Inquiry into Fair Work in the Hospitality Industry

Executive Summary for Hospitality Businesses

The Fair Work Convention

The Fair Work Convention brings together employers, trade unions and academic expertise to promote and advocate for fair work across the economy and to advise Scottish Ministers on fair work.

Fair work is work that offers everyone an effective voice, opportunity, security, fulfilment and respect.

It balances the rights and responsibilities of employers and workers. It generates benefits for individuals, businesses and society.

The Hospitality Inquiry

The Hospitality Inquiry was led by an Inquiry Group made up of hospitality employers, employer bodies, trade unions, hospitality workers and other organisations. The Inquiry was led by employer and union Co-Chairs, and supported by an academic advisor.

The group brought a wealth of expertise and experience to the Inquiry process.

The Inquiry considered fair work in the broadest sense, exploring the experiences of hospitality workers and employers to identify what is working and where improvements in fair work can be made.

Why Hospitality?

Hospitality is important to the Scottish economy and contributes to the quality of local community life across Scotland. Hospitality is a changing and dynamic sector which offers business opportunities, jobs and careers, and makes a significant contribution to economic activity, particularly in remote rural areas. Hospitality also comes with a range of fair work challenges which have been a feature of work in the sector for decades. Improving fair work will create positive outcomes for workers and employers. Investing in fair work now will help employers build strong and resilient businesses for the future.

Hospitality – Overview

Hospitality makes up around 8% of employment and almost 9% of private sector businesses in Scotland. The sector has a younger workforce, a relatively high proportion of ethnic minority workers and migrant workers, a higher proportion of part-time workers, and a higher number of jobs with a lower skills level. Half of all employees in hospitality work in small businesses employing fewer than 50 people, while over a third work in large businesses employing more than 250 people. Hospitality is labour-intensive, with higher labour costs, lower productivity and lower pay than the economy average.

The last few years have been particularly challenging for hospitality with the pandemic requiring the sector to close down or significantly reduce trading. This resulted in high numbers of workers losing their jobs or being placed on furlough. Coming out of the pandemic, businesses have faced cost pressures and labour shortages as they have tried to recover. While this created challenges it also created a focus on the value of fair work as businesses seek to attract and retain workers.

Security

Precarious work and insecurity at work disproportionately impacts certain groups – younger workers, women, disabled workers, non-UK nationals, ethnic minority workers and those with lower educational attainment.

Security at work is fundamental to fair work with issues around pay, hours, contracts and basic employment rights, all core elements of workers’ experience. While improvements have been seen in hospitality around payment of the Real Living Wage, there is more that employers can do to improve security at work.

Findings from this Inquiry suggest that when employers focus on providing transparent and predictable hours and clear information on employment rights to all of their employees, this is likely to have a significant impact on the positive experience of fair work in hospitality.

Respect

It is evident that many employers in hospitality take issues around respect seriously and take steps to ensure workers are safe and their wellbeing is supported. Yet, the evidence suggests that hospitality workers face a number of issues relating to respect at work. Hospitality workers would benefit from a clearer focus on safe working practices; support for night workers to get home safely; a better balance of working hours, with clear and consistent access to rest days; better relationships with managers, with a focus on eradicating bullying and harassment - particularly racism and sexual harassment; and a clear mechanism to report issues if they arise.

Respect at work is primarily about relationships, cultures, and how well work is run and organised and workers must feel confident that effective employer action will be taken if concerns are reported. This is an important and achievable focus for all employers regardless of size or starting point.

Opportunity

The hospitality industry is relatively diverse and plays an important role in providing routes into work and entry level positions for many. The important role that hospitality plays in social inclusion and providing work for highly marginalised groups is often overlooked.

With persistently high vacancy rates across the hospitality sector, there is a business need to maximise the potential workforce entering the sector as well as maximising recruitment and retention. The opportunity dimension focuses on fair, open and accessible employment and progression, irrespective of personal characteristics.

Focusing on providing equal access to work, training and progression opportunities, along with tackling pay gaps, and addressing bullying and harassment, including from customers, could support improved retention and fair work outcomes for workers, particularly those with protected characteristics (e.g. age, gender, race etc).

Fulfilment

The hospitality industry continues to struggle with issues around labour shortages, skills shortages and high levels of staff turnover. There are a number of routes into the sector through apprenticeships, colleges and universities, but data suggests that the number of people undertaking apprenticeships and college courses in hospitality is falling.

Perceptions of the sector do seem to be having an impact on recruitment, as are changes to immigration policy. Turnover and churn impacts employers by creating clear barriers to investing in their workforce through training, while, for workers, changing between hospitality jobs can often be a response to poor practice, particularly bullying and harassment from managers.

The hospitality industry prides itself on its ability to offer career progression but, too often, workers are not supported to undertake training and are unclear about routes through the industry. The treatment and working conditions of managers – particularly around unpaid overtime – is also a clear disincentive to career progression for workers.

Relationships with managers shape the experiences of hospitality workers for good and for ill, and while relationships with co-workers and customers are often identified by workers as the best thing about working in hospitality, relationships with managers are more variable and can have a major determining influence on workers’ desire to work in hospitality in the longer term.

Effective Voice

There is a need to strengthen effective voice and voice mechanisms and to encourage and empower workers to raise issues when they arise. For this to be effective, workers must have faith that they will be treated with respect and they must see their employer respond positively to their views and concerns.

Embedding improvements in effective voice is key to making meaningful progress on fair work in hospitality. Yet effective voice is an area of significant weakness for the hospitality industry, both in terms of individual voice mechanisms and collective approaches.

Workers must have a voice, and this must be respected and taken seriously if all other dimensions of fair work (security, respect, opportunity and fulfilment) are to improve.

Rurality

In Scotland, hospitality and tourism play an important role in the economy of remote rural areas. Rural businesses face many of the same fair work issues as urban businesses but there are significant additional issues facing both employers and workers. Making progress on issues like transport, housing, childcare and connectivity is essential for delivering fair work in rural areas.