Restaurant sector served yet another blow by new wage legislation

Higher pay scales and a host of additional costs to be carried by restaurateurs will hit the sector hard.

Restaurant sector served yet another blow by new wage legislation

The country’s restaurants are struggling to operate under the restrictive trading environment in place in South Africa. The ban on the sale of alcohol and the updated curfew have negatively influenced trading conditions for almost all businesses in the hospitality and tourism sector.

And now, business owners in the sector are facing a raft of new industry rules, including a weekly stipend for the washing of uniforms, which are expected to have a devastating impact on financial viability of many enterprises across the country.

The Level 3 lockdown restrictions announced on 28 December resulted in numerous restaurants temporarily closing their doors, hoping to be able to trade normally from 15 January.

However, hopes for reopening were dashed when Level 3 restrictions were extended once again until 15 February, placing additional pressure on an already embattled sector.

EATERIES TAKE LAW INTO THEIR OWN HANDS

The difficult trading conditions have placed more strain on business owners in the restaurant sector. Not being able to sell alcohol and having to close by 20:00 means restaurants cannot offer a full dining experience, which is the bread and butter for most establishments in the country.

Several establishments have made headlines by contravening lockdown legislation which prohibits the sale of alcohol. In parts of the country, desperate restaurateurs have resorted to non-compliance, selling alcohol as a means to keep their doors open and generate enough income to pay their employees.            

ADDING FUEL TO THE FIRE FOR RESTAURANTS

New legislation has come into effect which places restaurants under more pressure to generate income. Wages increases for staff, as well as additional fees and levies, must be paid by restaurant owners.

The new requirements come at a time when the sector is already on its knees, with many restaurants facing bankruptcy and having to close their doors for good.

The current trading conditions exacerbated by heightened lockdown restrictions, increased operating costs and reduced demand from patrons will unfortunately lead to more restaurant closures across the country.

NEW LEGISLATION FOR RESTAURANT SECTOR

restaurant COVID-19
The new labour law is another setback for restaurant owners. Image: Adobe Stock

Under the new legislation restaurateurs must comply with the following:

  • Waiters must be paid at least R22.25 per hour, increasing by 1.5% from 1 May 2021;
  • Employees earning more than this amount may not have their wages reduced;
  • Restaurants with fewer than 10 employees are permitted to pay 10% less than this amount.

In addition, business owners are now liable for a number of additional costs:

  • A levy for “council expenses” (R5 per month per employee);
  • “General” levy (R25 per month per restaurant);
  • Dispute resolution levy (R3 per employee per month);
  • Funeral benefits (R12.50 per employee per month);
  • Retirement fund contributions (5% of an employee’s monthly wages);
  • A stipend allowance if employees are required to wash their own uniforms (R17.50 a week); and
  • An annual bonus payable in December, equal to a week’s wages for those employed for 12 consecutive months (and two weeks’ wages for those employed for 24 consecutive months).

INHOSPITABLE OPERATING CONDITIONS

The new requirements will certainly not be welcomed by a sector that is already fighting for survival in the face of the extremely difficult current trading conditions. The Restaurant Association of South Africa (Rasa) has taken up the fight with the government.

The association is preparing to challenge the updated lockdown restrictions currently in place, which hamper the ability of restaurants to generate income, let alone manage the wage increases and additional fees and levies. 

If the sector is not able to trade with fewer restrictions, many more restaurants around the country will be unable to survive, leading to further job losses and closures. 

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Source : The South African More