Traditional weekly and monthly pay cycles are “heading towards extinction”, as research shows payroll is moving towards more flexible, employee-driven models.
Technology and the rise of the ‘three As’ (AI, automation and APIs) are transforming the payroll landscape, according to the latest Payroll Efficiency Index (PEI) 2025 from payroll and payments provider CloudPay.
The findings show a shift away from fixed pay schedules, towards agile and continuous approaches that allow employees greater control over how and when they are paid. For HR leaders, this evolution presents both a challenge and an opportunity: adapting pay strategies to meet rising employee expectations, while leveraging technology to deliver efficiency and engagement.
The research revealed that global calendar lengths, the number of days taken to complete a payroll cycle, rose by 12 percent to 8.28 days year-on-year, reflecting greater flexibility and making on-demand pay models increasingly viable. It also found a 1.43 percent increase in global supplemental runs year-on-year, payroll runs carried out outside of normal cycles, which it said underlines the growing complexity and nuance in payroll operations.
Carlos Maroto, director of operations, AMER at CloudPay, said: “The PEI data reveals fascinating global divergences in some of the core metrics we monitor, including issues per 1000 payslips, first-time approval ratings, and data input issues, amongst others. However, the data all points back to one core element: that global payroll is shaking free of its traditional constraints, and is embracing a more dynamic and agile future. Organisations have historically been tied to weekly or monthly pay cycles, but the rise of emerging technologies is supporting real change in the very fabric of the industry and profession, and supporting more flexibility, which will only benefit businesses and their employees.”
He added: “The move to more flexible pay cycles is being supported by the rise of the three As: AI, automation and APIs, which are offering far greater potential for organisations to adapt to external events, and the specific needs of the business, rather than being tied to rigid pay cycles. The growth of automation, in particular, is picking up a significant proportion of the arduous, time-consuming tasks that professionals had previously been focused on, and enabling employers to be more strategic and adaptive in their actions. Equally, changing employee demands and a growing need for access to more flexible employment models are also evolving the status quo, and could lead to traditional cycles becoming obsolete.”
Maroto concluded: “Those firms and payroll teams that do adopt more modern, innovative pay models can use this agility to their advantage by incorporating it into their recruitment and retention efforts. These types of changes mean that the future is looking increasingly bright for global payroll, and the shift away from fixed pay cycles can offer a huge number of benefits to adopting organisations and their employees.”
