The Sectoral Determination for the Hospitality Industry


 

In association with LabourNet

Recently the Minister of Labour announced a new determination relating to the Hospitality Trade, affecting franchises in the food sector. What follows below is a summary of the Sectoral Determination for the Hospitality Industry, as well as news on employers who are not affected. The full Determination can be viewed and downloaded by accessing the Labournet website at www.labournet.com

WHO DOES IT APPLY TO?

The determination defines the Hospitality Trade to mean any commercial business or part of a commercial business in which employers and employees are associated for the purpose of carrying on or conducting one or more of the following activities for reward:

  • Providing accommodation in a hotel, motel, inn, resort, game lodge, hostel, guest house, guest farm or bed and breakfast establishment, including short stay accommodation, self-catering, timeshares, camps, caravan parks;
  • Restaurants, pubs, taverns, cafés, tearooms, coffee shops, fast food outlets, snack bars, industrial or commercial caterers, function caterers, contract caterers that prepare, serve or provide prepared food or liquid refreshments, other than drinks in sealed bottles or cans whether indoors or outdoors or in the open air, for consumption on or off the premises; and
  • Includes all activities or operations incidental to or arising from any of the activities mentioned in the above two paragraphs.

 

WHO DOES IT NOT APPLY TO?

The determination does not apply to an employer and employees who are:

  • Involved in the trade of letting of flats, rooms or houses;
  • Covered by another Sectoral Determination in terms of the Basic Conditions of Employment Act, 75 of 1997; or
  • Covered by a Collective Agreement of a Bargaining Council in terms of the Labour Relations Act of 1995.

 

The letting of flats, rooms or houses is defined as the trade carried on by persons who carry on the business of letting flats, rooms or houses and includes the agents to who such persons entrust the letting of flats, rooms or houses and the employees of such agents who are employed exclusively in connection with such flats, rooms or houses.

It is also important to note that if you are subject to a Bargaining Council Main Agreement in your area, this determination shall not be applicable to you (for example Johannesburg and Pretoria have Bargaining Councils specifically covering the restaurant and catering trades).

WHAT HAS CHANGED IN TERMS OF CONDITIONS OF EMPLOYMENT?

Firstly, as stated above, should your company fall within the scope of a Bargaining Council or another Sectoral Determination, their stipulations in relation to conditions of employment will take preference over the stipulations of this Determination.

The Determination mostly follows the same line as the Basic Conditions of Employment Act in terms of conditions of employment. The following conditions of employment have been specified:

Maximum hours of work

Maximum ordinary hours of work are stipulated as:

  • 45 hour per week, and
  • 9 hours per day, if the employee works a 5 day week
  • 8 hours per day, if the employee works a 6 day week

 

Overtime

Overtime may only be worked in accordance with an agreement and may not exceed 10 hours per week. An employee may further not work more than 12 hours per day, including overtime. In other words, a maximum of 3 hours overtime per day is allowed.

The overtime rate is stipulated at 1.5 for each hour worked.

Payment for work on Sundays

An employer must pay an employee who works on a Sunday at double the employee’s wage for each hour worked, unless the employee ordinarily works on a Sunday, in which case the employer must pay the employee at one and one-half times the employee’s wage for each hour worked.

Annual leave

An employer must grant to an employee at least:

  • 21 consecutive days’ annual leave on full remuneration in respect of each annual leave cycle; or
  • By agreement, one day of annual leave on full remuneration for every 17 days on which the employee worked or was entitled to be paid; or
  • By agreement, one hour of annual leave on full remuneration for every 17 hours on which the employee worked or was entitled to be paid.

 

Family responsibility leave

An employer must grant an employee, during each annual leave cycle, at the request of the employee, three days’ paid leave for family responsibility.

Sick leave

During every sick leave cycle of 36 consecutive months of employment with the employer an employee is entitled to an amount of paid sick leave equal to the number of days the employee would normally work during a period of six weeks. Provided that in the first 6 months of employment an employer shall grant an employee one-day’s paid sick leave for every 26 days worked.

An interesting development in respect of the provision of sick leave is that the employer may offset any monies paid by the employer for the medical fees of the employee, from the employees pay. The employee must however agree thereto.

Maternity leave

Maternity leave is for a period of 4 months and is unpaid; employees will however be entitled to claim for unemployment benefits.

MINIMUM WAGES

In the Determination only one minimum wage is specified for the entire industry, whereas the previous legislation stipulated minimum wages for the various job categories in the industry.

With effect from 1 July 2007, an employer must pay an employee at least the minimum wage as stipulated in the Determination. It is imperative to note that the Determination specifically excludes gratuity or tips in the calculation of the minimum wage. In other words the employee must receive the minimum wage as payment and the employer may not include any tips or other forms of gratuity into the calculation.

Employee’s who work 45 ordinary hours of work per week must be paid weekly or monthly wages as prescribed. The parties can however conclude a written agreement in terms whereof they agree that the employee will be paid an hourly rate, as prescribed, for every hour or part of an hour that the employee works.

When an employee works for less than four hours on any day, that employee must be paid at least for four hours work on that day.

Furthermore, no division is made in terms of rural and urban facilities. The determination has however made a distinction between small and large employers, with a small employer being regarded as a business employing 10 or less employees.

The minimum wages for employers with 10 or less employees are:

  • R1 480.00 per month
  • R 341.00 per week
  • R 7.59 per hour

 

These wages apply for the period of 1 July 2007 to June 2008. There after wages will increase yearly with the consumer price index plus 2%.

The minimum wages for employers with more that 10 employees are:

  • R 1 650.00 per month
  • R 380.80 per week
  • R 8.46 per hour

 

These wages will be applicable for the same period and will increase as stipulated above.

Commission work

A written agreement can allow the employee to perform commission work on a regular basis. The employer must however pay such employee not less than the prescribed minimum wage for the period worked. In other words the parties can agree on a commission rate but when the employee is paid, the amount paid to the employee must be equal to or greater than the minimum amount stipulated above.

A further important aspect of commission work is that the above-mentioned agreement must be concluded before the work commences. The agreement must contain at least the following:

  • The wage rate and how the commission will be calculated,
  • The period over which the payment is calculated, which may not be longer than a month.

 

The employer may not amend or cancel the agreement without first giving the employee at least four weeks notice of the intention to cancel or amend the agreement.

The payment of any commission must be made within seven days of the agreed period.

CONCLUSION

As the Determination is already in effect it imperative that all company work practices are brought in line with the new Determination. It must be further noted that where employment contracts allow for benefits and wages or salaries above the stipulation of the Determination, those contracts will still remain in force and the employer is prohibited from unilaterally amending those contracts to now reflect the minimum requirements as specified in the determination.

Should you require any assistance in respect of the above or in respect of any other employment related issue, have a look at our Labour relations column on Whichfranchise here (insert link) for more information on the services provided by LabourNet.

Disclaimer

The information published in this article or newsletter is of general nature and should not be used without obtaining specific advice as to its application in your business or under your specific circumstances. LabourNet™ will accept no liability if the information is used without first obtaining specific advice from one of our consultants.