Friday the 25 March 2022 and the subsequent few days were a disaster for the payroll industry. As a result of technical issue at Standard Bank with their Bankserve connection (a basic file format error), hundreds of thousands of employees were not paid on the 25 March. Standard Bank scrambled to put things right over the weekend, but the repercussions amongst many South Africans were material.
This is not an uncommon situation worldwide and where this happens in the United Kingdom, for example, banks communicate the payment issues and the banking industry bands together so individual consumers are no worse off. There is a recognition that technical issues can and will happen. And if it happens to one bank this month it might happen to another in the future.
What did we learn in the same situation in South Africa?
- There are an inordinate number of employees operating hand to mouth, completely dependent on their payroll payment to meet debit orders (with little or no buffers). Any delay in payment (even by a day) can be catastrophic for these employees.
- There is no clear communication channel to let employees know about challenges and manage the process to help these consumers with their debit orders and to let them know when they will be paid.
- The relationship between employers and employees is generally not a good one. Where relationships are strained, employers immediately try to put the blame on somebody to protect their position. It becomes less about recognising a common issue faced by the entire industry and more about how the employer can make sure they don’t face the blame.
What happens next?
- This week, duplicate and non-payments will need to be worked through to make sure that everyone that should have been paid, was paid and was paid correctly.
- We understand Standard Bank has indicated they will setup a task team to deal with any rejected direct debits (and we hope deal with any adverse credit rulings arising from this and any incremental costs incurred by individuals). It would be helpful if the other banks work with Standard Bank on this on the basic principle that they may be next. More info to follow as we get it.
- Hopefully, the banking sector works on improving their communication to help their customers, rather than communication solely for damage limitation.
- The payroll industry will need to look at alternatives to the way they pay employees – assuming these are available.It is not clear at this point what these options might be.
For HRTorQue clients, we are communicating with our payment providers on the way forward regarding how to claim for returned debit order costs and we will send a detailed email to those affected as soon as we have the details. Any clients who wish to also discuss alternative payment mechanisms can contact us on [email protected].