National Living Wage: are staff getting a fair deal?

01 July 2016 by
National Living Wage: are staff getting a fair deal?

Research has revealed that hospitality staff still don't feel that they are being adequately rewarded for their work, despite the recent introduction of the National Living Wage. Neil Gerrard reports

Fewer hospitality staff feel they are being paid fairly for their work than last quarter, despite the introduction of the National Living Wage.

That's according to the latest survey by The Caterer, carried out in partnership with temporary staffing specialist LOLA Staffing.

The survey, conducted in May/June 2016, showed that just 25.7% of agency workers who participated in the sounding thought that hospitality staff were being paid fairly for their work, down from 33% in the first quarter of the year.

The findings come in spite of the fact that the National Living Wage of £7.20 per hour for workers aged 25 and over came into effect in April this year.

Interestingly for a group not yet entitled to receive the National Living Wage, the proportion of those aged 24 and under who answered The Caterer's survey and thought that hospitality staff are being paid fairly for their work was higher, at 29.4%, than the overall sample.

In the 25 and above age bracket, 77.2% felt that hospitality staff are not being fairly paid, despite the fact that minimum wage workers saw their pay packets increase two months ago.

Perhaps unsurprisingly, employers viewed things differently. The proportion of respondents who considered the pay they offer to staff as "above average", rose by nearly five percentage points to 46.6%, and there was a small uplift of 0.4 percentage points to 4.5% of those who considered the pay they offer to be "top level". Some 45.9% said their pay was "average", with just 2.26% viewing it as "below average", and just 0.75% seeing it as "bottom level".

A clear majority of 58% said they would not be willing to pay more for their agency staff, assuming the quality of staff would increase. This was a significant rise of 23.3 percentage points on the previous quarter. The proportion who answered "yes" to the same question fell from 40.8% to 28.6%, while those answering "don't know" reduced significantly too, from 25.5% to just 13.5%.

The results can been seen as a clear indication that the National Living Wage has squeezed employers, but that employees haven't necessarily noticed a major difference to the size of their pay packet.

Employers have been faced with a range of government measures recently that they fear could push up costs - from the National Living Wage to the ongoing uncertainty regarding tipping, service charge and tronc (of which more later), and fears of the Apprenticeship Levy set for introduction in 2017 and the associated changes to funding criteria for non-levy-paying companies.

A recent survey of 41 chief executives, chairs and managing directors at some of Britain's leading hospitality companies, including Casual Dining Group, Travelodge, Whitbread and Yo! Sushi by the British Hospitality Association (BHA) in association with global executive search firm Heidrick & Struggles, discovered decreasing confidence in the economy.

The majority of those interviewees felt that relations with government had not improved in the last 12 months and cited the recent introduction of the National Living Wage as a prime example. The BHA claimed this had been done with "little or no consultation with the hospitality industry".

Nonetheless, Duncan Mitchell, managing director of LOLA Staffing, said: "We were disappointed to find out that so many employers are not willing to pay more for better quality staff."

"Our worry is that such negative attitude of hospitality employers towards fair pay can be very demotivating for the staff or even discourage them from pursuing their career in hospitality completely," he said. "Nobody wants to see this happen, with 53% of employers already admitting that they find it difficult or very difficult to recruit hospitality staff. We'd like to highlight that there are hospitality employers who have taken the lead in paying a good wage to staff. We're hopeful that their strong example will create a movement."

Tipping and service charge

Despite some vocal warnings from key figures in the hospitality industry about the possible unintended consequences of the government's proposals on tipping and service charges (see box on page 42), as well as some concerns about what they truly involve, both staff and employers appeared to be broadly in favour of the plans, according to this survey.

A total of 70.4% of employees declared themselves in favour of the proposals. Among employers, that figure was even higher, at 74.4%. The motivation for that high proportion of employers appears to be driven largely by the hope that the proposals will lead to greater transparency and a level playing field for all. Typical comments among employers on this question included: "It should be more transparent and regulated to protect the employees and the employers".

Commenting on the findings, Mitchell said: "The results sent a strong positive message in support of freeing up tips on top of wages for all hospitality workers. We are delighted that the vast majority of employers agree that staff should be personally rewarded for their great service by the customers."

Well treated

There was good news for employers when it came to the way in which agency staff feel they are treated on site, with the proportion stating that they felt they were treated "very well" up by 7.9 percentage points. The proportion who felt they were "not well" treated was down slightly to 9.2% (from 11.8%), although the proportion who felt they were treated "badly" ticked up slightly to 6.4% (from 5.5%).

There appeared to be an improvement in the proportion of workers who said they got adequate breaks on shift too, with 20.2% saying they were always adequate (up from 16.5%), and 38.5% saying that "most of the time" they received adequate breaks (up from 35.4%).

Growing levels of satisfaction then, when it came to general wellbeing among agency workers, but a continued sense that hospitality isn't offering the levels of pay that employees want.

What the government is proposing on tips and service charge

The government announced the outcome of business secretary Sajid Javid's eight-month review of tips, service charges and troncs on 3 May and the industry had until 27 June to engage in the consultation process.The government has indicated it would like to see restaurants handing over all tips to their employees. The proposals also suggest that charges imposed on staff tips by employers should be scrapped or limited (except for those required under tax law), and that service charges on customers' bills should also be clear and voluntary. It is also considering:

  • Whether to ban or restrict the levying of table sales charges on staff - a fee paid by waiting staff based on their sales during a shift
  • How to incentivise and increase the prevalence of well-managed tronc systems
  • How to update the current voluntary code of practice and put it on a statutory footing to increase employer compliance.

LOLA Staffing

LOLA Staffing is a London-based temporary staffing agency, providing hospitality staff, promotional staff and crew to our industry. Since 2007, thousands of caterers, hotels, event companies and restaurants have trusted LOLA with their staffing requirements. Email to request testimonials and discuss competitive rates.

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