The owner of three Highlands hotels said an increase of more than £1 an hour in the national living wage will cost his business £750,000.
The rise from £10.42 to £11.44 an hour was announced by chancellor Jeremy Hunt in his autumn statement yesterday. The 9.8% increase will take effect from April 1.
Stephen Leckie, chief executive of Crieff Hydro Family of Hotels, employs 860 staff across seven Scottish venues including the Ballachulish Hotel and The Isles of Glencoe Hotel, both near Fort William, and Kingshouse Hotel in Glencoe.
“No one is arguing against the concept of a national living wage,” he said.
“But this is a big hike and more than we had planned. We’d set our budgets based at a rate of £11.
“Our wage bill is currently around £15 million a year. This will add around £750,000 at a time when we’ve been impacted by a huge increase in energy costs and rates.”
Mr Leckie said staff currently being paid above the current national living wage will also expect their wages to increase.
“It will have a knock-on effect,” he added. “A member of staff currently paid £11.50 will now expect a rise to reflect their years of service.”
Should staff tips be part of national living wage calculation?
Mr Leckie said the national living wage is not fairly calculated for hospitality businesses.
He said some of his staff members could expect to receive around £300 a month in tips. This is taxed but not judged to be part of an hourly rate.
Meanwhile his staff also receive meals, another saving he calculates as worth around £1 an hour.
“At the moment our staff could be on £10.50, but the meal allowance is worth another £1 an hour and tips add another £2 an hour,” he said.
“The national living wage doesn’t account for these benefits.”
Impact of living wage hike on small businesses
Meanwhile smaller hospitality operators say they will also feel the impact.
Chris Corbett, who owns Charlie’s Cafe in Inverness, will now reconsider plans to hire more staff.
He said the national living wage increase will cost his business roughly £20,000 a year.
Mr Corbett, who employs 13 members of staff, said the rise could put smaller cafes out of business as prices rise across the board.
He said: “It’s not just our wages but suppliers’ prices will go up.
“If their prices go up 10% as well as the wages going up, we may struggle.
“I had plans to take on more staff in the new year. I’m not sure if that’s even possible anymore – it’s a real spanner in the works.”
Mr Corbett believes if he wants to continue as a business owner he’ll have no choice but to give up more hours himself.
He added: “I will have to give up more time with my family.”