UK Hospitality COVID Questions Answered

Kate Nicholls, CEO of UK Hospitality recently hosted a webinar discussing government support options for the hospitality industry. If you didn’t catch this informative series with Montgomery Group, here’s an overview of the questions our industry raised:

Is there any sense that government might make changes to the emergency cash grant to include properties with a rateable value over the £51k threshold?

This remains a topic of discussion with Government and we will continue to press for this extension particularly in light of a potential extension of social distancing.
Hello Kate, do you have an update as to whether the tronc will be taken into account for the furlough pay?

HMRC clarified on Friday 24 April that tips and tronc could not be included in the calculation of reference salary for the purposes of CJRS. The new guidance makes clear that only regular payments which are contractually obligated can continue to be included.
Do you know if PPE, especially face masks, will be expected or required for those working in the hospitality industry?

Under current social distancing rules for essential food businesses which are able to open during the lockdown, there is no obligation for workers to wear face masks or use PPE. The Government has encouraged businesses to adopt a risk assessment approach to consider measures to minimise the risk of transmission eg ventilation, social distancing and hygiene and sanitation. Face masks or PPE would be a measure of last resort of the risks could not be controlled. Current medical and scientific evidence does not require the wearing of masks. We wait to see what protocols will be adopted to allow hospitality businesses to reopen.
Given there are bound to be social distancing requirements when our sector re-opens, have you been involved in suggesting what they should be? Is there a forum where operators could make sensible suggestions?

Yes, we are in discussions with Government around workplace safety and measures which can be taken to protect our teams. This work is ongoing for those businesses allowed to trade through lockdown and will be expanded. We are currently working with our member companies to collate best practice. Membership is the best mechanism for companies to engage.
I’m currently 20 weeks pregnant and on furlough, but my employer has already said there will be redundancies. What are
my rights – can I be made redundant just before I start my maternity leave which is due to start on 21st of June and would I be entitled to my SMP? My employer has said there will be a consultation period, which is usually 90 days, but would it be 90 days in this coronavirus crisis period?

Your employment rights would be unchanged as a result of COVID or CJRS. You retain the same maternity rights and redundancy rights as you would normally.
I have an employee who has not yet received their NI number. HMRC can’t seem to help. When will this be looked at, as I can’t process my claim due to not having 1 NI number?

You can process a claim for other employees and then speak to HMRC separately to process a manual claim for workers without an NI.
We have two restaurants in Edinburgh and have applied for the government cash grant for both our properties almost 4 weeks ago. There has been no response at all, are there any updates regarding this to your knowledge?

Councils are working though applications for cash grants. There has been a delay in Scotland as the Government took additional time to consider the position of multi-site businesses. Payments should be made shortly.
Due to the change in date of the furlough, we had put some staff off on furlough (new starters) However they will not be supported now. Our RTI is not weekly and we have a monthly payroll, they started after our cut off. what do we do for these team members, how can we help/support but don’t have the cashflow to pay them? How can we and UKHospitality lobby to get these TMs included PLEASE?

We are continuing to lobby on these workers who were furloughed in good faith. Unfortunately, as the rules currently stand, there is no ability to recover the costs of their salaries and therefore you can either decide to continue to pay them or you can direct them to claim Universal Credit.
If the lockdown continues and there are no big events (contract catering etc) and we are furloughed are we able to look for other work and if (maybe find it) then come off being furloughed? Are there any indications for big events to pick up later??

You can work for another employer on a temporary basis while you are furloughed.
Do we have any idea on when the lockdown will free up to open hotels again, and if so what do you feel will be the fallout from hotels going into administration? how long do you feel the sector will take to recover?

There is currently no indication of when the lock down restrictions will be eased but they will be kept under review and the next review is scheduled for 7 May. We anticipate the sector will reopen with 30% of normal revenues and it will take at least 6 months to recover to 70% normal revenues and until summer 2021 to recover fully. We know from the economic crash of 2010 that it will take as long again for profitability to recover.
Can I second the Tronc question. I have an important question for the group re: Tronc schemes which are not eligible. In
common with many we have say a chef who is paid say £30k – they get £20k through main wages and £10k guaranteed
(we top up if not enough service) through Tronc. Do we apply for the full £30k through furlough?

Unless the £10k top up is a guaranteed, contractually obligated payment you may not include it in the calculation of furlough salary. HMRC has updated guidance to exclude tronc payment.
Can you reiterate the point on furlough an holiday? Can we agree with our employees that accrued holidays are discounted during furlough?

Holiday continues to accrue during furlough and the normal employment contract provisions would apply unless you chose to vary them in the furlough agreement.
Hi Kate, have to ask about the Tronc payment from Government. The tronc for people who have in in the contract and never vary every month same amount of tronc, can this be classified as non-discretionary commission as is same every month?

Tronc is excluded from the calculation of furlough reference pay. The only element which may be included is a regular, contractually obligated payment.
If we are the last industry to be allowed open what is the likelihood of extended financial support during this extended
period?

We are pressing hard to ensure that financial support is maintained for hospitality not only during the period when we are closed but also during any phased re-opening given that we know businesses will not be operating profitably during social distancing.
Hi Kate, we need a phased removal of furlough for 3-6 months post re-opening or else we will be looking at large redundancies across the sector-can you comment on how we can achieve this?

This is exactly what we are lobbying the government to achieve. Our analysis suggests we will not reach 70% of normal revenue until 6 months after reopening and that many businesses will be operating sub-economically. If we are to avoid job losses and business failures, a tapered or phasing of furlough and a flexible furlough model as adopted on the
continent will be key.
Can rates rebate scheme be extended beyond £51k threshold and what pressure can be brought on insurers to pay BI claims (Hiscox in our case)?

We are continuing to lobby government on both these issues. The Government has introduced a new arbitration scheme
for small businesses (fewer than 50 staff and £6.5m turnover) to refer insurance disputes to the FCA for resolution.
Do you expect any guidance from government on schemes to assure guests of cleanliness standards, like what Accor and Bureau Veritas have proposed in France or HOTREC in Europe?

The guidance will, first and foremost, be drawn up by Government in discussion with industry and trade unions to promote safe workplaces and protect the health and safety of teams. We are the UK representative on HOTREC and are working to share international best practice.
Phased Returns would it be prudent to Budget for limits such as 50 people only for weddings etc?

It is difficult to give any certainty on the specific requirements which will be imposed when lockdown restrictions are
eased. The best advice is to look at the existing guidelines on the BEIS website on social distancing in the workplace and
work from those to plan the effect on your business. This requires social distancing of 2m to be observed and a risk
assessment to examine risks to your staff and steps to be taken to minimise them. That will then determine how many
covers or capacity you will be able to reopen with.
I work in Hospitality Education in Scotland. I have 2 areas of concern. 1 – impact on recruitment and training 2 – Low Income streams due to client disengagement, especially challenging given the funding cuts to the sector.

These are key issues of concern for many within the sector and there is no doubt that there has been disruption to
apprenticeships and other training activity during furlough. We have worked to ensure that training can be carried out
through lockdown and furlough and provide online training facilities. We are working with Government to look at the skills and retraining required as we ramp up.
The WHO guidelines for social distancing is 1 metre. The UK is one of the few with 2 metres this is likely to be an impact on re opening for hospitality. Has this been raised with the government?

This is being discussed with Government as we work through the requirements that will be applied to safe workplaces and social distancing at work as part of the easing of any lockdown.
What can we do if we still haven’t received our bill and have no business rate reference number?

You will need to speak to your local authority as soon as possible. You need to have been registered as the business rate payer for the premises on 11 March 2020 in order to qualify for grant support.
Just to reiterate question on business interruption insurance – insurers are running – will the government support the insurers
so claims can be processed?

Government has established an ombudsman service to help arbitrate the claims of the smallest businesses and is
encouraging insurers to review claims promptly where there appears a legitimate ground for claim.
Do you see a phased opening for hotels, with bedrooms first and events later?

This will depend on the guidance published for social distancing at work and safe workplaces. This will be sector-specific and it may be that the application of the guidance in specific premises would result in a phased reopening of various business activities, but this is likely to be driven by the health and safety risk assessment undertaken. It is likely, however,
that government will review mass gatherings and large scale business events separately.
Any sign of help similar to £10k grant for small B&B’s paying Council Tax (not business rates)?

There is no movement on this at present.
Can we insist on some annual leave being taken during the furlough period?

Yes, government guidance has been clarified to allow employers to require workers to take a period of leave while they are furloughed. However, where this is the case, the employer must top up the 80% pay to ensure the worker receives their full salary during any leave period.
Do you think it is likely that weddings will be postponed into next year?

It is simply not possible to tell when lockdown restrictions will be eased and what social distancing restrictions will remain in force. You should review the government’s guidelines on social distancing and safe workplaces for essential businesses as the starting point as your ability to host weddings is likely to be dictated by your ability to keep your team safe.
How long with Govt will continue to fund the (expensive) JRS Furlough? And do you expect they will drop the 80% rate as the time extends?

The scheme currently runs to end of June and will be reviewed thereafter. Any extension is likely to be determined by lockdown and social distancing restrictions and the ability of businesses to reopen safely. We are pressing for furlough to be retained – perhaps in a more flexible form – to support businesses who are ramping up earnings during any social distancing period.
Hi, I was in the process of purchase a 72 room hotel prior to the shut down, I am still looking to complete on the purchase. How will I be effect and will any of the financial packages be available. We are due to complete end of May.

Unfortunately, you will not be eligible for any hospitality grant as you needed to be listed as the rate payer on 11 March.

Equally, the CJRS scheme will only apply to staff which were only your payroll by 19 March 2020 and had had an HMRC
RTI submission. If you meet those eligibility requirements, then you will be able to be covered by the schemes. You will
also be eligible for the business rate holiday for 2020/2021 and may be eligible for a CBIL loan.
How do you see cafes re-opening with social distancing given the small space in kitchens and behind counter PLUS the limited space inside cafes?

We do not know yet what requirements Government will place on social distancing in social spaces at the moment, we
can only look at the existing guidance for essential workplaces. There is no doubt that any form of social distancing in
small premises will be problematic and may result in those premises being closed for longer. It is vital, therefore, that
government support is maintained.
I am the GM of a pub in London and have invoiced since July (unusual I know) we put me on PAYE on March 1st which
naturally is extremely unfortunate, is there anything that can be done or is it impossible for the owners to furlough me?

You can only be furloughed if you were employed before 19 March and were included in an HMRC RTI submission by that
date. So, if you are paid weekly and received a weekly payslip then you may be capable of being furloughed but if the
company does a monthly payroll run at the end of March then you will not be eligible.
Do you have any sense that areas of the country that depend on seasonal trade, such as the West Country, might be permitted to re-open ahead of the rest of the country?

Government has not yet confirmed whether it will consider a regional or geographical easing of lockdown.
How do you think the industry is going to recover in the next few months? People on temporary or one year fixed
contracts who had hope of permanent work following their time at a company will now not have the opportunity to stay, and so will be looking for work. Can you advise if people will be employing later this year when things are recovering or if recruitment will be stagnant?

It is difficult to determine the climate for reopening as we know that social distancing restrictions are likely to result in
suppressed demand and reduced capacity and, as a result, reduced staff requirements. We anticipate that it will take 6-9
months for the industry to recover but as premises re-open we anticipate recruitment will recover.
Have you had any clarification re: tronc/ service charge – also I know about 20000 people signed a petition.

Tronc is excluded from the calculation of furlough reference pay. The only element which may be included is a regular,
contractually obligated payment.
Hi Kate- Do you think there is any scope to review and reduce rents and rates moving forward on a permanent basis?

Margins in our industry are low, rents and rates, especially in central locations are sky high. If this crisis has shone a light
on anything, in my view it is just how fragile our sector is.
I would agree with your assessment of the fragility of the sector and the stresses and strains on the business model
which have been highlighted by the crisis. It is vital that we ensure that any national strategic recovery plan takes
account of the need to review and reform outdated legislation which could hamper the sector’s recovery and which has
been found wanting in the current crisis. We would include business rates and landlord and tenant legislative and
regulatory frameworks in that, and the crisis should be used to reset both.
If the JRS claims cannot overlap in the period they cover, how can you re cup the money for a staff member if you miss them now due to no NI number then add them back in later, if the some of the period they are furloughed for, was already included in a previous claim?

You will need to speak to HMRC about manual processing of staff members with no NI, temporary NI or a problem with
registering.