Basics

If a restaurant employs staff, they are subject to employment laws. The very basic requirements in England and Wales are:-

• Before you employ someone, make sure they have the right to live and work in England and Wales. This will mean checking their documents and keeping copies.  If you employ someone who does not have the right to work, then the penalties are substantial.
• Issue the employee with a contract of employment. This is right from day 1 of employment.  This should set out basic information such as the job title, pay, holiday entitlement, place of work and working days/hours.
• Register for PAYE (except in very limited circumstances) and operate a PAYE scheme.
• Provide your employee with a workplace pension scheme.

Employees and workers have many other statutory rights, and employers should make themselves aware of these rights, so that they do not inadvertently breach them.

Right to work

As stated above, penalties apply for employing someone who has no right to live/work in England.  The civil penalties are currently £45,000 per illegal worker for a first breach, and from £20,000 to £60,000 for repeat breaches.  There can also be criminal penalties of up to 5 years in prison and an unlimited fine.

Students often seek employment in the hospitality industry, and this includes foreign students at university level courses.  Many will have the right to work for up to 20 hours per week during term time and may have the right to work full time outside of the academic terms, but you will need to check carefully what restrictions apply to them according to their documents.

Flexibility

Restaurants may have busy times of day, busy days or busy seasons, so they may not need a constant level of staffing.  Employers can offer a range of working options such as zero hours contracts, part time or full-time work or fixed term contracts.

• Zero hours contracts – these will be particularly useful if the restaurant owner is not sure long in advance how many staff they will need at any given time. Under a zero hours’ contract the employer does not have to offer any work at any particular time.  The worker is not required to accept work when it is offered. Because of the flexible nature of the relationship most staff working under a zero hours contract will be workers rather than employees.  The contract should specify they are engaged as workers. They can also work for other employers at the same time as being contracted under a zero hours contract.  Such workers will be entitled to certain minimum rights, such as to be paid the National Minimum Wage, join a workplace pension scheme and paid holiday.  Many larger employers use HR software which allows staff to book shifts online, to cut down on the administration arising from zero hours contracts.
• Part-Time permanent employment – This may suit the restaurant owner when they have a better idea of their staffing needs on particular days or times of the day. In this contract the employer offers a set number of shifts/hours/days employment and the employee is required to work those days/times.  Pay should be pro-rata to an equivalent full-time job and holiday entitlement is also pro-rata.  Part time employees have the right not to be treated less favourably than full timers.
• Fixed Term employment – If the restaurant’s custom is seasonal, this may be the answer. It can be for a fixed term of a number of weeks or months.  It can be full time or part time.  Although it is for a fixed term, it can include provision to terminate before the fixed term.  Again, fixed term employees have the right not to be treated less favourably than a permanent employee.  If a fixed term exceeds 4 years (either because it is a long period or the contract is extended) a fixed term employee then receives the same rights as a permanent employee.
• Full Time permanent employment. The employee will have all the usual employment rights.

A restauranteur may take on agency staff.  Agency staff should be employed by the agency, not the restaurant owner, so this is a way to limit the employment liabilities of staffing a restaurant.  Restauranteur’s should make sure they check their contract with he agency to ensure this is the case.

Working Time

Restaurants may operate at various hours of the day and night, so require staff to work unsociable hours.

Employees are entitled to a 20 minute break if they work 6 hours; at least an 11 hour break between working days and an uninterrupted break of 24 hours per week, or 48 hours per fortnight.

An employee cannot be required to work more than a 48 hour week, unless they sign a waiver to confirm they agree.  They have the right to withdraw this waiver upon giving 3 months’ notice.

Some restaurants will provide a service into the night, and the hours between 11pm and 6am are considered the night period and anyone working 3 hours or more during that period is considered a night worker.  There are additional restrictions on night workers working hours, and obligations on the employer to make sure they are fit to do night work.

Different limits on hours of work and breaks apply to 16/17 year olds.

All employees have the right to 5.6 weeks holiday per annum (28 days), which can include Bank Holidays.  Employees are not entitled to take holiday on Bank Holidays, and can be required to work, as long as they receive a 5.6 weeks holiday in total.  This will be pro-rata if they do not work full time, either because they are part time or working under a zero hour’s contract.

The question as to how to calculate what holiday pay is payable to an employee or worker who works irregular hours or only part of the year has recently been resolved by the Government with an amendment to the Working Time Regulations.  For these two categories of workers new provisions apply for leave years beginning on or after 1/4/24:-

• Holiday will accrue based on the hours worked in the previous pay period and will accrue at 12.07% of hours worked in that period
• Employers can apply rolled-up holiday pay if they wish.

Rolling up holiday pay means that rather than paying holiday pay when holiday is taken, an additional 12.07% is paid to the worker for each pay period they work so that they are paid holiday pay as they work.

This is a complex area of law, and for more detail please see Holiday pay and entitlement reforms from 1 January 2024 – GOV.UK (www.gov.uk)

Harassment

Recent reports from various large institutions, including Mcdonalds, of sexual harassment have brought this subject front and centre.

All employers are currently responsible to ensure that their staff are not subjected to bullying and harassment, but the Workers Protection (Amendment of Equality Act 2010) Act, which comes into force in October 2024, enhances that responsibility.

That Act requires that employers take reasonable steps to prevent the sexual harassment of employees, making it a pro-active duty.  This will apply to behaviour between staff, management and staff and the behaviour of customers towards restaurant staff.=

Guidance is expected from the Equality and Human Rights Commission before this Act comes into force.

TUPE

If you are buying or selling a restaurant business you will be subject to the Transfer of Undertakings (Protection of Employment) Regulations – TUPE.  These require that if an undertaking is transferred, the employees go with the business, and work for the new owner under the same terms and conditions.  It is also unlawful to dismiss someone because of the transfer.  This is a very complex area of law, and sometimes overlooked by buyers and sellers of businesses.  Employees can bring claims in the Employment Tribunal against both sellers and buyers, so it is important that the risks of a claim are avoided by complying with TUPE and dealt with by warranties and indemnities in the sale and purchase agreement.

For more information please contact marina.vincent@haroldbenjamin.com