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The Legal Aspects of the Hospitality industry
The Hospitality industry is among the most diverse and widely operated business in the world. It has many stakeholders ranging from the government, the producers to the final consumers of the products and services. Since it has an important role to play in the economy, there have been initiatives by the government to place a legal framework to oversee a smooth operation. For instance, the restaurant business which falls under this industry has legal requirements that include employee rights, the environmental and operational laws, and the taxation requirements. We are going to tackle these and many more legal aspects concerning the business.
Hotels and restaurants are among the highest employers in the economy. They absorb both the specialized and semi-specialized labor based on specific professional terms. Such terms are complicated hence giving the employers a challenge to have open and transparent policies regarding the hiring and firing the workers. It’s required by law that these employers provide an all opportunity platform in the process of recruitment. This is why most of the employers in this industry outsource the stage for hiring and recruitment of workers to firms with the right mechanisms to do this job to them (Barth & Hayes, 2008). However, there have been reports that nepotisms and racism have been reported in some of the major hotels in the industry in the process of their employee recruitment. This is dangerous as such allegations may taint the image of the businesses.
Another dimension in the process of employment is the concern for proper documentation and contracting between the employers and the recruits. According to Barth & Hayes (2008) job descriptions, terms and conditions and other initial agreements are to be properly outlined and the workers adequately made aware of what they are to expect. In as much as this is a legal procedure it has also proves to be of great benefit to the human resource as it psychologically prepares new workers on the tasks they are to undertake.
The relationship of the management and the workers is legally expected to be professional and on the basis of the work procedures and protocols. Offences such as sexual harassment should be addressed in the company’s policies and the measures to be taken when such incidents arise to ensure that there is no repeat of the same. The freedom of associations of workers in the industry has for a long time been a sensitive issue since they normally have to be allowed to form their unions which help them have a collective bargaining for their rights. Most employers on many occasions undermine these organizations and limit their ability to press for conducive working environment and better pay. The formation of such unions is however an important phenomenon to many people in the civil society since they fight for human rights and prevent victimizations by employers.
The age at which employees are recruited into to work in the industry has also be a issues of contention and great legal debate. There are suggestions that a global age bracket be set to curb the issue of underage employment. Though it may seem to be a minor issue on the higher level hospitality players and businesses as they involve professional human resource recruiters, it’s a big problem that is present in the smaller but many restaurants. It is therefore very important that a policy with unanimity in the minimum age of employment be formulated to help curb the incidents of underage employment (Hayes & Ninemeier, 2008)
The restaurant managers also have an obligation to provide adequate insurance cover to all who have a direct benefit or obligation to the business. This not only applies to the workers but also to other third parties who include the customers and suppliers who may be affected by any negative incidents that may be present in the vicinity of the premises. Also there ought to be policies that cover for employees’ infidelity that may cause loss of suppliers or customers’ money. This is because the industry normally deals with perishables and foodstuffs that are delicate and may easily generate loss if not handled with care. Various insurance companies posses policies that are tailor made to suit this industry. As Hayes & Ninemeier, (2008) observes this means that the operators in this industry can adopt those policies that are of beneficial to all the stakeholders. For instance, workers and other staff who are subject to accidents need to be adequately compensated whenever it has occurred. Additionally some accident like fires or vandalisms which may bring down the premises should be adequately be covered to protect the workers from loss of work whenever an occurrence of that nature occurs.
Another legal requirement in the whole hospitality industry is the need to make every business environmental friendly. The issue of green operations and the conservation of the environment has been one of the most debated of many of topics recently. The producers of raw materials which are to be used in the restaurants have to observe efficient and environmentally friendly ways in the production of the raw materials. Some companies which run the restaurants avoid producers who supply raw foodstuffs that are sourced from polluted places. Since it may be easier to dispose the wastage and the chemicals to rivers or vast lands, some producers may try this to increase their profit margin. Doing business with such firms is to be avoided in order to discourage them from using such means (Hayes & Ninemeier, 2008).
The preparation and the final delivery of the products to the consumers have to be environmental friendly or simply ‘green’ as they are normally termed. Since there is an aspect use of energy and power in the preparation of foods for the restaurants, its important to have a choice of clean energy that have minimal disposal consequences. The use of fire wood or coal can be economical yet it subjects the environment with smoke or gases that, if released to the environment may have long-term effects. This has made the governments to have a framework that seeks to stop and correct such practices. In fact, lately before new permits are offered by the governments to business ventures it is a requirement that they comply with set green standards.
In connection to an environmentally friendly and fair business practice, safety and a non-hazardous work conditions is a legal requirement that all the businesses in this industry have to comply with. There are certain things that the businesses that have to fulfill concerning the safety of the people employed by the business. This includes the physical buildings and facilities that are to be used on day to day operations. The buildings have to possess safe ways and escape emergency doors that are to be used whenever a danger is detected. The fire extinguishers have to be in place in order to respond faster to fires. The buildings are also to be designed in a way that they don’t have easily combustible materials that may easily cause fires. They should also be strong enough to withstand strong pressures that may result from winds that subject them to spoilage and thus endangering those utilizing the facilities (Lee-Ross, 2008).
Also, as part of safety the general preparedness for health hazards and other pandemics is very critical. There ought to be a clear and objective preparedness of the owners of such entities to be ready for any catastrophe. For example the recent pandemic of H1N1 which easily transmit through mere contact recorded a high infection rate at eateries and other food joints. According to Tesone & Pizam (2010) legal addresses are placed on businesses in this industry which are negligent or are not capable to adequately provide preventive measures towards such happenings. He particularly noted this when the world was experiencing the pandemic and went further to carry out research regarding the issue. This was a new dimension that had not been thought of initially. Soon it became clear when losses increased and many businesses were being closed due to low customers’ turnout and employees being hospitalized hence he advocated for a legal redress on the issue of quarantine and medical covers. The safety of all the people involved is paramount and thus seriousness of such issues should be raised.
Operational laws are the next legal aspects that the hospitality industry players have to be familiar with. Carrying out business in such an industry that has so many competitors requires a unique identification through its legal name and identifications. It’s required that the owners conduct name searches from concerned registration authorities. This is because names are the ones that appear on all the documents like bank statements checks balance sheets and other day to day documents like receipts. Thus a unique name is to be attached to the individual firm in order to differentiate it from the rest (Lee-Ross, 2008).
In addition to that, the businesses are identified according to the structure of the business. Meaning some businesses operate under sole proprietorship while others operate under the company arrangements. It’s important for owners to have a clear perspective on the mode of operations and the implications of such arrangements with all the stakeholders. The restaurant owners are able to clearly identify their role in the issues such as liability and how to settle debts and claim compensations. It’s also important when they register their companies as it helps in policy setting regarding day to day activities. The business legal obligation does not end at the time of registration but actually begins as the commencement begins. This is due to the fact regular checkups and monitoring by the authorities take place from time to time hence the businesses operations have to be checked from time to time.
Partnership is among the most common business arrangements in the business environment. This takes place in the form of franchising where a smaller or separate business undertakes the name of a larger business to perform certain auxiliary activities such as supplies or marketing. Many consumers will not understand such arrangements as it will run on the larger names platform. It’s important that the players in the industry understand the implications of such agreements such as the consequences of breach of contracts (Tesone & Pizam, 2010).
It’s uncommon that restaurants are run by individual family or family members who are more often than not operate it in informal way. This may make them a bit uncomfortable to open up to the outsiders in business due to the fear of let up of family secrecy and other operations. But its of utmost importance especially when the workload has increased and the revenues on the increase which prompt a need to outsource some of the work and management of the work in a professional way. This will give way to a clear stipulation of the operations and clarity on the taxation and other procedure
The most important section of the industry that the governments normally look into is the taxation and other legal procedures that concern what the businesses generate. As Walker, Miller & McBee (2009) notes it’s important that the business owners familiarize themselves with the legality and other aspects of the law that exist in the country. The documentations of the business that show the financial worthiness of such a venture are to be availed anytime they are to be needed. Sometimes most business owners overlook such a stage and concentrate on other physical and operational requirements.
The fiscal or taxation requirement is the most important of them all as this is what officially gives the green light of to the operation of such a business. The authorities have an obligation to establish the number of such venture in a given area so as to plan on tax collection as well as other services provisions (Walker et al, 2009).
The industry has been for sometimes been on the limelight for allegations of tax evasion and avoidance as it has diverse operations that may prove to be hard to detect the taxable amounts. However grave consequences are attached to the offences. They may attract huge fines or eventual closure of the firm altogether. In this country alone many businesses would be closed for tax evasion if a nonbiased survey is to be carried out to establish non compliance. This is however hard to detect since the issue of non disclosure by the individual is hard to detect if full corporation is not to be achieved by the owners. Hence one of the initiatives that the government has taken into consideration is having a disclosure requirement that all the business people have to take before commencing any business.
The legal provision and requirements are numerous and it and all the players have to comply because the regulations make it easy for them to play their role. The authorities on the other hand come up with this regulation and enact measures to enforce them to ensure that three is sound competition with the industry and that people are protected from detrimental business activities
In summary what we have looked at is the different dimension that the legal framework takes concerning the hospitality industry. First, what are the legal obligations that the employer has on the workers who work for him and what are the terms and conditions that are recognized by the law regarding their welfare. This means that the employees also are protected by law. The law stipulates the term and conditions that regulate the aspect of recruitment, the terms of payment and the legal age groups or target labor source. The law further makes it possible that the workers enjoy freedom of associations by all means.
Secondly the legal dimension addresses what the restaurant business has to offer to the outsiders who include the producers and its consumers as they facilitate the movement of their whole businesses’ profit. The authorities make the restaurant owners to have an appropriate cover of insurance to all these stakeholders. Adequate compensation has to be taken whenever an accident happens without much delay from the insurance companies. The employers have an obligation to cover for the third parties losses that result from the workers negligence and handling of issues that make losses. The other aspect of the legality is that the environmental perspective that has increasingly become on the debate is taken care of. The authorities and governments have provided in the law that all operations should seek to address the conservation of the environment. Practices that undermine environmental quality have to be dealt by the law. The last most important issue for in terms of legal requirement and regulation is the issue of taxation. Every government has procedure used to collect tax and other revenues from business and avoiding this procedure with the intent to pay less tax or not to pay at all can be punished severely. The taxation laws require that businesses avail all necessary information to facilitate a smooth process. However those who fail to do so stand to face length law suits and fines.