Service charges scrapped at the Gallivant, while staff receive share of profits

The 20-bedroom Gallivant hotel in Camber, East Sussex, is paying its staff £9 per hour, four years ahead of when the government expects all businesses to achieve the figure as part of its new National Living Wage policy.

The new pay structure has been introduced for the 25-strong workforce, alongside a performance-based bonus and a share of the company's profits. All service charges and tips have also been scrapped. Due to be launched in April, the compulsory National Living Wage will require employers to pay staff over the age of 25 at least £7.20 per hour, rising to £9 an hour by 2020.

Harry Cragoe, owner of the Gallivant since 2010, said that he has made the changes to the pay structure in order to create an environment where the staff feel they are valued as an integral part of the team and will enjoy the benefits of the hotel's success. The restaurant's £500,000 turnover in 2010 is expected to reach between £1.5m and £2m during the current financial year.

"I did not like the tronc system where money is shared out equally between staff, without taking into consideration that some people may work harder than others," he explained. "I therefore decided to introduce a performance-based bonus, paid out on meeting incentive targets on a quarterly basis, with a share of the overall profit of the business distributed at the end of the year."

Cargoe said the initiative was all about creating some kind of ownership of the business the staff, and will, he believes, have a positive impact on the bottom line. "If staff are working in a better environment and are happier, they will be more productive," he continued. "The hospitality business is all about making people happy. If staff are unhappy, it is very difficult to achieve success."

Absolutely integral to the success of operating the new system, according to Cragoe, is the need to provide training to enable the staff to do their jobs to the best of their abilities, whether they are a kitchen porter, housekeeper, waiter or sous chef.

Unsurprisingly, staff at the Gallivant are enthusiastic about the new working terms and applauded Cragoe when he explained the new working conditions at a team meeting. Guests are equally impressed that they are not expected to pay a service charge, although a handful have insisted on leaving a tip, which have then been equally distributed among staff.

The Gallivant will complete a renovation of its bedrooms in March, when Cragoe intends to start looking for a second property.

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