Taking care of your employees in a demanding industry is not a walk in the park. You must have a piece of great knowledge about labor laws and minimum wage facts for restaurants to create a healthy working environment for them.
Managing your staff without knowing what they’re entitled to be a mistake that you should avoid. You must ensure that everything about your employee management is intact to avoid internal conflicts which often lead to a more serious legal issue.
The goal of this article is to equip you with facts about minimum wage so you can make informed decisions about it. Additionally, this article will provide you with tips on how to protect your business and employees.
Restaurant Management – Minimum Wage
It’s the lowest salary that employers can pay their workers in exchange for their services, it’s the price floor under which workers cannot sell their services.
The minimum wage for every country, region, and local state varies. The main reason would be that no location shares the same number of resources. The minimum wage is often determined by how a business can flourish in a certain area.
While it may sound reasonable at first, it is not advisable because the workload for each is just as same as those of the other areas. This is why there are lots of controversies covering this topic.
It was first argued that minimum wages would stop sweatshop exploitation and later as a measure to assist low-income families. By the end of the 20th century, most countries had passed minimum wage laws.
There are lots of countries that have started implementing the “National Minimum Wage”. This is to protect the employees and the employer at the same time. Having a standard to follow will make it easier for you, a restaurant owner, to create and practice strategies to improve your wage management.
Did you know that aside from location, minimum wage also often varies by age? This is because younger employees are at a higher risk of being priced out of employment compared to employees who are more advanced in age.
Younger employees also offer less experience as compared to those who have been in the field for some time. In other words, they have less, or even nothing, to negotiate with, resulting in a weaker bargaining position concerning pay.
What is the purpose of minimum wage?
The laws about the topic are created to serve as a protection for employment exploitation. Especially for workers who are desperately clinging on to their jobs. It should be enough to compensate for the living wage of an area, or country.
In addition to full-time workers and part-time workers, the national living wage applies to those who complete training essential to their job. Employers of all sizes must comply with it.
Employers tend to put their business first above anything else. Even if it is to the expense of their employees, quality of service, or product. Income generation is their top priority, leading them, sometimes, to create poor management decisions such as exploiting their workers.
Staff will be usually against it but will have no choice but to comply and accept substandard arrangements. The need for a job is so great that they will work for a low wage rather than not have a job at all, even if it doesn’t support their needs.
Improving minimum wage laws allows an area, or a country, to present a better living condition. There will be a lower unemployment rate, and it improves the satisfaction rate of a person in any aspect.
This is why minimum wages and employment management are something you should work on as a business owner. You should protect your business as a whole, not just the money that comes from it.
National Minimum Wage – Explained
Even though other countries are yet to implement this type of minimum wage arrangement, you have to understand how it impacts different labor markets positively. The aim of this is to provide aid to workers who receive low pay.
The importance of the concept has increased in a labor market that has seen a decline in union membership and an increase in service sector employment that pays low wages.
There are only a handful of countries that have passed the National Minimum Wage. Here’s a list of the top countries that deploys the highest minimum wage.
- Luxembourg ($13.78)
- Australia ($12.14)
- France ($11.66)
- New Zealand ($11.20)
- Germany ($10.87)
- Netherlands ($10.44)
- Belgium ($10.38)
- United Kingdom ($10.34)
- Ireland ($9.62)
- Canada ($9.52)
- Israel ($7.94)
- United States ($7.25)
- South Korea ($6.84)
- Spain ($5.83)
- Portugal ($5.76)
A minimum wage of $6.36 is considered the average. The top country changes its salaries, pay rates, and minimum wage alongside its changing cost of living. The minimum wage decreases in proportion to the decrease in the consumer price index.
Each country adjusts the minimum wage depending on how they have arranged it as a law.
Just how the United States arranged it. In the United States, the minimum wage is $7.25 per hour, making it the 12th highest wage in the world.
The federal minimum wage can, however, be raised by the state, as twenty-nine of them did. The minimum wage is also being raised by several states over the next several years in incremental increments to reach a specific wage.
As a result, the minimum wage varies from state to state. In addition, states have enacted their minimum wages for tipped workers that are on par with the federal minimum wage.
While having this type of implementation is ideal for most, others see it as a way that would lead to unemployment. Mainly because there will be businesses that won’t be able to keep up with the required payment construction.
However, unemployment has remained at an almost zero level since it was implemented in 1999. UK employment levels are at record levels, natural unemployment rates are lower, and unemployment is only temporarily increased as a result of the recession in 2008.
Others, however, contend that minimum wage rates in many areas of high housing costs, such as London, are still too low and not providing a ‘living wage’ for the working class. This is even though they provide one of the highest minimum wages there is.
Despite being based on an hourly rate, the National Minimum Wage applies to all employees regardless of whether they are paid by the hour. Therefore, however, someone is paid, they still need to calculate their hourly equivalent rate to determine if they are getting the minimum wage.
If a worker is an independent contractor, there are different ways to verify that they get the minimum wage.
- Time Workers – Employees who are paid by the hour.
- Salaried Hours Workers – These are the employees that are paid an annual salary. Under their contract, they are entitled to a minimum amount of hours each year.
- Output Workers – The employees that are paid according to the number of tasks they complete or the service they provide.
- Unmeasured Workers – These are workers who are paid an amount that does not depend on how long it takes them to complete their task, for instance, someone who is paid £500 for laying a patio regardless of how long it takes.
And, as mentioned above, it can be varied according to age. Here’s how the UK manages its minimum wages by age.
- £8.91 for employees aged 23 and above
- £8.36 for employees aged 21-22
- £6.56 for employees aged 18-20
- £4.62 for employees aged 16-17
- £4.30 for trainees under 19, or in the first year as an apprentice
For the sake of clarity and to avoid future conflict, here is a general guideline on what counts as working time.
- The employee must either be working or on standby near the workplace (covering rest breaks is not included in this calculation)
- If the employees are kept in the workplace despite not working (because of a broken machine).
- While waiting for someone from work or someone needed to start a job.
- Training time and traveling for training.
- Traveling related to work.
- Every work-related responsibility has to do with work.
Ensure your staff knows that the following are not included in their pay when crossing the following lines.
- The time spent traveling between work and their home.
- Rest breaks, holidays, an extended vacation, or maternity leave can take you away from work
Impacts of Minimum Wage
It offers different benefits and drawbacks to every labor market. Here’s a list of all the possible impacts if you follow this certain payment structure.
Advantages of Minimum Wage
Enhances work efficiency
Staff who are paid better, and can meet their ends without overthinking about their budget, are always high in spirit and morale. Having the sense of making a better standard of living empowers employees to perform better.
Also, if you feel like you don’t have to worry about your necessities daily, won’t you deliver better results as well?
Stimulates economic development
Economic growth is stimulated by a minimum wage because it increases the disposable income of workers. Consequently, business revenue and demand increase.
The more they have something in hand to spend and create business for other organizations, it’ll improve the circulation of money as well.
Enhances education and personal development
The more money and time a worker has, the more they will be able to dedicate to their education. As a result, they will be more productive. Increasing labor pool competitiveness is beneficial for the economy.
Innovation and small business growth are increased by a better-educated workforce.
Improves income equality
In addition to reducing income inequality, a higher minimum wage motivates more people to work. The provision of social welfare or an income guarantee with an incentive would be better for society.
Effectively reinforces employee retention
The minimum wage law benefits businesses as a whole. There is a lower likelihood of workers leaving for higher-paying jobs. Retraining becomes less expensive and turnover is reduced.
Being in the Restaurant Industry, where employee turnover rates are known to be risky-high, you must know when and where to compromise to improve employee retention. It’ll cost you in the long run if you tend not to care about your employees.
Compensate for monopsony employers
The monopsony effect is when firms employ fewer workers, which pushes wages down. The minimum wage, however, is likely to complicate this process. As a result, a minimum wage might positively affect employment.
Disadvantages of Minimum Wage
Business takes responsibility for every cost
In a similar vein to what happened in the United States, the minimum wage law of 1996 is the responsibility of businesses. State, local, and tribal governments are expected to pay over $1 billion in costs over five years under that mandate, according to the Congressional Budget Office.
Targets jobs-intensive fields
Companies that employ a lot of labor face penalties under the minimum wage. Those whose industries require significant capital gain benefit from this by default. Eventually, this can shake up the entire economic framework of a country.
Higher costs of labor
Businesses face higher labor costs due to minimum wage laws. Business budgets are already dominated by it. As a result of the government’s requirements, they choose to reduce their workforce to keep overall labor costs constant.
Thus, unemployment rates rise. Since low-wage earners have fewer jobs to compete for, they are most affected by it. In some cases, smaller companies cannot function with fewer employees. If they cannot pay their debts, they may be forced into bankruptcy.
Outsourcing may increase if minimum wage laws are implemented. Labor costs are lower in countries where companies move their facilities.
Affects the cost of living
Certain areas may see an increase in living costs. Housing costs are higher when workers earn a higher minimum wage. Therefore, landlords might increase rents, leading to inflation.
Inequality and unemployment rise
In many countries, minimum wage laws are not effective in reducing poverty. Although it helps workers who are employed, the unemployment rate goes up. Those with more experience received higher pay and more job opportunities, while those without as much experience saw their chances reduced.
Strategies To Use For Better Minimum Wage Practices
Although the effect has been smaller than some economists predicted, future increases may still cause employers to feel the strain. That’s why, as a restaurant owner, you must ensure that you’re cautious enough to protect both your business and your restaurant employees.
Employ qualified employees
If your business needs to reduce its workforce, you can find workers who are eager to do the job and possess a variety of skills. It is more important than ever to know how to conduct interviews, train employees, and create a strong organizational culture.
Consolidating positions is not an easy process, so proceed with caution. Consider your team’s feedback throughout the process. Having to deal with less staff means you have to be more selective in the hiring process.
Price your menu inventively
Consider improving how your selections are presented to customers if you are raising your prices. While offsetting operational costs in your restaurant, your menu price should balance market research, the needs of your customers, and your competition.
Customer perception is also influenced by the design and layout of your menu.
Maintain a close connection to employees and customers
Every business can rely on customer feedback to succeed. Restaurants are especially susceptible to this. You should obtain guest feedback regularly through every possible channel.
Using your restaurant CRM platform, you can keep close tabs on your Facebook and Instagram comments, your Yelp, and TripAdvisor profiles, and send out regular surveys.
Guest ratings and comments are requested during the payment process. An alert is sent to restaurant management by text message should a poor rating be recorded, making it possible to contact guests and learn how they can make improvements.
Ensure compliance with local and national legislation
You need to be proactive, as this may affect your future costs. Monitoring minimum wages in your area and asking for a raise is easy by keeping up with your local or national regulations.
You’ll be able to learn from others in the industry facing similar challenges if you become involved with your local and national restaurant associations or attend industry events such as Food for Thought.
Schedule your activities according to your needs
Controlling labor expenses requires careful management of labor expenditures, and establishing schedules following peak sales periods. By analyzing sales data, you can develop scheduling strategies that are also efficient for servers.
Take advantage of technology
Many restaurants have found that adding handheld payment devices to their operations increases tip percentages and lowers turnover significantly. Also, they can assist in the onboarding of new staff with information about menu items, ingredients, and provide a quicker service by reducing the amount of walking they must do.