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Hospitality sector addresses employment risks

The most recent meeting of the Hospitality Network addressed the pressures employers are facing from the fallout of Brexit, challenges to the so-called ‘gig’ economy, and a landmark legal case. Tar Tumber, Director of Employee Relations at Workplace Law, reports

Brexit Britain is obviously a strange place to be, especially with just a few precious months now until we have a better idea of where the UK’s relationship with the EU will end up and what it will mean for business.

One of the industries that has been most affected by the austerity agenda and the uncertainty brought by Brexit is the hospitality sector. Employing over four million people – nearly one in 10 of all UK workers – it’s seen employer numbers increase by nearly 20 per cent and revenues grow (up to £100 billion per annum according to a recent report) despite high profile closures and staff shortages.

It’s no surprise that the subject of employee relations is of such keen interest to employers in the hospitality sector. As with cleaning and security companies, and many other multi-disciplinary FM service providers, dealing effectively with people is an essential part of their operation.

It was a pleasure therefore to be invited to address the members of the Hospitality Network, an informal thought leadership and ideas exchange organisation for the hospitality sector, over lunch in September at the Rubens at the Palace Hotel in London.

Top of the employee relations list to consider is Brexit. Uncertainty over the UK’s exit from the EU is already having an impact, with up to 330,000 staff considering leaving the UK hospitality sector as a result, according to a recent YouGov survey. While negotiations are taking place the UK Government is being careful not to show its hand, but we do know the Government will be launching its Settled Status Scheme by the end of March 2019, allowing EU citizens to apply for Settled and Pre-Settled Status depending on the length of their residency. This scheme will be open until 30 June 2021. From that point, as things stand it would appear EU nationals will not receive any preferential treatment over non-EU workers and a new points based system will apply to all.

Then there is the so-called ‘gig’ economy, where people are paid ‘per gig’ rather than a fixed salary. In such cases organisations are now facing increasing challenges on employment status. Seen by the ‘client’ organisation as a ‘self-employed’ contractor, some of the five million working in this way are pushing to be recognised as ‘workers’ thereby attracting certain employment benefits and protections. A number of tribunals cases brought against Uber, Deliveroo, Hermes and Pimlico Plumbers have all found in favour of the worker definition – the amount of control exerted by the ‘client’ over the gig worker being a key consideration. The Government is consulting on employment status at the present time in an effort to provide more clarity for all parties. In the meantime, given the number of casual or zero hours staff utilised within the hospitality sector, this certainly highlights the importance of understanding who is engaged by and who is employed by the organisation.

While Brexit and proposals to change the gig economy might be considered to be driven by politics, there is an important employee relations case currently progressing through the Court system that could have a significant impact on the facilities management sector as a whole.

A group of 75 outsourced workers supplied to the client, the University of London, by the service provider, Cordant Security, have raised a legal challenge to access the same terms and conditions as staff employed directly by the University.

The group which includes receptionists, security guards, post room staff and porters are represented by the Independent Workers Union of Great Britain (IWGB) who originally filed an application with the Central Arbitration Committee (CAC) in November 2017. The application was to be recognised as the union who could bargain on behalf of the staff directly with the University as well as with Cordant Security.

The IWGB argued that although Cordant was the direct employer of the outsourced staff, the University, as the client being serviced by the staff, was the actual party controlling not only what the workers did day to day, but also the pay, terms and conditions they were receiving, whilst avoiding the legal responsibilities of being an employer. IWGB further argued that it was unfair that the outsourced staff worked alongside staff directly employed by the University on significantly lesser terms and conditions but in the same working environment.

The union alleged the University was the ‘de-facto’ employer and applied to represent the staff in order to collectively bargain with the University on employment terms.

This is the basic premise of the ‘joint-employer’ concept, which has been widely recognised in the US for decades. The notion is that employees can compel client companies, evidenced as having ‘sufficient control’ over them, to enter into collective bargaining agreements alongside the actual employer. The UK has never recognised the joint employer concept for the purpose of negotiating terms and conditions – and the potential impact on the facilities management sector is obviously significant.

At the current time, it is difficult to see how the High Court will find in favour of joint employer status given the practical implications for so many businesses and employees alike. But it could happen.

There is the ethical argument that outsourced staff should not be treated less favourably than the direct employees doing the same job in the same location, simply because they work for a service provider. However, a finding in favour of joint employment would definitely upset the apple cart and could even lead to organisations trying to work to an ultra-lean model, with the potential detrimental effect of reducing staff numbers to reduce their outgoings and squeezing the remaining employees to carry out more tasks and take on more responsibilities.

As far as all of this relates to the hospitality sector, it makes it more important than ever to keep a watching brief on political and case-law developments. Resource-planning is already difficult enough in a sector facing so many unknowns. Which makes contingency planning all the more important.

Tar Tumber is Director, Employee Relations at Workplace Law. She is the author of a white paper: Employment law in FM: joint employer status, available from www.workplacelaw.co.uk

For more information on the Hospitality Network please visit www.hospitalitynetwork.co.uk

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