Pay delays likely as small firms ignore technology switch

Thousands of UK workers could face delays in getting paid in the New Year if employers fail to meet a December deadline for switching to an online version of the payroll system that allows them to pay salaries directly into bank accounts.

More than 90% of UK salaries and an increasing proportion of government social security benefits are paid automatically into bank accounts through the Bacs clearing house, which is switching over to a new online system – Bacstel-IP – from 1 January 2006.

But Bacs is warning of a potential payroll crisis because, with just over four months to the cut-off deadline, around 35% of firms have not yet started the migration to Bacstel-IP.

Mike Hutchinson, marketing manager for Bacstel-IP, said that while most large organisations have switched to the new system, a significant number of smaller businesses have not even started thinking about it.

“Small businesses really haven’t picked up on this in the same way the large organisations have,” he said.

Firms that miss the deadline may end up having to pay staff late with cash and cheques.

“If any organisation keeps its head in the sand [and misses the deadline] it must speak directly to its bank. There isn’t another Bacs – companies will have to go back to cash and cheques to pay employees,” warned Hutchinson.

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