Viewpoint: Hospitality must repair the damage to its image or lose out on recruitment

10 February 2017 by
Viewpoint: Hospitality must repair the damage to its image or lose out on recruitment

Our industry needs to recruit more British youngsters post-Brexit, but first it needs an image overhaul, say Bob Cotton and Miles Quest

Even if a work permit scheme is introduced, Brexit will inevitably lead to a reduction in the number of migrant hospitality workers and employers will have to rely on recruiting more British-born workers. There's little chance of that, however, if they continue to (illegally) pay staff below the National Living Wage (NLW) and (legally) regard most or all of the proceeds of the service charge as company revenue without making this clear to the customer.

It's doubtful if the two most recent examples of these practices (Roux Restaurants and Harrods, though both have revised their policy) are exceptional - indeed, they may even be the tip of the iceberg. Paying below the NLW is plainly illegal, but given the number of employers in the industry (over 200,000) and the low wages paid, it's probable that underpayment is far more prevalent than HMRC believes. The rules and practices about the service charge are so misunderstood, and such little information is given to the customer about the distribution of monies raised, that it is little wonder that customers are confused.

Back in 2009, the BHA urged businesses to abide by a code of conduct which set out to explain to customers how any service charge raised was distributed to staff - whether some of it was retained by the business, if so how much and for what purpose, and which members of staff received it. To their credit, some major, and smaller, employers accepted this code, in full or part measure. But this left, and still leaves, a great number of establishments who raise considerable sums of money as additional house revenue without any intention of distributing it to their employees. Nor do they explain this to their customers.

No-one denies that those businesses that retain the proceeds of the service charge are acting perfectly legally, but are they acting morally? The plain intention of a service charge, certainly in the eyes of the public, is that it should go to the staff who provided the service, not to the business itself - otherwise, why not introduce a surcharge? No business would dare to call it that, however.

For a modern-day industry, this is hardly a sustainable position. There is no doubt that public confusion over the service charge and the underpayment of minimum wages led to valid criticism of the industry's employment practices. There are many good and honest hospitality employers but the industry still has a poor employment image which has been created by years of bad practice. That these practices are continuing well into the 21st century bodes ill for the industry's chances of recruiting more British-born youngsters to replace the thousands of migrant workers that might be prevented from working in the UK following the Brexit negotiations.

Who wants to work for an industry that cheats on its employees? There is very little time for hospitality to repair the damage.

Bob Cotton is former chief executive of the British Hospitality Association and Miles Quest is managing director at Wordsmith and Company

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