Payroll In Hotel And Hospitality Industry
13 minutes read

Payroll In Hotel And Hospitality Industry

Are you looking to manage HR and payroll for the Hotels and Hospitality industry but are not unsure about which payroll system is best suited for your industry?

We understand the importance of catering to a flexible staff schedule, POS system integration, and managing diverse employee types within the hotel and hospitality industry. Managing multiple taxes, time and attendance tracking, and overtime for a widely dispersed workforce can be challenging. This is where a hotel & hospitality Saral payroll system comes into play, streamlining manual and paper-based processes and allowing you to concentrate on delivering exceptional customer service.

So, to know details of the payroll in the hotel & hospitality industry, we will discuss the following points.


What is the payroll in hotel?

In the hotel industry, payroll refers to the total amount paid to employees, which includes salaries, wages, bonuses, incentives, schedule-based pay and other forms of compensation. Typically, payroll accounts for around 50% of total operating costs, making it a crucial expense for hotels to manage accurately and efficiently with profitability and comply with regulations.

Payroll Challenges in the Hotel and hospitality industry

In the hotel and hospitality industry, there are several payroll-related challenges.

  • Compliances with labour laws and wages – Payroll in Hotel and hospitality industry needs to follow various labour laws like minimum wages, overtime pay, tips and service charges, employee health and rest requirements, and tax reporting. These laws change frequently, and It’s essential to stay compliant by payroll professionals.
  • Multi-Level Payroll Structure: This industry has a very complex payroll structure due to the workflow between various departments like housekeeping, front office, Food & Beverages, Kitchen and others. Each department will have different profiled employees with different kinds of pay rules making the calculation complicated.
  • Seasoned workforce: In this industry, business varies as per the season, event or other related conditions. As a result, the workforce will also be fluctuating depending on the demand, which shall include part-time or seasonal employees. Hence, it becomes challenging to adjust staffing levels, schedules, and payroll according to the need and demand.
  • Overtime & Shift Pay: Hotels and hospitality sector operate 24/7, which means employees will also be working 24/7 but in shifts or in irregular hours. The challenge here will be to calculate overtime pay according to their role and shift difference amount, if applicable.
  • Tips and service charges: In Hotels and hospitality industry, tips and service charge is a common practice that is given to client-serving employees. It becomes a challenge when tracking and distributing tips and service charges to all eligible employees as it involves multiple departments. They also need to consider the tax implications of this additional income and ensure accurate reporting in payroll.
  • Calculation of Incentives: Providing bonuses or commissions, or incentives based on performance, is a proven strategy to inspire and retain hotel and hospitality staff. However, it’s critical to ensure that they are calculated precisely in alignment with predefined criteria and business objectives.
  • Employee Retention: This industry has higher employee attrition, especially employees at entry-level. Hence, frequent recruitment and onboarding will lead to additional burdens for the pay computing as well as HR personnel.
  • Time & Attendance integration: Generally, hotel and hospitality industries have a time and attendance tracking system in place, which helps them to track the presence of employees at different levels. But, integrating this to a payroll process with accuracy is a task to be considered. Timely data transfer with minimal or no error is very essential, as inaccurate details will lead to wrong pay calculations.
  • Labour Union: Many hotels have unions that represent their employees. This, at times, will create some complex situations as the management will have to adhere to the union’s requirements like wage increament, employee benefits, changes in work standards etc, which may lead to the additional workload.

Solutions for Payroll in Hotel and Hospitality industry

To pay your employees on time and accurately track real-time data, we designed the Saral PayPack hospitality solution with an intuitive and logical workflow that keeps you one step forward in this business world.

  1. Automate the payroll process: Using a payroll software can streamline and automate payroll tasks. This can reduce manual errors and improve the calculations on wages, time tracking, taxes, and reporting. This also ensures compliance with changing labour rules and regulations. One can integrate their payroll with other systems for
  • Attendance,
  • Shift scheduling,
  • employee onboarding
  • HR Management.
  1. A centralised payroll system can be used to manage different departments and branches. It can help you to identify the areas where improvements can be made with optimisation of the workforce utilisation and employee performance. Centralised information management will also help in easy access to data with reduced chances of errors.
  2. Keeping yourself updated with the latest changes in state & central complaint laws w.r.t labour requirements. Accordingly, the policies and procedures can also be changed.
  3. Payroll staff, have to be adequately trained on the for clear understanding of the payroll process, tax regulations and labour laws. This will help in timely pay calculation and accuracy of data.
  4. Creating a Payroll Plan – A payroll plan can be tailored to meet the hotel’s objectives and market conditions. This includes demand-based workforce, along with their requirements.
  5. Overtime and Shift based attendance can be accurately tracked with Time & attendance management software. Implementing T&A will not only track the proper work hours of the employee but integrating it to the Payroll system will reduce the time taken for payroll computation and errors in the calculation.
  6. Proper system has to be developed to manage tips and service charge distribution. This will also help in managing tax on the income and the systemic process of disbursal.

Improve your hotel’s payroll and hospitality services with a free demo of Saral PayPack. Click here to learn more.

What are the Benefits of Payroll Software in the hotel and hospitality industry?

There are some benefits of payroll in hotel industry, such as –

  • Data Access Easily – With payroll software, you and your managers can conveniently access data from anywhere with an internet connection, effectively monitoring, analysing, and reporting on payroll performance.
  • Easily Time and Attendance Tracking – Integrating a time and attendance system, like a biometric device, you can effortlessly track your employees’ hours, shifts, overtime, and absences without requiring manual input.
  • Flexibility in Working – Our system supports flexible work arrangements, including casual, part-time, and contract work. It ensures accurate tracking of hours and pay rates.
  • Cost Saving – It helps you to save money by reducing payroll errors, penalties, frauds, administrative costs, and excess employee payments.
  • Ensuring compliance with central federal and state laws and regulations is crucial when it comes to aspects such as payroll taxes, tips and service charges, minimum wages, labour standards, reporting requirements, and overtime payments.
  • Data Storage – It can store all your payroll data in cloud storage securely and remotely.
  • Enhanced Employee Experience: By offering online access to payslips, leave balances, tax forms, and personal information, employee engagement and satisfaction can be improved. Additionally, employees can request leave, update their details, and claim through the ESS portal.
  • Hotels can enhance talent management by utilising payroll software to provide competitive compensation packages, career growth opportunities, and effective feedback mechanisms. This helps in attracting, retaining, and developing their human resources.

This brings us to the end of our discussion on Payroll in the hotel and hospitality industry. Let’s know your other questions and opinions on this topic. Mention below the comment box.

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