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If you own a business in the hospitality industry, here are the HR risk areas you need to know about.

Providing an exceptional customer service experience and serving mouth-watering food may be your passion, however managing a hospitality business has its own challenges including costs around the operations, pricing of menus and providing service with a smile. Among these challenges, one of the most important areas that owners overlook is HR compliance and the risks associated with it.

Let’s narrow the HR risks for the hospitality industry down to the top 5 that can make or break your business and why you may need to review your HR policies and processes.

1. Hiring and Onboarding

It is a no-brainer that having good staff is an integral part of the business. It is wise to invest the time to look for team members that are the right fit with right skillsets during the hiring process. High turnover is not uncommon in the hospitality industry due to the demands and pressures involved and at times, transient workforce. Having a diligent recruitment process may assist to retain skilled staff. Once hiring is concluded it is very easy to overlook onboarding. This is one of the most common mistakes small business owners make. The experience of having a properly structured on-boarding process determines the retention rate of employees. This enables the owners and new staff member to form a good working relationship. The engagement level is set from day one and will reduce the unnecessary cost of constantly replacing new staff. Setting up clear expectations from the start followed by regular feedback is all part of the onboarding process.

2. Employment Law

Small businesses, restaurants and cafes, in the hospitality industry, and even some larger ones as we’ve seen in recent media, are limited when it comes to in-house HR support. Subsequently, they may overlook the need to have adequate employment contracts. Employment contracts determine staff employment conditions and are legally binding to ensure your business is protected whilst setting a standard and expectation for new staff members to provide them with clarity. It goes without saying that your contracts should be reviewed by an HR professional to minimise risk. Pay structure and Modern Awards form part of the employment contract. Do you know what Modern Awards apply to your hospitality business? What are the correct pay rates for hospitality employees? Small businesses in hospitality will find themselves subject to the Fair Work Commission’s attention if they don’t get awards and entitlements correct. If as a business owner, you are found to be non-compliant there are potentially heavy fines and back payments involved.

3. Training

Investing time to train your staff ensures the success of your business and satisfied customers. At the same time, the hospitality industry is heavily regulated in relation to Food and Safety Standards. As a business owner you are required to provide adequate training to your staff around food safety compliance and minimum standards, hence having a training manual, proper policies, processes and guidelines to ensure adherence to regulations is essential. Did you know a Food Safety Inspector can walk into your restaurant or café at any time to question your staff on Food Handling?

4. Managing Performance

Running your own business especially if you are a hands-on owner, finding time to have regular discussions with your staff can be challenging. Nevertheless, it is vital to have meetings with individual staff members and provide them with feedback on a regular basis. Setting a structure from the beginning is a good start. Understandably managing poor performance can be time-consuming but is a necessity. As an employer providing fair and clear expectations with follow up meetings is important. This is your opportunity as the business owner to address any concerns you may have relating to a staff member’s performance. This provides the staff member with an opportunity to take action and own their performance. The Fair Work Commission requires you to demonstrate that you followed a fair and due process. This also provides you the opportunity to identify any training and skills gaps. Following a compliant performance process with written documentation may assist you if you need to manage your staff member’s termination.

5. Risk Management and Safety

As the WHS Act stipulates, as a business owner it is your responsibility to provide a duty of care to your staff and your customers. There are several risk factors to be considered being in the food industry such as food-borne illnesses and mishaps in the kitchen (slips, falls, cuts, burns). Awareness surrounding safety compliance being embedded in the business is crucial. Being a small business owner your priority should be to mitigate any risk factors; lack of compliance and negligence can lead to heavy financial consequences and reputation damage for your business and subsequent loss of customers. Having a WHS policy in place and a safety culture in your business can assist with compliance.

As business owners, you may spend time researching and finding the right location to locate your restaurant or café, understanding the customer needs, the demographic trends and wearing several hats at the same time. In a nutshell, it is an exciting time whilst being overwhelming. Be smart, speak to an experienced HR professional today and get the right support. The management of the above risk factors is the key to the success of your business.

Shereen Kumar
Associate, 360HR Solutions


To minimise your risk and optimise your business for HR peace of mind, or if you have any questions, we’d love to help.
Contact your 360HR Solutions team member or our Corporate Head Office on email and 02 4225 2223.