Payroll Challenges in Retail & Hospitality (and How to Fix Them)

If you run a restaurant or retail shop, you know the drill. Your best server forgets her timesheet, your barista’s hours are scribbled on a coffee-stained sticky note, and now you’re trying to remember who covered last Saturday’s shift. Payroll always lands on your desk — and when it goes wrong, everyone feels it. 

For many Canadian small businesses in retail and hospitality, payroll is one of the biggest stress points. Let’s break down the most common challenges (and why they keep happening). 

Why Does Turnover Create Payroll Headaches?

Retail and hospitality are notorious for high turnover. Students, seasonal staff, part-timers — people come and go all the time. That means: 

• Constant onboarding and offboarding
• Records of Employment (ROEs) at short notice
• Updating CRA forms and tax details every few weeks

Example: a student quits mid-season, and suddenly you’re scrambling to finalize their pay and issue their ROE before the CRA deadline. Multiply that by a few staff changes each month, and payroll starts to feel like a revolving door of paperwork. 

What Makes Schedules and Pay So Complex?

In one restaurant, you might have: 

• Servers earning hourly wages + tips
• Kitchen staff hitting overtime
• A salaried manager
• A bartender who also covers hosting shifts at a different rate

Keeping all that straight in a spreadsheet is risky. Miss one detail, and you either overpay (cutting into your margins) or underpay (angering staff). Neither is good for business. 

What Makes Stat Holiday Pay So Confusing in Canada?

Here’s a big one: statutory holiday pay. Every province has its own formula — and they don’t match. 

• Ontario: Holiday pay is based on an employee’s average daily earnings in the four workweeks before the holiday. Example: if a cashier earned $2,000 in that period and worked 20 days, their stat holiday pay is $100.
• British Columbia The formula is different. Employees are entitled to an average day’s pay, calculated as total wages in the 30 days before the holiday ÷ number of days worked. If someone only worked weekends, their holiday pay could actually be higher than in Ontario.
• Quebec The rules are stricter. To qualify, employees must work their scheduled shift before and after the holiday (unless they have a valid reason, like illness). The CNESST enforces penalties if employers get it wrong.

This patchwork of rules means if you’re running stores in multiple provinces, you might have to calculate holiday pay three different ways in the same week. Miss one, and you’re not just risking upset staff — you’re risking compliance fines. 

How Much Do Inaccurate Time Records Really Cost?

Let’s be honest — a lot of small shops and restaurants still use paper timesheets or punch cards. That opens the door to: 

• Lost records shifts vanish when a timesheet goes missing
• Buddy punching one employee clocks in for another who’s late
• Missed or rounded punches five minutes here, ten minutes there

The American Payroll Association estimates that inaccurate or unverified time records like these can cost businesses about 2% of gross payroll. For a café with a $300,000 annual payroll, that’s $6,000 lost — just from sloppy time tracking. 

Why This Matters More Than You Think

Payroll isn’t just another admin task. It touches: 

• Your staff → getting paid right and on time builds trust
• Your compliance → CRA remittances, T4s, and holiday rules must be accurate
• Your sanity → less time chasing timesheets means more time running your business

This is exactly why we built Powerpay Time — a digital time module that takes the guesswork out of hours, shifts, and stat holiday pay. 

Your Next Step

If you’ve nodded your head at any of these payroll headaches, you’re not alone. The good news is there’s a better way. 

Stay tuned for Part 2 of this series: How Powerpay Makes Payroll Easier for Retail & Hospitality. 

Ready to ditch sticky notes now? Try Powerpay Time — built for Canadian retail and hospitality businesses that want payroll to just work.