We spoke with Kate Shawcross from Harrison Drury solicitors about how to create the right team for your hospitality business.
No matter what the size of the venture you are taking on it is likely that there will be people already working there. You may have a view of the team you’d like to have on board, but an existing business is likely to have existing staff so what do you need to think about in terms of employees?
It is essential to do plenty of research and to make sure that you have properly undertaken your due diligence with reference to employees since they will be a critical success factor, and cost, to the business. It is essential that you understand the extent of your obligations in this regard as nasty surprises can lie in wait for the unwary. It is vital that you understand what your workforce will look like, how it works and is structured and how much it will cost since this will clearly impact on your business planning and the profitability of the scheme.
No matter the size of the concern, individuals employed by that business will have employment rights under the Transfer of Undertaking (Protection of Employment) Regulations 2006 (commonly referred to as ‘TUPE’ or the ‘TUPE Regulations’, or just ‘the Regulations’). TUPE protects many aspects of employment and ensures that, if and when individuals transfer to a new employer, they carry across with them their accrued rights. These include but are not limited to length of service (known as continuity of service), salary and contractual benefits.
In the hospitality industry it is also worth thinking about the accommodation aspect since it is not uncommon for individuals to live in where they work. Such arrangements are usually covered by a Service Occupancy Agreement and it is important that you understand the set-up as well as the impact on pay (taking into account national minimum wage and any salary deductions for rent etc).
Do not be fooled into thinking that if there are no contracts of employment you have a clean slate. In the absence of any paperwork the statutory provisions will apply – your employment advisor will be able to let you know what these are if the need arises. In terms of any adjustments you may wish to make it is important to know that only limited post‐transfer changes are allowed. For these to be given effect they must be for an Economic, Technical or Organisational reason (ETO), and any changes implemented which are solely linked to the transfer will be unenforceable.
As a result of Brexit, there are new rules you will also need to be aware of if you employ, or are going to employ, foreign nationals, including those from the EU. In most circumstances, you will now need to apply for a sponsor licence before employing foreign nationals, and they will need to meet certain requirements and apply for permission before working in the UK. You will therefore need to ensure that employees from outside the UK have all of the relevant documentation in place, such as proof that they have the right to work in the UK.
From 1 July 2021, employers will no longer be able to accept EEA or Swiss passports alone as evidence of a permanent right to work in the UK for new employees, and proof of immigration status will also be required.
For the above reasons it is important to ensure that you have the right support and expert guidance throughout the process. This will enable you to understand the employee due diligence information provided to you, to take the right steps in advance of the transfer and to be well placed to manage the situation post-transfer so you have a solid foundation on which to build your business.
At The Cumberland, we specialise in mortgages for the hospitality sector. Find out more about the lending options available for hotels, guest houses, B&Bs and holiday lets.