Why Self-employed workers are damaging our industry and could close your Salon.
We all know that we are part of an amazing industry which can reward our creative emotions, personal ambitions and more importantly our financial needs. As a Salon Coach, every day I see the potential that salons have, observing their business is hugely exciting and so frustrating in almost equal measure.
There are many obvious challenges that are part of an almost permanent agenda, education standards, minimum wage, VAT and of course State Registration to name a few. However, the biggest threat to our industry comes from the salon owners themselves, either through a lack of their own business education or a lack of awareness of industry standards and legislation.
All these shortfalls are easily addressed, with a plethora of industry experts, an abundance of printed and online materials and of course industry organisations like the Hair and Barber Council. Salon owners have never had better access to resources, and even salons on a tight budget can find great free or low-cost information.
This lack of business understanding has led to a huge growth of rent a chair/room/space across the whole industry but especially in the barbering sector, and it is this engagement with self-employed workers that is the single biggest threat to our industry and to the success of a salon.
I accept that there are occasions where the system is a perfect match for a salon with a business model that requires no employee control and a guaranteed set income.
For everyone else there are various levels of how the self-employed system is engaged and therefore various levels of legality.
Whether through business ignorance or deliberate strategy, salon owners are engaging these workers in their business because it significantly reduces their overheads.
Benefits of this system to the salon owner.
No Holiday pay, no income tax, no NI, no Pension, no sick pay, no maternity pay, no paternity pay, no training costs, no product costs and in many cases, it helps in staying under the VAT threshold.
It’s easy to see why salon owners find this an attractive option when the financial benefits appear to be so high.
Negatives of this system to the salon owner.
You have no control over these workers, who are operating on your premises, almost none. They should be able to work the hours that they want (within reason), take holidays when they want, charge the prices that they want, sell the products that they want, wear what they want and even advertise how and when they want. You can’t build a business, or a brand if you have no control over your staff.
This is where things have gone wrong.
Salon owners treat these workers like staff, controlling their actions but removing their employment rights and benefits. Simply it’s illegal.
These salons are breaking employment law and engaging in possible tax evasion.
It really calls into question the size of genuine industry growth, especially the perceived boom in the barbering sector, if salons are built on a foundation of illicit business practice.
Ultimately, they will be subject to investigations and employment tribunals.
Often, the public are being duped into thinking that they are visiting a salon which is a single organisation when often that is not the case. The salon owners should have signs up at every workstation making it clear that the worker is self-employed, their name and address displayed clearly, and if there are any customer complaints they are directed to this information. This sign should accompany the individual workers’ liability insurance which may not exist because they think they are covered by the salon insurance, which often they are not.
There are already documented cases of workers in other industries being treated as employees with cases such as the 2018 Pimlico Supreme court hearing.
For us this is creating a disadvantage for salons that employ staff properly and honour all their legal rights. These good salons are diminishing in size, laying off staff and often must close. This doesn’t mean that the worse salons are closing, sometimes just the ones who are operating against a competitor who is operating by different rules.
This scenario also leaves us with a market flooded with business’ who would not otherwise survive, very little staff development and certainly no job security.
Salons should take a good look at their own operation now and make adjustments to ensure that they fall in line with UK guidelines. If salons aren’t sure Salon Help would be more than happy to guide salons for free if they e mail info@salonhelp.wpengine.com
