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How Hoteliers Can Cope with Rising Wages

Diana Szpytma 22 August 2018
How Hoteliers Can Cope with Rising Wages

The hospitality industry is facing rising costs everywhere, but most significantly in wages. According to a survey by the Recruitment and Employment Confederation (REC), hourly pay rates for short-term hospitality staff rose for the 62nd consecutive month.

CV Library also discovered that hospitality workers have the fastest-growing pay packets of any other sector, with wages rising by 10.4% by the end of 2017.

The economy has been seeing a considerable amount of shake-up in the wake of Brexit and the introduction of the National Minimum Wage. From different rates for different ages of worker to surprising rules about what counts as working time, hospitality pay is not just getting more expensive, but it’s getting more complex.

As if that was not enough, hotels face the risk of Government enforcement. HMRC has been tasked with fighting for workers’ rights when it comes to pay, and has been flexing its enforcement powers in recent years. In the last five years, over 1,500 businesses have been named and shamed for failing to comply, including several household names. 23% of the businesses named last year were hospitality businesses.

Being fined for failing to pay the national minimum wage and ordered to pay arrears is not a good look for anyone, let alone hospitality businesses trying to show they are considerate employers in an ever-tighter labour market.

So, what can hoteliers do to tackle rising costs and ever more complex compliance issues?

Review your processes

Firstly, make sure your house is in order. This means undertaking a full review and assessment of your internal HR and payroll processes. Make sure that your processes are up to date and still fit for use. Do not keep anything you no longer need and try and streamline your process flows wherever possible.

Make sure you have structured processes in place to ensure employer and employee compliance with governing bodies such as HMRC and The Pension Regulator, whilst also helping you to ensure accurate and timely processing of data.

Many hotels are chains with a number of premises dotted around the country. This means that payroll information can likewise be spread out. When data is sitting in various sites and systems, centralising your payroll operation can result in huge time savings.

Regardless of whether your payroll teams are centralised, as long as they have access to all the data they need, when they need it, your operation will run much more smoothly. One secure data site also ensures greater data security, as it allows you to have closer scrutiny over access.

These processes, if adhered to properly, will make sure that you do not fall fowl of any regulations and that your employees get paid on time. Compliance to regulations means no fines, while paying staff on time is a vital part of ensuring productivity from staff.

Invest in skills and tech

The majority of employees in the hospitality sector are paid flexibly and often work in several locations within the same pay period. These factors can make running accurate payroll more of a challenge.

There is also usually a high turnover of staff in hospitality businesses, meaning you have to constantly update your payroll, and a lot of the staff are student workers who have limited working hours during term time.

For these reasons, you cannot expect a general manager, whose main focus is their customers, to be an expert in payroll. You need to equip your business with fully qualified, experienced payroll staff who know what they are doing and who are able to focus on getting your employees paid. They also need to have the right tools and systems in place to make their jobs easier and to ensure accuracy of data.

Early investment of payroll infrastructure will always pay off in the longer term. The question is: which solution is best for you? Some hotels would be better with an outsourced solution, while others simply need automation and systems support to get the work done.

Keep up to date with the latest changes

You would be surprised just how far reaching some compliance changes can be. As we have mentioned, Government changes in legislation and compliance have already had a major impact on hospitality payroll. That is why it is so important to keep an ear to the ground and be aware of changes before they come into force. This allows you to have a process in place and a budget organised ahead of time, so you aren’t caught out.

When you work in an industry that subject to constant change and upheaval, having a robust, yet flexible foundation is a must. Efficient process flows and readiness for change are the best ways to ensure cost effective and efficient use of your HR and payroll resources.

The article is written by Gary Webb. Gary heads up PR, marketing and communications for FMP Global, and ensures that all communications help to drive understanding of the solutions available from their experienced payroll team.