Staffing and payroll considerations for hospitality businesses

Staffing shortages in the hospitality industry have not been helped by the so-called ‘pingdemic’ and while the furlough scheme has been a saving grace for many businesses in the sector, as long as it remains in place it continues to cause issues with recruitment.

Anecdotal evidence from our clients suggests, for example, that as so many talented chefs are on furlough, they are not keen to take up employment elsewhere, meaning businesses that could be fully booked are struggling to open without the people needed to operate. 

The Job Retention Scheme is in operation until 30 September 2021 and from July employers have been required to contribute towards the wages of their employees who remain on furlough. Initially, this was 10% of the 80% total but the employer contribution has now increased to 20% as the Government has reduced its contribution to 60% for the remainder of the scheme.

It is also hoped staffing levels will begin to recover as many workers will no longer be required to stay at home as a result of being ‘pinged’ by the NHS Covid app. The Government has changed its guidance around self-isolation for ‘double-jabbed’ - or aged 18 years or under - close contacts of those who have tested positive for Covid-19. Instead of self-isolating, they are now advised to get a PCR test to check if they have contracted the virus.

As the hospitality industry begins to recover, there are some areas employers should consider when it comes to payroll and recruitment.

Sick Pay 

Under the Coronavirus Statutory Sick Pay Rebate Scheme, employers can claim back up to two weeks’ SSP paid to current or former employees for coronavirus-related reasons.

It is unclear when this will come to an end, but there are some key eligibility points to note: 

• You must have a PAYE scheme that was created on or before 28 February 2020 
• You had fewer than 250 employees across all your PAYE schemes on 28 February 2020 
• The scheme counts towards your State aid limits where applicable 
• Employers can claim for employees who were unable to work because they have Covid symptoms, are required to self-isolate or have been notified to shield or self-isolate before surgery
• The employee must still be off sick for four days or more to qualify, albeit it is paid from day one (no waiting days) up to a maximum of two weeks 

Apprentice pay rates 

Apprenticeship schemes in hospitality are very popular and so it is important to understand the NMW/NLW rules if you decide to recruit apprentices.

The rates of National Living Wage (for those aged 23 and over) and National Minimum Wage (for those of at least school leaving age) change on April 1 every year.

The current rates as of April 2021 are:

Apprentices are entitled to the apprentice rate (currently £4.30 per hour) if they are either under 19 years old or aged over 19 years and in the first year of their apprenticeship.

Apprentices are entitled to the minimum wage for their age if they are aged 19 or over and have also completed the first year of their apprenticeship. Knowing when the apprentice is entering into their second year is important so you can apply the correct rate. If you use a payroll service provider you will need to advise them of the rate increase. 

If you have not thought about employing apprentices, even if you are not a large employer paying the levy, you can still use the fund and contribute just 5% to the cost of the training. More information on employing apprentices can be found here. 

Accommodation  

When an employer provides accommodation to an employee, the costs can be taken into account when calculating the NMW/NLW due.

If you use the offset rate - currently £8.36 per day or £58.52 per week - this is allowable as a deduction from the pay and will not breach the NMW rules. However, if the employer charges more than the offset rate then the difference is taken off the workers’ pay and does therefore count towards NMW/NLW. 

Tips 

There is a handy code of best practice on administering tips. They must not be taken into account for NMW/NLW but they are subject to tax. You can operate tips via a tronc scheme which will be set up as a separate PAYE scheme and requires a troncmaster to administer it. 

Depending on how the tronc is administered will determine whether PAYE and NICs apply or just PAYE. You must understand the scheme rules and operate accordingly.