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Personal Finance

The many laws that hotel owners must observe

Taking customers’ orders at the Highlands Restaurant in Corner House. Life behind the scenes for a restaurateur or hotelier is busy. A big part of restaurant management is identifying and managing the legal risk associated with the business. Photo/FREDRICK ONYANGO
Taking customers’ orders at the Highlands Restaurant in Corner House. Life behind the scenes for a restaurateur or hotelier is busy. A big part of restaurant management is identifying and managing the legal risk associated with the business. Photo/FREDRICK ONYANGO 

For many people, running a restaurant seems fairly simple with the main aspect being ensuring that quality is maintained at all times.

From a customer’s perspective it is difficult to imagine the extensive laws and regulations governing restaurant and hotel operations.

Life behind the scenes for a restaurateur or hotelier is busy.

A big part of restaurant management is identifying and managing the legal risk associated with the business.

From labour laws to food safety and anti smoking rules, compliance becomes more challenging as the restaurateur needs to stay abreast with the dynamic changes in applicable laws.

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The main Act applicable to restaurants and hotels is the Hotel and Restaurant Act.

The Act requires that any person who engages in the business of restaurant/hotel be licensed.

It is worth noting that any person aggrieved by the manner in which a restaurant is run may lodge a complaint to the Hotel Licensing Board after which the Board may cancel the hotel’s license.

It is illegal to rate your hotel without involving the Authority.

For example you cannot claim your restaurant is a five star hotel when the authority has not approved this rating.

There are also more detailed provisions regarding the running of hotels for example, maintaining guest books.

Another statute applicable to the business is the Public Health Act.

The Public Health Act is an Act made to ensure that public health is secured and maintained.

Restaurants are sensitive businesses in the area of public health due to their very nature of food handling and being open to the public.

Therefore any unhygienic standards will expose the restaurant to penalties under the Act.

When it comes to tent and caravan sites special regulations apply to them especially under the Public Health Act

Hotels are subject to special tax statutes like the Hotel Accommodation Act and the Entertainment Tax Act.

Before one agrees to hold an event at the hotel venue then he needs to be licensed by the relevant authorities.

Before betting or gaming is allowed in one’s premises then he needs to have the relevant license from the authority and must also observe all relevant rules and regulations regarding conduct of such business.

For example one is not allowed to sell alcohol in premises where gaming is being carried out.

Before one can hold an entertainment event then a license is required and he might be required to surcharge an entertainment tax under the Entertainment Tax Act.

The Food Drugs and Chemical Substance Act is also applicable in the sense that the restaurant is not allowed to sell any food unfit for human consumption. Doing so would expose one to penalties from the relevant authorities.

The statutes already mentioned apply to only one aspect of restaurant management and that is quality management.

There are other laws that need to be considered in the relationship between the restaurant and its customers.

One of this is the Occupier’s Liability Act whereby the hotel remains liable to customers for any damages sustained while in the restaurant/hotel unless the hotel can show that it was not negligent.

Examples include injuries sustained in playgrounds due to defective structures and injuries sustained from animals owned by the hotel.

Employment laws are the other laws that need to be considered and the relevant statutes include the Employment Act, Workmen’s Compensation Act and Regulation of Wages Act among others.

For example if a chef is injured while performing his duties on whom will liability fall? Liability and damages would be determined under The Workmen’s Compensation Act.

Other laws that the restaurant management needs to consider include property laws.

If the property is leased then the management needs to determine if it is a controlled tenancy or a normal tenancy.

Assess contracts

A controlled tenancy is a tenancy of a shop, hotel or catering establishment that is not done in writing that is less than five years or that provides a clause for termination for reasons other than for breach.

The importance of this determination is because different laws apply depending on whether the tenancy is normal or a controlled one.

When it is controlled any disputes are determined by the Business Premises Rent Tribunals and where it is normal then the courts have the first jurisdiction.

The restaurant must also asses the contracts with its stakeholders like suppliers, employees and security firms to avoid exposure to unnecessary legal risk.

The restaurant should also consider intellectual property issues like trademarks (for its logo) and trade secrets (for its recipes).

If the restaurant is a franchisee it also needs to ensure observance of all the terms of the franchise to avoid being in breach of the franchise.

Running a restaurant/hotel is not as easy as it seems due to the vast laws that apply.

In addition to managing legal risk, the restaurant also has to observe general principles of business management.

The laws applicable to restaurants/hotels change dynamically and a restaurateur / hotelier must keep abreast with changes in all relevant statues.

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