Note: This article covers the information for UK Jurisdiction.

When running a beauty salon, spa or hairdressers/barbershop, it is crucial to know your therapists, barbers or stylists’ rights. Employment laws can be confusing, especially for business owners or managers new to hiring employees.

The hair and beauty sector is a particularly interesting place because hiring staff isn’t as straightforward as it is with other business sectors. You can hire an employee to work directly for you on a full or part-time contract, or you can hire staff that are considered to be self-employed.

But you need to understand what defines the difference between the two and make sure that if you hire self-employed staff, you don’t fall foul of the IR35 rules if your business is based in the UK.

In a beauty salon or hairdressing/barbershop, your workers are self-employed or employees. Your employees can’t be both. 

You can advertise for staff, enrol them on your salon’s payroll, and then pay them an hourly rate. Or you can hire them off-payroll as a self-employed contractor. 

Employee rights

If you choose to hire your salon staff on contract, they will be entitled to be paid the national minimum wage according to their age, but you can pay them whatever salary you like over the NMW. Your employees are also entitled to paid holiday entitlement, sick pay and maternity/paternity leave. 

You are responsible for withholding your contracted employee’s tax and National Insurance contributions. You are also responsible for paying towards your employee’s workplace pension scheme if they are eligible.

Employee pension rules

Since February 2018, in the UK, under the Pensions Act 2008, all UK employers are required to offer auto-enrolment to employees who qualify. This is where you, as an employer, pay into a pension pot for your employee.

Auto-enrolment applies to all employees, including those in the hair and beauty sector, that employs one or more staff. As a general rule, you are required by law to pay into your employee’s pension pot unless they earn equal to or less than £520 a month, £120 a week, £480 over four weeks, or £6,240 in a year. (2021 rates). The amount you pay towards your pension plan depends on what type of workplace pension scheme you are running.

You may employ staff that don’t fall into the auto-enrolment category, such as part-time staff, but they are entitled to enrol into your workplace pension scheme voluntarily. So you must have one in place. 

Self-employed salon staff

Many beauty salons, spas, and hairdressers/barbershops hire self-employed staff. It is a practice that has been going on for years, but the newly revised off-payroll working rules (IR35) that were brought in from April 2021, are worth paying attention to.

Tax experts believe that it is unlikely that the changes to the IR35 tax law will affect salons or barbershops. However, those salon owners hiring off-payroll workers will be responsible for ensuring they comply with IR35 tax rules to reduce tax avoidance.

Salon owners hire off-payroll therapists and stylists that are not paid by their company PAYE system. The staff member will be hired to complete a particular job, whether that be as a hairstylist or beauty therapist etc., but your self-employed staff member will be responsible for paying their own tax and NI contributions on their personal income.

The IR35 rules are designed to assess whether your self-employed staff member is a genuine contractor rather than a ‘disguised’ employee for the purposes of paying tax.

Keeping records of working hours

As a salon owner, you need to keep detailed records of your employees working hours by law. A ruling in the European Court of Justice introduced stricter rules for recording the number of hours your employees work. 

This means you are responsible for accurately recording all hours your employees work, including overtime hours. These rules still apply in the UK post-Brexit.

By far, the best way to keep an accurate record of your staffing hours is to use a salon booking and scheduling management system such as Salon Iris. This type of salon management software will help you keep track of your client appointments and manage your staff and their working schedules.

You will be able to keep a running record of hours worked by your individual staff members so that you can accurately report their working hours and easily calculate their pay and contributions.

If you are a salon owner about to expand your business and employ staff for the first time, it can help to brush up on your employment law, and get a sensible salon management software system in place so you can keep accurate financial and staff records from day one.