In 2021 there will be 3 increases to the minimum wage; a 1.75% increase in February (delayed from July 2020 due to the pandemic), a 2.5% increase in November (delayed from July 2021), and a 0.5% increase in the superannuation guarantee rate, which came into effect in July.
Whilst this may seem like good news all around, the bitter truth is that the hospitality industry has been struggling.
We caught up with Leanne Robertson from KeyPay about the upcoming pay rates increases, read the full Q&A here.
In that Q&A, Robertson said, “ For an industry already facing income uncertainty due to unexpected lockdowns and skill shortages, this may, unfortunately, be the tipping point for some businesses.”
And she’s right.
Businesses were already struggling from one of the worst bushfire seasons on record when the pandemic hit. For those that hung on, these increases could be the death knell.
In a year that has seen the longest continuous lockdown for many states, including Victoria where Melbourne has inherited the unwanted record of ‘most locked-down city in the world’ having spent over half of the year at home, it’s been a tough slog for Australian hospitality owners.
With a lack of regular trade, the hospitality sector has been hit harder than any other industry by the pandemic. People either couldn’t go to their favourite spots anymore, or were hesitant on spending their money in an era where their own employment was at risk.
Many campaigned for November’s rise to be smaller than 2.5%, preferring instead a 1.1% increase. This would have allowed a much more palatable comeback from COVID for many smaller businesses within the industry, such as cafes, or small bars.
How can these small businesses cope?
There are many options, but according to Leanne Robertson, the most effective would be to know which award rates you have to pay, and maneuvering them in a way which saves you money.
Say a member of your team has awards that kick in after a certain amount of time on the clock. Combat this by rostering to avoid overtime.
Having your staff work shorter hours is also a good way to nurture a more positive working environment, and is a step closer to ridding the industry of the long-outdated tradition of working more than the contracted hours.
Introducing a surcharge for weekends and public holidays can also offset any penalty rates you might have to incur. By passing some of the financial burden onto the customer, you can ensure that you can roster the appropriate amount of staff for the busier periods.
If your staff have a no meal break penalty, avoid it by simply feeding them (I mean, you should also just feed them anyway).
You can get more familiar with your actual wage costs. Knowing how much wages are cutting into your bottom line can inform you on how much staff you actually need to roster on to meet your targets.
Robertson advises a good wage cost percentage usually hovers between 25-50% of your income, depending on the business.
Switching from salaried to hourly pay can also reduce the risk of underpaying staff. Paying staff an hourly rate, and pairing this with a payroll platform that automates award payments means that you only pay award rates when you have to.
The increase in minimum wage this year is definitely a blow to the hospitality industry, but there is a way to navigate it so that your business is cushioned from its impact, at least a little.
