Blogs/Vlogs

Brexit and the hospitality sector – people

12 March 2019

Currently, Brexit talks are failing to achieve the necessary breakthrough. Leading economists warn that Britain risks a “no-deal” recession so severe that it sends shockwaves across Europe and beyond. SMEs (including many hospitality businesses) will be among the worst affected, with the resulting impact on the costs of food and drink and the people working within the industry.

Post-Brexit, it is going to be difficult to recruit staff to service the hospitality industry, especially with the complicated immigration rules that will come into effect. As it is, staff turnover in this industry is already very high. Currently, about 75% of service staff in London is of EU origin and, if a number of EU employees are to leave, it will be extremely challenging to recruit for these positions. This could result in a decrease in efficiency and quality of services provided, which could impact on the reputation and brand of hospitality businesses.

Earlier this month, Millennium & Copthorne reported lower profits and blamed this in part on EU migrant staff having Brexit worries. The FTSE 250 operator of hotels in central London said it faces real difficulties in recruiting EU workers that make up over half of the hotel’s total London workforce.

Adding to the problem, a study conducted by the Change Group in 2018 identified a significant pay disparity between UK and non-UK employees in the Hospitality sector. UK workers were being paid on average 20.3% more than employees from other EU countries, equating to an additional £5,300 per annum. Businesses should work together to iron out such disparities and remunerate all staff using the same criteria, irrespective of gender or nationality.

With demand for skilled hospitality staff potentially exceeding supply after 29 March, higher salary packages will be demanded, thereby increasing business costs. Increases in costs will be passed down to customers, which means reduction in footfall. Businesses need to consider their options and work hard to retain and support their existing workforce to ensure some of the risks associated with a “no-deal” Brexit are mitigated.

EU Nationals need reassurance, guidance and support regarding their future presence and status in the UK. Employers can provide an ‘Action Kit’, which address Frequently Asked Questions (such as who is affected by Brexit and how). The objective is to provide these staff with the advice and direction they need to understand the various options available to them and help with following procedures and understanding regulations to secure their future in the UK and within the businesses to which they belong. For example, employers can provide assistance to EU staff in understanding that in the event of a “no-deal”, EU citizens would have to apply for “settled status” under the EU Settlement Scheme by 31 December 2020. This scheme would only be open to EU citizens residing in the UK by 29 March 2019.

Those who made preparations at the start of the Brexit journey in 2016 will stand a better chance than those who have not put plans in place. The last few days remaining should be used to fine tune these plans before we embark on a potential rollercoaster ride into the unknown.

If you have any queries or would like to discuss this issue further, please contact your local UHY adviser. Alternatively, fill out our contact form here.

References:

Big Hospitality, New research reveals gender disparity in different hospitality roles

Reuters, Hotel group Millennium & Copthorne sees Brexit led hiring crunch

Big Hospitality, British hospitality workers earn 18% more than EU counterparts

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