Need to employ someone in your hospitality business? Avoid these pitfalls

By Tom Little on 20 February 2018

If you’re thinking about buying an existing guest house or hotel, you may decide you need staff but are you actually going to inherit some unknowingly?

We spoke to Joanne Stronach, an employment law expert, who revealed the traps that hospitality business owners sometimes fall into.

You’re not just buying a property Often those new to the sector consider buying an existing guest house or small hotel to be just a property transaction.

However. if you intend to continue to run the property as some form of guest accommodation, even with a new name, then that is wrong if the business already has staff. What you are buying is a business.

The purchase of the land and buildings is just one, albeit important, part of that business purchase. As a buyer you need to be wary and ask the right questions to discover if there are any employee issues.

Don’t assume that because you don’t see any employees when you visit the property in the low season that there are none. You may inherit some you don’t know about under the Transfer of Undertakings (Protection of Employment) Regulations.

What questions do I need to ask?

  • Are there any full year, seasonal or casual staff?* Do seasonal staff expect and are expected to return each year?
  • Who is the employer?
  • What terms are they employed under?
  • Do any employees live in?
  • Have they been paid the correct National Minimum Wage (NMW) or National Living Wage (NLW)?
  • How flexible are the working hours of any staff or are they set in stone?
  • As a large proportion of the workforce that are employed in this sector are young, female, from outside the UK and/or part time, do you know your legal obligations relating to age, sex and race discrimination?

Click here if you need a hospitality mortgage.

If you need further advice…
"I am proud to be part of a specialist legal team who know the right questions to ask when purchasing the business and so ensure that you know what you are getting for your money. We can ensure that payments due to staff are correctly apportioned.

"We will ensure that the employment warranties and indemnities protect you as the buyer.

"We can help you find any hidden liabilities lurking such as under calculated, underpaid holiday pay, any breaches of the NMW or NLW and unearth unpaid employee benefits that may need to be continued.

"With significant experience of acting for hotels, guest houses, B&Bs, caravan parks, restaurants and pubs don’t get caught unaware and give us a call."

Joanne Stronach
Head of Employment and HR Cartmell Shepherd
Tel: 01228 516666