like in 2025.
1. AI (of course) is taking payroll from reactive to proactive
Artificial intelligence isn’t just a trend—it’s reshaping how payroll should get done. As Nimit Kumar, Senior Vice President of Product at Multiplier explains, “While automation has handled calculations and processing for years, AI is unlocking a new level of foresight, leaving teams who are using outdated systems behind.”
AI is helping payroll teams shift from routine processors to strategic advisors. They can predict errors before they happen, send real-time compliance alerts, and synthesize data to reveal insights that influence compensation and headcount planning.
For employees, AI delivers more personalized payroll experiences—think smart notifications, tailored financial guidance, chatbots that offer instant answers, and greater payroll and tax explainability to better understand deductions.
2. Payroll enters the benefits conversation
Employee experience has always been at the heart of payroll, but with 3 in 4 people now struggling with the rising cost of everyday expenses, payroll teams are being called to respond to the pressure between paychecks.
The use of Earned Wage Access (EWA), a tool that allows employees to access a portion of their earned wages before payday, is increasing. In fact, with the solution offering improved financial flexibility and reduced reliance on credit, 75% of millennials report that they would be more likely to accept a job offer with EWA in place.
Teams are tasked with the challenge of integrating this into payroll processes and implementing financial education programs to avoid overuse. After all, EWA is not without its limitations. According to Kumar, “EWA can too easily act as a short-term fix to a long-term problem.
3. Transparency is becoming law
The EU Pay Transparency Directive, which comes into full force in June 2026, requires that all companies hiring in the EU document and justify how pay decisions are made to avoid gender pay gaps. In the US, states such as California and New York are following suit.
Payroll teams are increasingly focusing on creating fair pay policies with detailed criteria for pay progression and job evaluation, conducting effective pay audits, and training leadership.
There’s also a huge opportunity for teams to drive compensation strategy with the C-suite. “Should they opt for paying salaries in the higher percentile to attract talent?” asks Kumar, “or sit a little lower to save costs?”
Compensation strategy is especially critical for those who number among the growing number of global teams, with employees across geographies.
4. Payroll is going global
Faced with deepening talent shortages and rising labor costs, U.S. companies are increasingly turning to international markets to find the skills they can’t source locally.
This is placing extra pressure on payroll teams who need to meet local tax and compensation laws, make multi-currency payments, and deliver a consistent employee experience. “Payroll teams can’t be expected to have knowledge of every country they’re expanding into,” says Kumar, “but organizations can’t afford to hire experts in every region.”
To help teams meet these challenges, global payroll systems are becoming increasingly popular. These solutions centralize operations across countries, automate calculations in line with local regulations, and enable seamless multi-currency transactions.
5. Integrated systems are the new standard
To effectively support both employees and broader workforce strategy, payroll teams need access to consolidated data. Yet too often, this is fragmented because of poor integration with other HR tools or, in the case of global teams, the use of multiple local vendors. Kumar explains, “It’s real-time data that helps payroll teams work strategically, but it’s impossible to get this without integration.”
Teams are looking beyond outdated payroll software that comes with lock-in periods. Instead, they’re turning to modern, integration-first platforms that connect with time-tracking tools, HRIS, and expense management solutions.
Transformation over transaction
Payroll teams are being called to adapt. The challenge is to keep pace with compliance requirements, technology evolutions, and changing workforce strategies – all while meeting rising employee expectations.
Increasingly it’s clear the future belongs to teams who see payroll not just as a function but as a force for growth.