Minimum Wage Within The Catering Industry

The recent economic slump within global community and the slow economic recovery locally has perpetuated a sharp rise in the cost of living across the board, which has hit groups within the middle to lower income earners particularly hard. The above has perpetuated the recent rise in Union action in relation to compensation and benefits attached there to.

For many years the catering industry has by and large escaped the reach of the law in terms of labour matters such as minimum wage. However disputes surrounding labour issues are on the increase within this industry. Such disputes pose a particular risk to restaurant and catering businesses, of which a huge number fail within the first year of business alone purely on the basis of lack of revenue, add to this the current economic climate and the increase in Union action, the risk of failure increases dramatically.

A prominent issue that must be canvassed in relation to labour disputes of this nature is the definition of an employee. The definition has been constructed so widely that essentially a person does not require an employment contract to qualify as an employee. This means that such people may be entitled to certain benefits even though they lack a formal employment contract.

A very difficult and uncertain position arises in relation to the payment of minimum wage of waiters. Waiters were initially described as “contract waiters” in terms of their employment description. Recently the description has changed to “commission work”, note that the aforegoing should not be confused with the terms “independent contractor” or “causal worker”. The law seems to be open to interpretation in relation to what constitutes minimum wage in this context. In essence there are two possible interpretations: the first being that a commissioned worker needs to be paid minimum wage exclusive of any commission, in other words the employee is paid a basic and gets to keep any commission; the second possible interpretation is that minimum wage is inclusive of any commission which essentially means that the party in question remuneration will be constituted by setting out a set amount as the wage and then any amount earned over and above that amount constitutes commission. The difference between the former and the latter simply that in the former situation the party will earn R x as a basic and will get to keep any commission/tips earned. Under the latter construction the party wage is R x and the commission will only be payable in the amount that is earned over Rx. Thus if the wage is R 1200, should the party only earn R 200 in commission they will only receive R 1200 however if they earn R 2000 they will get R 600 commission.

The ultimate consideration under the context of minimum wage for prospective restaurant owners is simply the sustainability of paying such over a long period of time, given the fact that restaurants generally have massive fluxuations in their revenue, it is advisable to hire an attorney to draft the employment agreements for all staff so that the contracts are tailored to best protect the businesses financial needs.