Trade body UKHospitality has called on the Government to help employers swallow the cost of new wage rates.
It wants to see employer National Insurance Contributions (NICs) on the first £12,000 of earnings scrapped as a way of supporting businesses increase wages for hardworking employees.
It follows the publication of a report by the Low Pay Commission backing proposed increases to the National Living Wage rate.
UKHospitality chief executive Kate Nicholls said: “We certainly want our fantastic team members to be rewarded fairly for the great work they do. We pride ourselves on being the UK’s foremost experiential sector and the great people who work in our venues are a huge part of the reason we succeed.
“The labour-intensive nature of hospitality means that a significant and sudden increase to the rate of National Living Wage is going to shock many businesses. If the Government is going to push ahead with its plan of increasing the rate to £10.50 over five years, then it must also take steps to help businesses on this journey, otherwise we will see job losses.
“A very good first step would be to scrap employer National Insurance Contributions on the first £12,000 of salary earned. That way, businesses will still be able to give team members the pay rise they deserve, without damaging the stability of the business they work for.”