I’m talking today to hairdressers and salon owners, and those working with others to deliver their services. It is becoming increasingly challenging to know what you need to be aware of when looking at the legal, employment and contractual risks of offering a role to a hairdresser working within your business.
And, just as importantly, to know where to go for help and advice on this.
Well, obviously straight to Stanford Gould, but bear with us as we explain why…
A recent case (reported in July 2020) has clarified some of the issues around self employed hairdressers and beauticians who work in salons – often with very little contractual paperwork to set out how they work, and their employment status. The reality is, it has so often been a ‘trust’ thing; for hairdressers and salon owners, often a working pattern has been established over a long period. This can mean there are high levels of informality in the arrangements. Well, I’m sorry to say that in light of a recent court decision, you salon owners might need to think again if you want to be protected and limit your risk.
You can read more about the facts of the case and the legal issues for hairdressers and salon owners in this fab blog by our lovely fellow lawyers at Nelsons Solicitors in Nottingham, but here it is in a nutshell. Ms Gorman worked in a salon which controlled her working hours, which clients she saw, how she was paid and what time off she was allowed to take, as well as the prices she charged to customers. It was a very typical scenario. She had a written contract for services with the salon owner saying she was self-employed, but the Tribunal looked beyond that. After investigating what was actually happening in her working arrangements, the Tribunal ruled that because the salon was exercising a very high degree of control over her activities, she was, in fact, an employee.
Why is this important? Two main reasons:
ONE) Because employees not only have to be treated differently for tax (so HMRC were watching carefully and had a particular interest in this case)…
TWO) perhaps more importantly, an employed person has additional rights; to holidays, rest periods, sick leave, and not to be unfairly dismissed. There are lots of benefits for a worker. In fact, this case wasn’t brought by the tax man – it was brought by Ms Gorman herself who wanted to be declared an employee, presumably having been unable to persuade the salon owner to make her so, and to thus claim some of those rights.
So for salon owners there’s a double risk – firstly, from HMRC who are keeping a close eye on the use of contracts for services and pseudo self-employed status. It costs the Treasury significant sums in lost tax revenue every year (and new so called IR35 rules tightening have been postponed for implementation from summer 2020 to 2021 – more of this later next year). Secondly, your workers might be looking for better terms and conditions of their work and actively seeking out employed status for some of the perks it offers.
The lesson? Take advice! Get the right contracts in place, which properly reflect your situation and your workers’ rights and responsibilities. We have some fabulous low cost templates for hairdressers and salon owners available through our sister company Stanford Gould Limited – so go check them out here and make sure you are reducing your risk as far as you can.
If you are a makeup artist or hairstylist looking for contracts, you’re better off here!