Employers forced to pay staff in cash

Thousands of UK employers may be forced to pay their staff by cash or cheque after failing to upgrade to a new system for paying direct debits and salaries.

On 1 January, the old Bacs payment system was switched off and replaced with Bacstel-IP, which is designed to cope with a greater number of transactions.

Employers have been warned for several years to migrate to the new system, but thousands have not, according to Mike Hutchinson, Bacstel-IP marketing manager.

“We’ve got to a point where we have got all bar 5,000 companies on the new system – and about 102,000 are on the system,” he told technology website silicon.com.

“We’ve got about 5,000 companies that didn’t move over by the deadline and the old system has definitely been switched off as planned. We are pleased with 95% but we’re not complacent because 5% didn’t hit the deadline and that’s somebody’s payroll.”

Of the 5,000 companies that didn’t migrate, some are dormant and others have simply decided not to move over. With these taken out, Hutchison estimates there are about 2,000 – mostly small businesses – that will still want to use the service but haven’t migrated yet.

“If they try to use the old software it won’t work,” he said. “What they must do is speak to their bank about the different options they have until they migrate to Bacstel-IP.

“Ultimately, [in] the worst case, they can offer cash or cheques but there’s no reason it should come to that.”

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