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Payroll and HR considerations for hospitality and leisure

| | Michele Coe-Baxter | 9 July 2024

As a business owner in the hospitality and leisure industry, it can be easy for payroll and HR to slip down your list of priorities as you focus on other day-to-day ‘business as usual’ tasks.

However, payroll and HR are vital tools to help you navigate the challenges that come with running a business in this industry.

Whether it’s managing seasonal staff during busy periods, keeping up with National Living Wage changes or tackling recruitment issues, having a reliable payroll and HR function will make life a lot easier for you.

Keeping up with busy seasons

We all know that the hospitality and leisure industry experiences peaks and troughs throughout the year, with times like Easter, summer and Christmas leading to huge spikes in demand.

Around these busy seasons, you’ll most likely be hiring extra staff to help you cope but you don’t want to be scrambling for staff at the last minute. To avoid this, it’s a good idea to plan ahead by carefully analysing your financial forecasts.

You’ll need to take higher wage costs during busy points of the year into account in your monthly payroll forecasts and cross-reference these against your projections. By doing this, you’ll be able to work out exactly how many extra people you can afford to hire, as well as getting your job adverts out well in advance.

However, whilst hiring new staff will be a priority during busy seasons, you’ll also need to remember that existing staff will be likely to want to take time off during these times. Since April this year, the rules have changed surrounding holiday pay and there is a new accrual method for irregular hour workers and part-year workers. This means that holiday entitlement for these workers will be calculated as 12.07% of the actual hours they worked in a pay period.

Another thing to consider when hiring seasonal staff is making sure they’re integrated into your existing team as much as possible. Whilst they may only be with you for a short time, you still need them to give their all and feel happy in their job and long-term colleagues need to be accommodating and supportive of them. To do this, you could consider investing in basic training, as well as assigning mentors to get them up to speed quickly.

Managing tips

Employees in the hospitality industry rely on receiving tips to boost their income and tipping fairness plays a significant role in job retention - 88% of hospitality staff say that the fairness of the tip process influences where they work and how long they stay in a role.

However, as we are slowly moving towards a more cashless society, the tipping process has become much more complex, with many customers wishing to use card payments to make tips.

Hospitality businesses can distribute tips made in this way by adding them to the general payroll, but choosing this option does mean that some of the tips can be tax-deductible.

One way around this is to use a tronc scheme - a special pay arrangement which allows businesses to fairly allocate tips and ensure all staff members, including those who may not typically receive tips directly, are compensated fairly.

Complying with legal payroll requirements

Businesses in the hospitality and leisure industry generally pay their staff an hourly wage and, as a business owner, you have the power to decide how much to pay them. However, there are baselines you have to stay above - the National Minimum Wage and the National Living Wage.

The National Minimum Wage applies to staff who are of at least school-leaving age. As of April 2024, the rate is £6.40 per hour for those under 18 and £8.60 per hour for those aged 18-20.

For staff members aged 21 or over, the National Living Wage applies and, as of April 2024, this is £11.44 per hour.

These rules are particularly tricky for holiday park owners, who often have staff living on-site. If you have staff members who live on-site and are provided with accommodation, you need to be very careful to ensure you’re not falling foul of minimum wage rules.

The rates for both the National Minimum Wage and the National Living Wage change on 1 April every year, so you need to make sure your payroll function is up to date whenever they change. Failure to comply can result in an investigation from HM Revenue and Customs, leaving you open to steep fines.

Tackling recruitment issues

The hospitality and leisure industry persistently struggles with recruitment and many tactics have been put in place to address this - including hospitality training academies and suggestions about a new tipping law.

According to the Office for National Statistics, there were 112,000 vacancies in hospitality at the end of 2023, compared with the pre-pandemic figure of 89,000.

Because of this, it’s vital that you hold onto the staff you already have to reduce the need for recruitment - and having a good payroll function plays a big part in this. Prompt and proper payment of wages is your staff’s most basic expectation of you as an employer and any shortcoming in this regard is likely to break the trust they put in you.

If you repeatedly have payroll errors occurring, such as late payments or figures not being as expected, it can quickly become a cause for concern and employees may begin to look elsewhere.

No matter what area of hospitality and leisure you work in - whether it’s a restaurant, hotel or caravan park - payroll and HR should be something that you consistently prioritise to help your business succeed.

If you’re struggling to manage it on your own, why not consider outsourcing your payroll function? At Duncan & Toplis, we specialise in providing bespoke payroll services to businesses across the East Midlands and beyond.

For more information about our services, or to make an enquiry, get in touch - we’d love to hear from you.

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