Deadline looms for salary payment systems

Large numbers of employers will be forced to pay staff by cash or cheque from January if they do not make immediate plans to migrate to an alternative electronic payment system.

The Bacs system – the only way employers can pay staff electronically – is being upgraded to cope with increasing demand and will be turned off at the end of the year. However, about 35,000 employers are in danger of missing the cut-off date for changing their payment, according to Voca, which runs the system.

The banking transactions company Voca is trying to persuade all companies to adopt the new Bacstel-IP system, but so far only 75,000 of the 110,000 organisations affected have moved over.

Mike Hutchinson, marketing manager for Bacstel-IP, said those companies that are yet to start their migration are almost at the point of no return.

“They have to know that the deadline is real and not going away,” he said. “An average migration can take three months so we are down to the wire.”

The consequences of failing to migrate could be serious for some companies, Hutchinson warned. “It could mean employees not getting money directly in their bank accounts in January,” he said. “The worst-case scenario is this interfering with direct debits.”

Employers would then have to pay staff with cash, by cheque or use a payroll bureau, which could complicate matters, he said.

Hutchinson said people will complain to the HR department if they aren’t paid properly.

Bacstel-IP is being introduced because of the huge growth in electronic transactions. There are 4.5 million transactions a year using Bacs, but this is expected to rise to six million by 2007.

The deadline to migrate to the new system was set in 2002, but many businesses blame employer apathy and resentment at being forced to move for the delay.

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