Five NHS organisations with more than 16,000 staff have ended a payroll contract with Capita after a catalogue of errors. The contract had been due to run to 2010 but was terminated last week after just 18 months.
Problems included late payments, incorrect payments and one incident where staff records were found in a street, which led to a police investigation.
University Hospitals of Leicester trust, which alone has 12,000 staff, Leicestershire Partnership trust, Leicestershire County and Rutland primary care trust, Northampton teaching PCT and Northampton Healthcare trust have now signed a contract with McKesson, which developed the electronic staff record.
Only one of the original six in the payroll consortium, Leicester City PCT, is staying with Capita.
Capita said: "After careful consideration, five of the six trusts making up the payroll consortium have agreed with Capita that now is an appropriate time to draw a line on what, at times, has been a problematic contract for both parties."
The consortium and Capita insisted the two had parted on good terms.
A police investigation was launched in March after papers containing names, addresses, bank details and national insurance numbers of a "very limited number of staff" were found in the street in Stevenage, Hertfordshire. No charges were brought and it was said to be an isolated incident.
University Hospitals of Leicester trust staff side chair David Morgan welcomed the announcement. He said: "It's certainly good news for staff that the trust have taken on board the many comments from staff side and staff members regarding the Capita payroll situation."
Kate Bradley, human resources director for the trust, said: "Despite a difficult history, we have maintained a good working relationship with Capita. We just felt that the time was right to move to an alternative provider."
Capita is expecting to hear the outcome of its bid for the NHS Choices contract in early November. It was named preferred bidder for the£80m contract in July.