The hospitality industry is one of the fastest growing sectors in the South African economy. Most of the excess hotel room capacity built in anticipation of the 2010 soccer World Cup has since been absorbed by an impressive growth in tourism, fueled in large part by international visitors.
It’s a sector which employs approximately 700 000 employees, and contributes almost 10% to GDP.
Prospects for the sector remain very positive, after foreign visitor numbers and room revenue per night both increased by in excess of 12% in 2016, in comparison to 2015.
It is an industry further enhanced by the Federated Hospitality Association of South Africa (FEDHASA) which, since its establishment in 1949, continues to be an active representative of hotels, guest houses, restaurants and caterers. So much so, that FEDHASA is recognised by government as the official trade association for the industry. The Tourism Business Council of SA also plays a significant role in lobbying on behalf of the hospitality industry, within the context of its tourism brief.
Last month, Deputy Tourism Minister Elizabeth Thabethe noted that South Africa has 118 869 graded rooms spread across approximately 5 354 establishments in the hospitality sector, adding that South African tourism is “poised for growth”.
It is, however, also an industry with all the ingredients for challenging labour relations. There are a number of reasons for this. To begin with, it’s labour intensive. On the positive side, being labour intensive, it has the capacity to be a significant source of job creation and employment; this is especially significant if one has regard for the fact that the real unemployment rate is in the region of 35%. However, on the flip side, not all job opportunities in the industry are full-time permanent positions.
Outside of peak seasons, it is well-nigh impossible for the industry to forecast, for example, room-occupancy, banqueting and conferencing bookings. It is precisely for this reason that the industry needs job flexibility, and seeks to achieve this by adopting various categories of employment, such as permanent, scheduled and ‘casual’ staff, a model which trade unions typically object to.
However, there are additional employment factors which exacerbate hospitality industry labour relations, such as shift and night work, both of which invariably complicate all sectors which operate such continuous-shift systems.
Whilst the industry is labour intensive, many of the job opportunities are entry-level jobs, with associated entry-level wages. It was for this reason that Government promulgated Wage Determination 14 ten years ago, to make provision, amongst other things, for minimum wages in the industry.
Various such Wage Determinations have been promulgated in recent years relating specifically to industry sectors which are considered to employ vulnerable employees. These other sectors, such as retail and security services, tend to have similar employment characteristics to the hospitality industry, namely many entry-level jobs, and shift work. It is interesting to note that the most recent Wage Determination minimum wage, effective from 1 July 2017, is only fractionally higher than the R3 500.00 per month national minimum wage to be introduced in April 2018.
A further factor increasing the complexity of hospitality industry labour relations is the proliferation of trade unions in the sector. Whilst SACCAWU, and to a lesser extent, HOTELLICA are the dominant trade unions in the sector, our firm has identified a further twenty trade unions also operating in the sector throughout the country. This can, and occasionally does, lead to union rivalry, when identifying majority representation, within single and multiple-bargaining units within each establishment, becomes contested.
Collective Bargaining agenda items in the hospitality sector, by and large mirror the hot-button agenda items in other sectors. These include the quantum of annual wage increases, improved benefits such as employer pension and provident fund contributions, as well as travel and night shift allowances.
There is however one collective bargaining agenda item which is more common in the hospitality sector than all other industry sectors. This relates specifically to how employees are rewarded for the premium wages associated with overtime, Sunday and Public Holiday work. For example, the normal overtime rate of pay is 1.5 times the normal rate of pay. The employer is obligated to pay the employee their full wage for the normal time portion of the overtime hours worked.
However, Sectoral Determination 14, as does the Basic Conditions of Employment Act, makes provision for employers to reach an agreement with employees that the premium for the overtime hours worked (ie: an additional 0.5 hours for each overtime hour worked) may be addressed by crediting the employee with additional leave for this additional premium due, rather than pay the employee cash.
This is a common practice in the hospitality industry for good reason. Given the increasingly inflexible labour market, and ongoing increased regulation in employment models, hospitality industry employers have an opportunity to make some provision for employment flexibility by, in essence, banking the days accumulated by employees in lieu of pay for overtime, Sunday and Public Holiday work, and granting employees this time off work during quiet periods.
By and large, employers reach agreements to proceed on this basis in the employment contracts which employees sign on commencing employment.
Finally, the hospitality industry, at least in the experience of our firm, has the highest incidence of employee theft-related cases than any other industry, when contrasted with other categories of misconduct. Furthermore, our experience is that theft-related misconduct is frequently the single biggest specie of misconduct spawning dismissals in the sector. This obligates the sector to, on an ongoing basis, invest in costly and time-consuming security vigilance and labour disputes.