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Catering & hospitality employers encouraged to adopt ‘pay on demand’

9th Feb 2024 - 04:00
Employers in catering and hospitality should look at the idea of ‘pay on demand’ for staff, argues Borja Perez vice-president of product and payments at CloudPay. It could help you stand out in a tight labour market.

Employers across the public sector have faced numerous issues when recruiting staff for a number of years now. But what can be done to get on the radar of potential staff and to help secure hospitality workers ahead of competitors?

Many different approaches have been used to help employers tackle their hiring woes; however, this has not been an easy problem to fix.

All catering businesses and hospitality groups are competing for the same, fairly small, pool of talent to hire from. Ahead of busy times and major holidays, these skills are in even more significant demand, especially in the retail sector.

Hospitality hiring challenges

Recent data from the Recruitment and Employment Confederation (REC) suggests that this situation is at best no better, and leaving many struggling even more than normal.

Last year seasonal hiring, which usually commences in late September and early October, was been delayed because hospitality employers deliberately held back on recruiting as a result of uncertainty within the economy and issues with supply chains.

This delay had the effect of making the sourcing of skills at short notice even more challenging, with many workers being tempted to move into opportunities in other sectors instead.

The pool of potential hospitality staff is already severely limited, so those firms that can get a head start on others are likely to benefit, particularly in a climate where many people are desperate to find a job that can help them cover the added costs brought on the rising cost of living.

Payroll challenges

However, particularly for firms in the retail sector that delayed hiring, there was a major battle to ensure staff were paid ahead of Christmas which highlighted both a problem and an opportunity that has lessons for the public sector.

Many of the workers taking on starting roles in the industry, in retail or within the public sector, can struggle to meet their commitments if forced to work a month in hand, which makes such employers a less attractive proposition.

It can lead to job churn, and then the costs, in terms of money and time, of recruitment and onboarding yet more new workers if, and when, they arrive.

Speed is also important because many hospitality workers will take the first role they are offered that can pay decently and those employers that can’t hire at pace need to find alternative methods of standing out from their rivals and attracting people to work for them. This can be a challenge and firms need to be innovative, but many don’t really do anything to really differentiate them from their competitors.

How pay-on-demand can help

However, for these employers, and other groups across the public sector, there is a potential solution at hand. Pay-on-demand may be a relatively new concept for some, but essentially it allows workers to access their accrued earnings as and when they need them, rather than having to wait for weekly or monthly pay cycles or until after their contract has concluded to receive their pay.

Our research shows that eight out of every ten employees say they would use pay-on-demand if it were available to them.

Offering this model as a key part of your employee value proposition (EVP) can set you apart from competitors, both by highlighting you are a caring employer and also one that provides instant access to pay for those that really need it.

For catering workers, the model can provide support in financially challenging times as many people struggle to manage the rising costs of food, energy, and other utilities.

It also aligns with the greater levels of flexibility and freedom found in almost every other walk of life. In a world where any information, song, film or data that you want can be accessed instantly through mobile phones, why are traditional payroll models still being used when there are other more effective – and modern - options available?

Pay-on-demand in practice

Nandos Singapore is a good example of an employer, albeit in the private sector, that has successfully adopted the model. The business had faced challenges recruiting in a skills-short market and needed a solution that would provide flexible pay, support its hiring and retention and boost its Employee Value Proposition (EVP).

It also, like many public sector hospitality employers, had issues running advance payrolls for its employees ahead of festivals like Christmas, Eid, and the Chinese New Year. Nandos adopted pay-on-demand and was able to provide all of its employees across Singapore with instant access to their earned wages, meaning they were supported ahead of potentially costly holiday seasons.

The firm also gained from a knock-on reduction in recruitment and retention costs from less use of agencies, advertising and other fees.

In reality, pay-on-demand is not just for holidays, it’s a highly useful model to adopt at any time – particularly in a market where employers are likely to seek the skills of temporary workers on an ongoing and more regular basis.

And for public sector hospitality employers looking to recruit at speed, it can help in the short term too.

Written by
Edward Waddell