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.
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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.
