Resource · Labour cost

Labour costs in UK hospitality: the 2026 numbers, and where the hours go

Last updated: August 2026 · ~10 min read

Labour is the biggest controllable cost in UK hospitality, and in 2026 it got more expensive again. From 1 April 2026 the National Living Wage is £12.71 an hour, employer National Insurance is 15% on everything above £5,000 a year, and once holiday pay and pension are added the real cost of an hour is well over £16. This guide sets out the 2026 numbers, shows how to work out what an hour actually costs you, and covers where the hours go in a catering business.

The short version

From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over.
Employer National Insurance is 15% on earnings above a £5,000 a year secondary threshold.
Add holiday pay and pension and a £12.71 hour costs roughly £16.40 before any margin.
Labour cost has two halves: service hours and admin hours. Most operators only manage the first.
An hour of admin costs the same as an hour on the floor, and produces nothing a client pays for.

1. The problems UK hospitality teams face on labour in 2026

The wage floor keeps moving. The National Living Wage rises every April, and it rose again on 1 April 2026.
Employer National Insurance starts almost immediately. The secondary threshold is £5,000 a year, so nearly every hour worked carries 15% on top.
Differentials get squeezed. When the floor rises, chefs de partie and supervisors expect their gap to hold, so the rise travels up the payroll.
Turnover costs more than people think. Recruiting and training a replacement is real money that never appears on the labour line.
Admin hours are invisible. Nobody rosters the three hours a week somebody spends re-typing menus, so nobody manages them.
Prices cannot absorb it. Client budgets and contract rates do not rise on 1 April because a wage floor did.

2. The 2026 numbers, in one place

These are the statutory figures for the 2026 to 2027 year, published by GOV.UK. Rates change on 1 April each year, so check the source before you build a budget on them.

National Living Wage, 21 and over: £12.71 an hour from 1 April 2026
18 to 20 rate: £10.85 an hour
Under 18 and apprentice rate: £8.00 an hour
Employer National Insurance: 15% on earnings above the secondary threshold
Secondary threshold: £5,000 a year, £417 a month, £96 a week
Employment Allowance: up to £10,500 for eligible employers
Under 21s and apprentices under 25: no employer National Insurance until £50,270
Statutory holiday: 5.6 weeks, which is the 12.07% accrual figure used for irregular hours and part year workers
Pension auto enrolment: 3% employer minimum on qualifying earnings

3. What an hour really costs: the arithmetic

Take the April 2026 National Living Wage and build it up. Every step here is arithmetic you can redo with your own rates.

Base rate: £12.71
Holiday accrual at 12.07%: about £1.53, giving £14.24
Employer National Insurance: the £5,000 threshold spread over roughly 2,000 paid hours is about £2.50 an hour free of National Insurance, so 15% applies to about £11.74, which is about £1.76
Pension at 3%: roughly £0.35 on qualifying earnings
Total: about £16.40 an hour

Worth knowing: the Employment Allowance offsets up to £10,500 of employer National Insurance for eligible employers, so a small operator's true average lands lower than this. A large one pays close to the full number on every hour.

The useful conclusion is not the exact figure. It is the ratio. Every £1 of wage costs you roughly £1.29 by the time it reaches your profit and loss, so an hour saved is worth about 29% more than the wage rate suggests.

UK hospitality operators typically report labour between 28% and 35% of turnover. Contract catering and high volume banqueting usually sit at the lower end, restaurants and private dining at the higher end, and hotels vary with how much of the operation is outsourced.

Benchmarks are worth less than your own trend. Two catering businesses with identical labour percentages can be in completely different health, because one of them is spending a fifth of its hours on paperwork and the other is not.

A profit and loss report for a catering operation showing revenue, cost lines and margin — Labour sits next to food cost. Both have to be true for the margin to be true.

5. The two halves of labour cost

Every hour a hospitality business pays for falls into one of two buckets, and they behave completely differently.

Service hours are the hours a guest experiences: the chef on the pass, the waiter on the floor, the porter clearing. Cutting these is visible immediately, and it is why blunt labour cuts damage a business faster than they help.

Admin hours are the hours spent producing paperwork: building quotes, re-typing menus into a second system, costing recipes, chasing dietary lists, writing function sheets, entering supplier invoices, working out what to order. No client has ever paid for any of it.

Most operators manage the first bucket carefully and never count the second. That is backwards, because the second bucket is the one you can cut without a guest noticing.

6. Where the admin hours actually go in catering

Count these for a fortnight before deciding anything. The list is almost always longer than the guess.

Building and re-building quotes and costed menus
Typing the same menu into a second system
Re-costing recipes after supplier prices move
Collecting, chasing and re-issuing dietary lists
Writing and re-writing function sheets and BEOs when numbers change
Working out what to order, then splitting it by supplier
Entering supplier invoices and querying the wrong ones
Building the allergen paperwork by hand
Reconciling what a job was quoted at against what it cost

Then price them properly. Three hours of an executive chef is not three hours of the National Living Wage, and most of this list is done by senior people.

A catering event pipeline showing every booked job with its stage, guest count, dietary requirements and margin in one table — Most admin hours come from the same fact appearing in several places at once.

7. How to cut admin hours without cutting service

Stop double entry. Every fact typed twice is an hour spent and an error waiting.
Generate documents, do not write them. A BEO rebuilt from the booking when a number changes costs nothing. A BEO re-typed costs twenty minutes and a mistake.
Let prices flow. A supplier bill that re-costs the recipes removes the whole re-costing job.
Collect dietary requirements once, structured. A list that arrives as data can be checked automatically. A list that arrives as prose has to be read by a person every time.
Give senior people back their hours first. The same hour saved is worth more when it belonged to a chef.
Measure it. Count admin hours per booked catering event, and watch the number, the same way you watch GP%.

8. What this means for your role

Head of catering

Labour is your biggest controllable line and the one you can least afford to cut bluntly. Splitting the number into service hours and admin hours turns a blunt cut into a choice.

Sales director

Your team spends hours building quotes, re-typing menus and chasing dietary lists. Those hours are labour cost sitting inside a sales function, and speeding them up raises win rate and lowers cost at the same time.

Executive chef

Costing, re-costing and paperwork are chef hours at chef rates. Every hour of that is an hour not spent on food, and it is the most expensive admin in the building.

Head chef

Prep planning, ordering and the paperwork around a service are hours nobody counts as labour cost, and they are. So is the hour spent finding out what a guest can eat during service.

9. Questions people ask

What is the National Living Wage in 2026?

From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over. The 18 to 20 rate is £10.85, and the under 18 and apprentice rates are £8.00. The rates change on 1 April each year.

How much is employer National Insurance in 2026 to 2027?

Employers pay 15% on earnings above the secondary threshold of £5,000 a year, which is £96 a week or £417 a month. Eligible employers can offset up to £10,500 of that with the Employment Allowance. For employees under 21 and apprentices under 25, employer National Insurance does not start until £50,270.

What does an hour of staff time really cost in UK hospitality?

Take the hourly rate, add holiday accrual of 12.07%, add employer National Insurance at 15% above the threshold, then add pension at the auto enrolment minimum. On the April 2026 National Living Wage of £12.71 that comes to roughly £16.40 an hour before any overhead or margin.

What percentage of turnover should labour be?

UK hospitality operators typically report labour between 28% and 35% of turnover, with contract catering and banqueting at volume usually lower than restaurants and private dining. The number that matters is your own trend, because the mix of service hours to admin hours differs hugely between businesses.

How do you reduce labour cost without cutting service?

Separate service hours from admin hours and attack the second first. Service hours are visible to the guest and cutting them shows. Admin hours produce nothing a client pays for, and in most catering businesses they are the larger and softer target.

Is the 12.07% holiday figure right for everyone?

The 12.07% figure comes from 5.6 weeks of statutory holiday spread across the 46.4 working weeks of the year, and it is used for irregular hours and part year workers. Salaried staff on fixed hours accrue holiday differently, but the cost lands in the same place.

10. Where Havenue fits

Havenue does not roster staff and does not run payroll, so Havenue does not touch your service hours. Havenue attacks the second bucket: the quote, the costed menu, the dietary checks, the BEO, the allergen matrix, the supplier order and the invoice all come from one record, so the same fact is never typed twice.

The hours that removes are senior hours, and at 2026 rates a senior hour is the most expensive thing in the building.

See the catering event planner, the BEO and allergen matrix and reporting and compliance.

11. Sources

Statutory rates in this guide were checked against GOV.UK on 21 August 2026. Rates change on 1 April each year and thresholds change at the start of the tax year, so check the source before you build a budget on any of them. Nothing here is legal, tax or employment advice.

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