P&O2, Answers Chapter 2

PER SONNEL& ORGANISATIONHOSPITALIT Y PERSONNEL & ORGANISATION FOR THE HOSPITALITY INDUSTRY ELLEN VAN KOOTEN Chapter 2 | Answers | Questions about the chapter 2

Personnel & Organisation for the Hospitality Industry | Part 2Chapter 2 | Answers | Questions about the chapter 1. Which three components make up total labour costs? Labour costs are more than just staff wages. When calculating labour costs, you therefore need to look at more than just the wages paid. You should generally add 30% to include the other labour costs. This gives an honest picture of what an employer is spending on staff. There are three types of labour costs: • Direct personnel costs (salary, bonuses and benefits). • Indirect personnel costs (pensions, travel expenses and employment benefits). • Compulsory premiums and contributions (payroll taxes, insurance and employer's levy). 2. What are a company’s direct labour costs? Every entrepreneur has direct labour costs and is obliged to cover these. These costs vary from one company to another. Direct labour costs consist of three types of costs, namely: • employer’s social contributions • collective labour agreement funds • reserves 3. How can an entrepreneur make savings on direct labour costs? The entrepreneur can make savings on redundancy premium and transitional remuneration. The difference between a high and low redundancy premium is more than 4%. As an entrepreneur, it is important to take the level of this premium into account. The premium can be reduced. The employer is entitled to a low redundancy premium for any employment contract longer than one year plus those that specify a certain number of hours. This may even be just 1 hour. Use zero- hours contracts for a period of one year or more, otherwise you will have to pay a high redundancy premium. Do not be tempted to see zero-hours contracts as a panacea. If an employee is employed for six months or more and you want to dismiss this employee, you will have to pay the employee transitional remuneration (a 1/3 of his/her monthly salary). However, this is a difficult area to make savings. It involves taking a good look at your staff. What is the chance that you will want to dismiss an employee? But you should certainly be aware of these costs. 4. A chef earns €12.50 per hour, before taxes are deducted. You have checked which premiums (direct costs) apply to your organisation and, in total, these come to 45%. This means that the conversion factor is 1.45. How much does it cost you to employ the chef per hour? The chef costs €12.50 x 1.45 = €18,13 per hour. 5. A part-time service employee earns €9.75 per hour, before taxes are deducted. You have checked which premiums (direct costs) apply to your organisation and, added together, this comes to 50%. This means that your conversion factor is 1.5. How much does it cost you to employ this member of staff per hour? The part-time service employee costs €9.75 x 1.5 = €14.63 per hour. 6. What are indirect labour costs? Indirect labour costs vary from one company to another. These costs can be divided into four parts, namely: • accountancy costs • administration costs (staff matters) • sickness insurance costs • legal costsVersion 1 | 25-10-2018 | [email protected]

Personnel & Organisation for the Hospitality Industry | Part 2 7. If an entrepreneur is looking for a new accountant, which questions might he/she ask? Answer an accountant the following questions: • What are the annual costs associated with a complete package? • Do I pay periodic costs? • Do I pay extra costs for special situations (sick leave, contract, etc.)? • Do I pay for additional advice? • Do I have to pay to register staff members? • Do I pay for annual paperwork? • Do I pay per pay slip / annual statement? 8. A dishwasher earns €8,50 per hour, before taxes are deducted. You have checked which direct and indirect costs apply to your organisation and, added together, these come to 65%. This means that the conversion factor is 1.65. How much does it cost you to employ the dishwasher per hour? The dishwasher costs €8.50 x 1.65 = €14.03 per hour. 9. An assistant manager earns €13.50 per hour, before taxes are deducted. You have checked which direct and indirect costs apply to your organisation and, added together, these come to 65%. This means that the conversion factor is 1.65. How much does it cost you to employ the assistant manager per hour? The assistant manager costs €13.50 x 1.65 = €22.28 per hour.Version 1 | 25-10-2018 | [email protected]