Hospitality sector to benefit from ban on exclusivity clauses

Hospitality sector to benefit from ban on exclusivity clauses

What is an exclusivity clause?

When an exclusivity clause is put into an employee’s contact, it restricts the employee from being able to take on additional work with another employer. In 2015, exclusivity clauses were banned from being placed into zero-hours contracts. The government judged this unfair when work is not guaranteed to the employee.

 

What are the new rules on exclusivity clauses?

Business Minister Paul Scully has recently announced that the Government has decided to extend the ban on exclusivity clauses further which includes those earning less than £123 per week. This rule changes means employers will no longer be able to insert exclusivity clauses into employee’s contracts where their guaranteed weekly income is £123 of less (the Lower Earnings Limit). It has been estimated that 1.5 million workers across the UK are earning £123 or less per week. The intention of the new rules is to ensure that workers within this group with exclusivity clauses have the option to top up their income with additional work.

 

How will this benefit hospitality businesses?

This announcement has been welcomed by the hospitality sector and has been described as ‘positive for businesses and workers in hospitality’ and UKHospitality have said that the reform will benefit firms that are currently experiencing recruitment issues. The reform to the rules will enable those who would like a second job to have one. The hospitality sector has over 160,000 vacancies and enabling people to work with contracts that suits them should help with recruitment and increase business confidence.

 

Hospitality employees working longer hours

As referenced earlier, the hospitality sector currently has over 160,000 vacancies which is double the number of vacancies the sector had before the pandemic. The shortage of employees in the sector means that employees are being asked to work longer hours. According to a survey conducted by workforce management specialist Bizimply, it has been found that staff working hours in the hospitality sector has increased on average by 6 hours per week (25 hours per week compared to 19 hours per week) than before the pandemic. The hospitality sector is hoping that changes to exclusively clauses will help fill some of the many vacancies available. This may alleviate some of the pressure on their current staff who are working additional hours.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants in Sheffield, Doncaster, and Northampton.

As the sector continues to become ever more challenging, with changes in fierce global, national and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

 

At Hawsons our dedicated team of specialist hotel, pub and restaurant accountants offer professionals advice and guidance that is tailored to their individual needs and requirements, providing a full range of proactive services.

Free initial meeting

Richard Burkimsher, Partner

Richard Burkimsher

Partner, Northampton

01604 645 600

Scott Sanderson

Partner, Sheffield

0114 266 7141
Paul Wormald, Partner

Paul Wormald

Partner, Doncaster

01302 367 262

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Hospitality Sector Optimistic for 2022 Despite Staffing Challenges

Hospitality Sector Optimistic for 2022 Despite Staffing Challenges

A recent survey conducted by the CGA and Fourth’s Business Leaders has found that hospitality leaders are optimistic about the prospects 2022 has to offer. The poll shows that 65% of multi-site business leaders are confident about the next year for the market. This has increased from 59% in December 2021.

 

Why has confidence increased?

Despite the recent news that the 12.5% temporary VAT rate has now returned to 20%. The survey demonstrates that multi-site businesses are starting to find their feet again with 84% confirming that they are now operating at a profit. This is 4% more than in December 2021. Furthermore, the hospitality sector is now become very attractive for investors and consumers and the sector is quietly confident that profits and sales will continue to improve in the second quarter of this year.

 

Staffing shortage cause for concern

Despite the increased confidence for leaders in the hospitality sector there are considerable challenges that the sector is currently facing. Not only is the sector being affected by increasing inflation and the cost-of-living crisis but it is also facing widespread staffing issues.

As the hospitality sector emerges from the pandemic, staff shortages are becoming a major issue. This shortage is causing job satisfaction to fall with 45% saying that their job is now less appealing than it was previously. The most common reasons cited by employees to explain staff shortages were:

  • Unsociable hours (54%)
  • Increased workload (49%)
  • Pay not matching the job (47%)

 

What improvements would staff like to see?

The survey Transforming The Employee Experience In Hospitality has shown that teams would welcome implementation of technology into the workplace. This technology said to be most welcome are:

  • Digital clock-in/clock-out
  • Smart scheduling
  • Shift management

This demonstrates that implementing technology to improve employee experience is crucial in keeping members of staff engaged. Therefore, hospitality businesses that adopt technology to provide a good employee experience will in many cases, have a better employee retention rate.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton.

As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

At Hawsons our dedicated team of specialist hotel, pub and restaurant accountants offer professionals advice and guidance that is tailored to their individual needs and requirements, providing a full range of proactive services.

Free initial meeting

Richard Burkimsher, Partner

Richard Burkimsher

Partner, Northampton

01604 645 600

Scott Sanderson

Partner, Sheffield

0114 266 7141

Martin Wilmott

Partner, Doncaster

01302 367 262

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Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

How will the return of the 20% VAT rate affect hospitality?

How will the return of the 20% VAT rate affect hospitality?

Introduction

In the Chancellors Spring Statement he announced that the VAT rate for hospitality businesses would return to 20% as the temporary 12.5% rate ends. This decision has sparked outrage from the hospitality sector as they look to recover after the disturbance of the Omicron variant over the Christmas period and was one of, if not the most affected sector during the pandemic. Furthermore, the sector is attempting to recover during a time where inflation is rapidly increasing the costs of supplies generally.

 

Hospitality businesses will have difficult decisions to make

Due to the increased VAT rate, hospitality businesses will have to decide whether to absorb the hit of the rising costs themselves in order to retain customer loyalty, or increase costs but run the risk of losing customers due to pressures on the cost-of-living.

Some hospitality businesses will be forced into the latter as many do not have sufficient cash reserves. It has been reported that one in three hospitality businesses have less than a months worth of free cash reserves. This means that hospitality businesses will likely be forced to increase their prices which may cause a decrease in demand.

Some hospitality businesses who are fortunate enough to have available cash reserves have confirmed that they plan to shoulder some or all of the cost in order to retain and increase customer loyalty going into the crucial summer months, one of them being London based pizza chain, Four Hundred Rabbits. They have said that they considered increasing their prices but have choose not to as they did not want their customers to feel that eating out or ordering a takeaway was too much for them.

 

Should the Chancellor reconsider his decision?

Michael Kill, CEO of the Night Time Industries Association said that the Spring Statement announcement demonstrated the Government’s disengagement and lack of understanding of the industry. The small increase in the Employment Allowance was the only announcement the Chancellor made that helped the hospitality industry. Over the last two years the hospitality sector has lost over a third of its nightclubs due the pandemic, with many more struggling. The withdrawal of financial reliefs such as the increase of VAT back to 20% will only result in the sector losing more businesses and jobs.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton.

As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

At Hawsons our dedicated team of specialist hotel, pub and restaurant accountants offer professionals advice and guidance that is tailored to their individual needs and requirements, providing a full range of proactive services.

More from our leisure and hospitality experts

You can find all of our latest hospitality sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Richard Burkimsher, Partner

Richard Burkimsher

Partner, Northampton

01604 645 600

Scott Sanderson

Partner, Sheffield

0114 266 7141

Martin Wilmott

Partner, Doncaster

01302 367 262

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Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

Hospitality sector calls for business rates reform

Hospitality sector calls for business rates reform

Introduction

In the Government’s recent Business Rates Revaluation Consultation, UKHospitality along with the British Institute of Innkeepers called for a wide-ranging reform of the current system. The Government’s consultation has confirmed that business rates revaluations will now occur every three years instead of five which has been supported by hospitality trade bodies. However, hospitality trade bodies have also said that this cannot come at the cost of additional reporting, restrictions on appeals, and penalties’. Hospitality trade bodies have said that they appreciate the usefulness of the Government’s consultation. But they feel that there needs to be a wider reform to address the unjust and imbalanced system with a need to move taxation away from property.

 

Why do trade bodies want a reform?

In the current system, the hospitality sector overpays by 300% relative to its turnover which amounts to £2.4bn. Understandably, the hospitality sector believes this is particularly unfair considering the effect the pandemic has had on hospitality businesses. This has piled up the pressure on indebted businesses as they start to rebuild after being closed for the majority of the last 16 months. The fact that they are overpaying on their business rates certainty doesn’t help.

Hospitality trade bodies have expressed a number of concerns about the proposals in the consultation which would increase the administrative burden on hospitality businesses. They believe a broader review is needed to redesign the business rates system to reduce the administrative burden and not increase it.

Hospitality trade bodies propose that businesses should not be asked for any additional information than they currently do in the revaluation process particularly as they will now be more frequent. Furthermore, they believe that the Valuation Office Agency should improve its technological systems to help with data returns.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton.

As the sector continues to become ever more challenging, with changes in the fierce global, nation, and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

At Hawsons our dedicated team of specialist hotel, pub and restaurant accountants offer professionals advice and guidance that is tailored to their individual needs and requirements, providing a full range of proactive services.

Free initial meeting

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

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Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

The Government introduce an insurance scheme for events

The Government introduce an insurance scheme for events

The Government and Lloyds have partnered together to introduce the Live Events Reinsurance Scheme. The purpose of this scheme is to provide support for live events in the UK that are available to the general public. For example, this would include:

  • Music festivals
  • Business events
  • Theatre performances
  • Comedy events

 

The scheme will cover costs incurred from events that are legally obliged to cancel due to Government Covid restrictions. In this scheme, the Government will act as the ‘reinsurer’ as they will step in and guarantee that insurers can offer the products that events companies need. The scheme will be available from September 2021 and will end at the end of September 2022.

 

What does this mean for the events industry?

The introduction of this insurance scheme will allow the events industry to start planning events without having to worry about the event being cancelled at a later date if the government reinforces Covid-19 restrictions. In turn, more event organisers will have the confidence to start event planning which will bring more money into the UK economy.

Industry experts have welcomed the news of this new insurance scheme, however, some have questioned the timing of the introduction and asked why the scheme wasn’t introduced earlier.

 

How can we help?

Hawsons has a dedicated team of specialist leisure and hospitality accountants in Sheffield, Doncaster, and Northampton.

As the sector continues to become ever more challenging, with changes in fierce global, national and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

At Hawsons our dedicated team offer professionals advice and guidance that is tailored to our clients individual needs and requirements, providing a full range of proactive services.

Free initial meeting

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

More content

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...

Expected recovery date for eating out market in doubt

Expected recovery date for eating out market in doubt

Recent research conducted by Lumina Intelligence has found that the UK eating out market was expected to make a full recovery by the end of 2022. By the end of 2021 the UK eating out market was expected to grow by 33.4% to £63.6bn and expected to continue growing by the end of 2022 to £91.9bn just over the pre-pandemic levels of £91.3bn. This data has been based upon all restrictions coming to an end on 21st June. However, it has now been confirmed that the current COVID restrictions will be extended a further four weeks which is likely to have a significant effect on the recovery of the eating out market.

 

Could the UK hospitality sector suffer from long economic COVID?

There are concerns that the hospitality sector will suffer from long economic COVID which are likely to be emphasised due to the extension of COVID-19 restrictions across England. The UK Hospitality chief executive, Kate Nicholls, gave a speech in the House of Commons on 7 June which highlighted the impact that forced closure and strict trading conditions was having on the hospitality sector. According to Nicholls’s evidence, only 40% of hospitality businesses are currently able to operate profitably.

The average monthly costs of running a hospitality business are between £10,000 – £20,000 whilst average government support is £3,000 per month. This has left hospitality businesses with average deficits of £7,000 to £17,000 per month which has contributed to the industry’s rental debt exceeding £2bn. Nicholls has called for landlords to split the debt with businesses and write off 50% of rent debt for periods of forced closure.

Following the news of the extended restrictions the government will most likely be under pressure from business leaders in the hospitality sector to deliver further financial support.

 

Conclusion

To conclude, the extension of the COVID-19 restrictions across England has put the expected recovery of the eating out market on hold. This means that hospitality businesses will face at least a further four weeks of strict trading conditions. This decision by the Government will put them under more pressure to deliver further financial support to the hospitality sector with some unable to trade profitability in strict trading conditions.

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton. 

As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

Free initial meeting

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

More similar content

Tax Rates and Allowances 2022/23

Introduction We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used. Personal tax rates As...