Payrollers in hotels and restaurants have to be switched on at all times.
Hospitality is one of Britain 's fastest-growing sectors, with just under two million people working in hotels, restaurants, pubs, clubs and contract caterers and support services. And even with many organisations concerned about the impact of the smoking ban (UK-wide from 1 July), the industry is thriving. But hospitality payroll teams face a number of challenges.
'The main issues have always been higher-than-average staff turnover, lots of temps and seasonal fluctuations,' says Cara O'Rourke, senior product strategy manager at Northgate HR, which provides HR and payroll software and outsourcing services. 'More recently, making sure that migrant workers are eligible to work in the UK - and that catering companies are not employing staff with incorrect or expired visas - have become important considerations.'
Peter Davies, investigations and enquiries manager for Vantis, says payroll paperwork is often a secondary consideration for managers: 'Especially at junior levels, people don't stay for too long in one job. But hotels and restaurants need certain numbers to operate effectively. They often require them at short notice and might have to ask existing staff if they have friends who need work. When they find them, starting them is the priority - payroll information gets forgotten or dealt with too late.'
The hospitality sector has always employed a sizeable number of migrants but with the industry's expansion, employers are increasingly turning to overseas workers to fill vacancies. EU enlargement in 2004 - when 10 countries joined - precipitated the much-reported migration of some 600,000 Poles and other Europeans to the UK , many of whom took jobs as waiters, bar staff and chefs. And since January this year, Romanians and Bulgarians, albeit with tighter restrictions, are now free to seek work here.
'Many employers are confused as to who's allowed to work and who isn't,' says Davies. 'They see Albania , Russia or Ukraine on the passport and assume it's ok to take them on.'
Under UK employment law, all job applicants should be asked for their passport to check for eligibility to work. 'This should happen regardless of colour or language or accent,' says Davies. 'You should photocopy the passport - if it's not from an EU state, the employer must see the visa and check if it allows full employment, leave to remain or study. If you follow the visa, you'll be covered if the Home Office pays a visit.'
But employing migrant workers brings other problems of flightiness: 'You need to be careful with NI numbers - you have to ask yourself if the person has actually been here long enough to apply for one or if they've bought it for a tenner in the pub,' says Yvette Lamidey, technical adviser for IPP Consult. 'You also must decide about bank accounts - are you going to insist they have one or will you accept accounts in someone else's name? If you pay the worker into his partner's account and there's trouble with the partner and the employee can't access his pay, that causes problems - so ideally they should have their own account. If not, you might want to go the extra mile as an employer and talk to your own bank about arranging for your workers to be allowed to cash cheques there.'
Low-paid migrant workers - particularly those who have recently moved to the UK - often move around between digs before settling down: 'They may be at one place when they start and another when they finish, and we won't necessarily know,' says Tracy Summers, payroll manager for Pizza Hut. 'When we send out a P45 or a cheque for final payment, it ends up at the wrong address and the worker starts to chase us. We have to cancel a lot of cheques.'
Lack of understanding of UK tax and employment systems, coupled with a poor grasp of English, creates further difficulty when workers are asked to complete seemingly complex forms. However, employers risk hefty penalties for non-compliance with Home Office and HMRC requirements - along with negative publicity, as Sir Terence Conran found to his cost in 2003, when his flagship Bluebird restaurant was raided. After 15 arrests, six migrant workers were removed from the UK - and while the restaurant was not subsequently investigated, the media attention was far from welcome.
'You get hit over the head in a big way unless you're seen to have taken reasonable steps by the Home Office,' says Peter Davies. 'Some employers regard it as Mickey Mouse paperwork but with a £3000 fine per worker, it's a hassle worth avoiding.'
But employers can still be caught out by more wily migrants: 'You'd be amazed how many companies are paying people who haven't actually done the work, or who shouldn't have done the work in the first place,' says Eric Smart, CEO of Smart, which provides systems that allow managers to record the 'biometrics' of individual workers' hands. 'An HR person might interview and offer the job to one chap but it's his friend - who may not speak English or have the right skills for the job or have permission to work or even be in the UK - who turns up for work.
'If managers are lax with recording leavers or absences, people can easily continue to get paid long after they've finished working. Similarly, if there are different managers for different shifts, cunning workers can work both shifts, creating health and safety issues. By implementing a biometrics system, people can't clock on for work without a PIN number and a matching hand reading - preventing incorrect payments.'
Increasingly sophisticated systems are geared towards helping busy managers avoid these problems: 'You can link your systems with visa renewals,' says Cara O'Rourke. ' It's possible to enter visa expiry dates into the system, which will then flag visas that are about to expire, safeguarding against having employees working for the company with out-of-date visas. Document scanning can also be used to scan a visa into the system against an employee's record, so you have evidence of the visa when employment commences.'
Systems are all very well - but often, the key is good old-fashioned communication: 'We mail-merge our restaurant managers every 8-12 weeks asking for outstanding information on individuals,' says Tracy Summers. 'We have to be pretty hot on chasing - managers may have seen all the legal stuff but still be short on payroll information.'
A unique aspect of the hospitality sector is that pay can comprise not just basic salary but tips and gratuities - catered for in many organisations by 'tronc' schemes, whereby an appointed individual (the 'troncmaster') distributes tips amongst staff, independently of the business.
'The original tronc rules were written in the days when people paid for meals in cash, and tips would go into a bag and be dished out by the head waiter,' says Peter Davies. 'We've moved on from there - with service charges and most restaurants being paid with credit cards.'
HMRC recently announced that tips could count towards national minimum wage - meaning that neither worker nor employer need pay NI on that part of pay. However, a vital component of these schemes is the troncmaster's independence of the employer: 'There's usually an interaction between the troncmaster and the business,' says Davies. 'But what that can't amount to is arm-twisting. Any unreasonable influence by the employer will not only spin over into poor customer service but be classed as invalid by the Revenue.'
The Mandarin Oriental, a five-star hotel in London's Hyde Park, is reviewing its tips payments in the light of HMRC's announcement: 'Each department head in our restaurants, bar and room service team distributes their tronc amongst the team,' says Jerry Milner, payroll administrator. 'Some do it according to a points scheme, some according to the number of shifts worked by each employee. As long as it's agreed by our employees, that covers us and NI isn't payable. But we're looking closely at the scheme at the moment.'
Whether scrutinising their own workers or finding their way through the maze of officialdom, hospitality employers are going to have to be on the ball for some while yet.
Choosing a troncmaster |
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| • | If you're the business-owner, don't choose a 'yes man' |
| • | Identify someone who is responsible and trusted by staff - perhaps the head waiter or head chef |
| • | The troncmaster should have an understanding of finance and what's needed to keep happy shifts going |
| • | If elected by staff, ensure the appointment is properly documented |
| • | If the business has an owner-proprietor, with mostly part-timers, put two or three proposals to the vote - once documented, it will count as an instruction to the business |
