Select Committee on Social Security Appendices to the Minutes of Evidence


Memorandum submitted by the British Hospitality Association (PL 25)


  1.  The British Hospitality Association represents the hotel, restaurant and catering industry, which nationally has nearly 2 million employees. Fifty per cent of these are under age 30, compared to only 26 per cent of the national workforce, and the industry will therefore be particularly affected by parental leave.

  2.  Parental leave will inevitably add costs to this industry, with its 300,000 establishments, most of them independently operated. Employers will have to find replacement staff and train them to the required standard. We would be seriously concerned if the Directive was gold-plated so as to require the employer additionally to pay the employee all or some of their remuneration during parental leave.

  3.  In any event, on the analogy of the existing maternity leave rules, employers would probably be expected to continue with contributions to occupational pension schemes and with the provision of other "perks". Where such "perks" were subject to Employers' National Insurance Contributions, these would presumably continue to be paid during periods of parental leave.

  4.  We do not offer an opinion on whether there should be a "parental leave benefit" paid by the Department of Social Security to those parents taking leave, other than to note its possible cost.


  5.  The British Hospitality Association is the national association for the hotel, restaurant and catering industry, representing some 25,000 establishments in a sector ranging from motorway service areas to clubs. The hospitality industry has nearly 2 million employees[101] and a total annual turnover estimated at some £50 billion.

  6.  The hospitality industry will be particularly affected by the introduction of the Parental Leave Directive, for four reasons:

    —  first, it has a particularly high proportion of young workers, who are most likely to become parents. Compared to the national average of 26 per cent of the workforce being aged up to 30, some 50 per cent of hospitality industry employees are in this age bracket[102];

    —  second, it has a particularly high proportion of women workers at 71 per cent of the workforce.[103] While parental leave entitlement will, of course, apply to both partners, it must be likely that, in families where only one partner decides to take such leave, this will usually be the mother;

    —  third, it is relatively common for a couple both to work in the hospitality industry, often in the same establishment. The impact on what may well be a small establishment of both taking parental leave, even if it is not at the same time, could be considerable;

    —  finally, the vast majority of the 300,000 establishments in the industry are small, whether they are independently operated or group owned. Losing a member of staff for up to three months can create significant operating difficulties.

  7.  Parental leave, like maternity leave, will generally necessitate recruitment of a temporary stand-in, often requiring specific on-the-job training. The industry already has considerable job vacancies (some 75,000 recorded at Job Centres, with perhaps a similar number of unrecorded vacancies in addition.)

  8.  With some 725,000 live births annually in the United Kingdom,[104] this is the equivalent of up to 360,000 parents being on parental leave at any one time, of whom this industry might be the employer of perhaps 50,000 or 60,000. Even if only half of all entitlement were taken, the industry would find itself with a significantly worse labour shortage problem.

  9.  The Parental Leave Directive imposes no requirement that the leave be paid. We note that, under the regulations on parental leave proposed in the Employment Relations Bill, remuneration is excluded from the terms and conditions which will continue to apply during the period(s) of leave. We believe that this is the right approach. Forcing employers to continue to pay salaries during parental leave would have a serious effect on costs. By analogy with maternity leave, employers would, in any event, have to continue to offer those "perks" which do not count as remuneration (eg, pension contributions.) Again, with perhaps several tens of thousands of employees on parental leave at any one time in our industry, the costs would be substantial, even excluding any requirement to pay "remuneration."

  10.  However, employers do have to offer (in most cases of pregnant employees) Statutory Maternity Pay, though they are generally able to recover most of the cost from the government. We would strongly oppose any gold plating of the Directive with the back door imposition of costs on hospitality employers via the introduction of an analogous "statutory parental leave payment," should any such innovation be under consideration.

  11.  Employers will, in some cases, have to pay National Insurance Contributions on "perks." From April 2000, it is intended that benefits-in-kind should generally be subject to national insurance as they are already to income tax. This will particularly affect live-in accommodation, which is quite widely offered in the hotel sector and which, under the parental leave proposals, would presumably have to remain available to an employee absent on such leave. Finally, should the Committee be considering recommending the introduction of some form of social security benefit for those taking parental leave (and who would not therefore be receiving any remuneration), we do not have a specific view on this possible approach, other than to note that the costs could be considerable, especially since its availability could significantly increase the take-up of leave.

Martin Couchman

Deputy Chief Executive

May 1999

101   Total hospitality industry employment in 1998: 1,880,000 (sources: Annual Employment Survey and Labour Force Survey). Back

102   Source: Hospitality Training Foundation. Back

103   Source: Hospitality Training Foundation. Back

104   Live-births in 1997: 725,800 (source: Office for National Statistics). Back

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