In light of the upcoming long weekend, many small hospitality businesses will be forced to either shut, or face additional costs says Edward Mallett, managing director of employment relations consultancy Employsure.

“Many small hospitality businesses such as restaurants and cafes are faced with this catch-22 over public holidays,” says Mallett. “It is an out-dated system that is skewed against employers.

“Compulsory penalty rates have fallen away in the UK, New Zealand and the rest of the developed world, yet Australia still clings to a system which fails to reflect current market conditions.”

Mallett says that a recent Australian Chamber of Commerce and Industry survey revealed that small businesses struggled in the March 2015 quarter, with many employers expecting the economy to deteriorate over the next 12 months. It also found that small business profits fell for the second consecutive quarter.

Mallett says that this coupled with the “added pressure” of penalty rates will further impact on the profitability of small business owners.

“The main concern for most hospitality business owners is making enough money to keep the business afloat. We frequently receive calls from employers asking whether it’s financially worth it for them to stay open on public holidays, due to penalty rates. Many end up deciding not to open, citing the additional costs as too expensive.

“Public holidays also give consumers an extra day when they can spend money on dining out, yet their options are narrowed because of unreasonable wage expectations. These factors collectively have a significant impact on the economy.”

Mallet adds that there can also be confusion in relation to which penalty rates apply to which businesses.

“Many of our clients in the hospitality and food service industry aren’t sure which penalty rates apply to their businesses, and how to implement them. If an employer fails to pay penalty rates, or forces employees to work on public holidays unnecessarily, they could justifiably have a claim brought against them. The system is mind-bogglingly complex and just adds to the burden of red tape in running a business in the industry.”

Below, Mallett lists five tips for hospitality employers during public holiday periods.

1. Know your industry: Make sure you know which award applies to your staff. Treatment of public holidays can vary from industry to industry and it’s important to know what your options are.
2. Understand your obligations: Even if you don’t know what your obligations are, there’s a good chance your staff will. It’s important that you know which penalties apply and from when, and whether the applicable award allows for substitution of public holidays.
3. What are your options? Most hospitality businesses have a mix of casual, permanent and part-time employees – rostering options can help you determine who would be most beneficial to have working on a public holiday.
4. To open or not to open? Compare the costs of staying open versus staying shut before deciding to close, and remember your customers’ expectations, especially your regulars. Not all public holidays are national – if it’s business as usual in WA, you risk losing business if you decide to close.
5. The public-holiday sickie: Have a process for addressing unexplained absenteeism, and communicate clearly any expectations your business will have for employees to work on the public holiday.

This article is written by our media partner, Hospitality Magazine. Click here to view more articles.