Five action points for hospitality entrepreneurs
Category: Hospitality law
Regulations governing the hospitality industry are in a constant state of flux. In this blog, we discuss five points hospitality entrepreneurs should pay attention to: the new Dutch Alcohol Act, the hospitality operating permit, contracts for hospitality staff, working conditions, and contracts with suppliers, landlords, etc.
1 – Does your hospitality business comply with the new Dutch Alcohol Act?
This law entered into force on 1 July 2021. The law also allows municipalities to further regulate a number of common hospitality issues in their local regulation. Therefore, also check any changes to the hospitality regulation (sometimes also regulated in the General Municipal Byelaw – Algemene Plaatselijke Verordening or APV) on the specific municipality’s website. For example, a municipality can deem a certain area an alcohol nuisance area where stricter rules apply. This can also lead to the refusal of a permit or to the addition of more conditions that must be met for a permit. In addition, the ventilation requirement in the Dutch Building Code also applies to hospitality facilities; for existing buildings, 2.12 dm3/s per person applies. It makes sense to have an expert check this and, if necessary, take measures to ensure adequate ventilation.
2 – Do you still meet all the requirements of your hospitality operating permit?
The operating permit concerns the type of hospitality business (daytime, evening or night-time business), the opening hours and any outside areas. You need a foodservice operating permit if customers can consume food and beverages on your premises. This means that, besides foodservice establishments, it also applies to canteens at sports clubs and gyms. A foodservice operating permit does not give you permission to serve alcoholic beverages. This requires an Alcohol Act licence, which you must apply for with the municipality.
Changes in the operational management of a hospitality business must be reported to the municipality. If the form of business of your hospitality company changes – for example, if you want to transition from a sole proprietorship to a limited liability company – this must also be reported to the municipality. It may then be necessary to reapply for the operating permit. The municipality must also be notified if a hospitality business is transferred within the scope of a share transfer. The new owner will then need to apply for a new permit and will usually have to fill out a Bibob form for the Bibob procedure. Among other things, the new owner must demonstrate how they will obtain their seed money or financing.
If you want to put up a gaming machine in your hospitality business (no more than 2), a gaming permit is required.
Moreover, you must apply for a (new) permit if:
- your current operating permit is about to expire;
- you are changing the legal form of your hospitality business;
- you want to set up an outdoor seating area or expand your existing one;
- your hospitality company is going to carry out new activities.
3 – Do your contracts with your hospitality staff comply with the Hospitality Industry Collective Bargaining Agreement?
In the Hospitality Industry Collective Bargaining Agreement (Horeca-CAO), the employers’ associations and trade unions involved have made agreements regarding the employment conditions of staff within the hospitality industry (Dutch). At present, the Hospitality Industry Collective Bargaining Agreement has been declared universally binding. This means that every hospitality entrepreneur who falls within its scope is obliged to comply with the minimum employment conditions for staff that are set out in that agreement. In brief, this is the case if the wage bill for the hospitality activities is more than 50% of the total wage bill within the company. Some of the important obligations set out in the collective bargaining agreement are:
- Job and salary: the collective bargaining agreement uses job scales with associated salary scales. These are the minimum salaries that employees must be paid.
- Compensation and allowances: the collective bargaining agreement states when employees are entitled to compensation for overtime or additional allowances, for example if they work at night or if an employee is assigned to on-call duty.
- On-call workers: on-call workers are often used in the hospitality industry. For this reason, special rules have been included in the collective bargaining agreement. For instance, an on-call worker must be called up for a shift no later than 24 hours in advance. If this limit is breached, the on-call worker is not obliged to come in. If a shift is cancelled or changed within 24 hours before it starts, the on-call worker is (also) entitled to the salary for the originally scheduled shift. This is sometimes different in the case of seasonal work. If an on-call worker has worked for the hospitality entrepreneur for 12 months, they must be offered a fixed number of working hours equal to the average number of hours worked in the course of the previous 12 months.
- Wage in case of illness: If an employee is unable to work, they are entitled to 95% of their salary during their first year and 75% of their salary during the second year. This percentage is higher than the legal minimum of 70% over two years.
If a hospitality entrepreneur has wrongly failed to comply with the employment conditions set out in the Hospitality Industry Collective Bargaining Agreement, employees can retroactively claim their right (in principle for up to five years). This could mean that a hospitality entrepreneur may be hit with high costs out of the blue. For that reason, it is important to check whether the employment conditions within the company are in line with the Hospitality Industry Collective Bargaining Agreement.
Pension for hospitality staff
In addition to the Hospitality Industry Collective Bargaining Agreement, there is also a compulsory pension fund for the hospitality industry (Bedrijfstakpensioenfonds or Bpf Horeca). Every hospitality entrepreneur who falls within the scope of the pension regulations is obliged to join Bpf Horeca for the pensions of their employees. Here too, an entrepreneur falls within the scope of applicability if the wage bill from the hospitality activities is more than 50% of the total wage bill within the company.
If a hospitality entrepreneur fails to meet this obligation, both Bpf Horeca and the individual employees may enforce affiliation and claim damages. As opposed to enforcing the employment conditions of the Hospitality Industry Collective Bargaining Agreement, in this case it is possible to go back further than five years. In some cases, we even look back to the point in time when affiliation of the hospitality entrepreneur became compulsory. In addition, the damage suffered is often higher than just the amount of pension contribution that was wrongly not paid, because the amount that the employee could have received in pension, if the pension contribution had been paid, is considered. In short, it is vital for the hospitality entrepreneur to join Bpf Horeca promptly.
4 – Does your hospitality business comply with rules relating to working conditions?
Within every organisation, the employer is responsible for providing a safe workplace for employees. The hospitality industry is no exception. In general, the specific risks and circumstances associated with the nature of the work must be taken into account. The Health and Safety Inspectorate SZW has made an inventory of this. Physical strain (being on their feet for a long time) and noise (nightlife and events), for instance, are listed in the inventory under particular risks.
Every hospitality entrepreneur must identify the specific risks in a risk inventory & evaluation (RIE) and, based on that, take measures that guarantee the safest working environment possible. Various instruments have been developed within the industry that can be used to map out the risks. Information to staff and a sick leave policy, for example, can form an important part of the measures. The RIE and the measures must then be evaluated regularly in order to continuously monitor whether any adjustment of the working conditions policy is necessary. Read more about how hospitality employers should deal with working conditions.
5 – Are your contracts with suppliers, your landlord, bank and other parties still in line with the market?
Contracts with hospitality suppliers are sometimes well locked in by the suppliers. In times when turnover is low and prospects uncertain, it may be necessary to revise the contract. The Covid-19 measures are an unforeseen circumstance that is reason enough to reevaluate the contract and renegotiate with the supplier; the latter needs to be reasonably cooperative when it comes to amending the contract due to unforeseen circumstances.
You should be careful with obligations to purchase certain minimum quantities (purchase clause) in uncertain times. By no means blindly accept price increases; check carefully whether a price increase is justifiable and reasonable. Read through the rights of tenants of hospitality premises to demand a rent reduction.
The same may also be the case with a financing agreement with a bank or brewery. Such an agreement may also include unforeseen circumstances that entail an adjustment of financing conditions (Dutch). The first step is to notify the other party that you want to discuss the contract.
Our Hospitality Desk advises hospitality entrepreneurs
Blenheim’s Hospitality Desk advises and litigates on behalf of hospitality business owners. We are here to handle these issues for you and to give you peace of mind. Our clients can expect clear, dynamic advice and a solution-oriented approach. So, whatever happens, your business can continue as usual. We like to think things through with you and give forward-looking advice, so you won’t be in for any nasty surprises. We provide customised services at competitive rates and based on clear agreements. Learn more.