The owner of the Fazenda restaurant chain is using savings from the cut in hospitality VAT to give all 330 of its staff a 10% pay bonus.
Southern Wind Group, which bought Fazenda out of administration in March, said the move was a "thank you" to team members across its five sites, including chefs, front of house and managers.
The first payment of the VAT bonus scheme was added to June's pay checks and will be included every month until September.
In July 2020 the government temporarily slashed hospitality VAT from 20% to 5% to support the industry through the pandemic. It will increase to 12.5% from 30 September and return to 20% in April 2022.
Southern Wind Group hopes the bonus will help promote hospitality careers at a time the industry is struggling with a major staffing crisis and is making the 10% available to all new starters joining the company.
"While the past 12 months have been hard, we now want to look to a positive future," said Tomas Maunier, managing director of Fazenda.
"Hospitality is integral to our economy and our lifestyles, and we want to make sure people are rewarded, and that it remains an attractive career choice for so many."
Fazenda has restaurants in Leeds, Liverpool, Manchester, Edinburgh and Birmingham with further expansion planned for the next 12 months.
This week pub group JD Wetherspoon said it would be increasing its prices by around 40p per meal after the VAT rise in September and argued it was unfair supermarkets did not pay the same rate on food as hospitality.