Five million dollars is to be spent on fixing Novopay.
Cabinet Minister Steven Joyce has made the announcement this afternoon.
Breach of contract notices have been sent to Talent2, the company responsible for the Novopay payroll system.
He says effectively it means Talent2 has been put on notice as to the Government's position.
Mr Joyce says it's a legal move that has to be done should a decision be made to shelve the current contract.
He says it shouldn't be taken as a sign that is a a decision the Government will make.
He says final responsibility for who covers the bill, Talent2 or the Ministry of Education, is still to be sorted out.