If you’re working as a hairdressing or salon professional, it’s likely you will have heard of rent-a-chair agreements. Under such agreements, a salon can hire a hairdresser as an independent contractor, so they can work with their own clients in the salon, and use the salon’s equipment and chair. Basically, the hairdresser runs their own business, while using the premises of another salon. The hairdresser simply rents the salon chair, and pays the salon owner for the rental. This could either be through a percentage of their earnings, or a fixed amount per month.
Rent-a-chair agreements can work well for both salon owners who want to offer more stylists to clients without having extra employees, and freelance hair stylists who don’t want the costs and responsibilities of running their own salon. That said, in legal terms, they can be complex agreements to navigate in terms of whether a stylist renting a chair is a contractor or employee. In essence, they go far beyond simply offering a contractor a salon chair.
HMRC is in fact cracking down on employees that are ‘disguised’ as salon chair renters, with employers not paying them in PAYE, and without national insurance and holiday/sick pay. It’s therefore important that salon owners know how to create and enforce rent-a-chair agreements while staying on the right side of the law. Here’s a simple guide to rent-a-chair agreements in salons.
Is renting a salon chair classed as subletting?
Salon chair renters are not employees – they are contractors and self-employed. This means that they are running their own business and providing an independent service, and are not working directly for the salon they are renting the chair from. Both the salon owner and contractor have ultimate control over their own businesses.
If a salon owner enters into a rent-a-chair agreement with a contractor, and they are renting the salon from a landlord, the agreement could complicate things legally between the salon owner and that landlord. This is because having a rent-a-chair agreement could be seen as ‘subletting’ part of the salon, which could be restricted under any lease agreement the salon owner has with their landlord. Before entering into a rent-a-chair agreement as a salon owner, it’s very important to check the contract you have with your landlord and the terms of your lease. You may need approval from your landlord to ‘sublet’ any part of the salon space, or negotiate an agreement that makes it profitable for them. If you own the salon property outright yourself, this isn’t an issue.
Are you self-employed if you rent a salon chair?
Renting a salon chair in the UK typically means that a person is self-employed, as they’re essentially paying for the space and operating independently within it. They’re responsible for managing their own clients, operating hours, schedule and finances, and there will be some flexibility as to when they offer business within the confines of the salon’s policies. However, it’s always a good idea for both the salon owner and the contractor to be completely clear on the specific terms of the rent-a-chair arrangement, so both parties are familiar with their responsibilities.
In being self-employed, a contractor hairdresser hiring a chair at a salon doesn’t have to wear mandatory uniform or follow any other rules that are followed by salon employees. This can be tricky for some to navigate, which is why both parties need to be clear that the contractor has their own authority.
Independent contractors typically bring their own supplies. In rent-a-chair setups, the salon owner may decide not to let the contractor use products that their employees use in the salon. If a salon has exclusive partnerships with specific brands, it’s prudent to notify them if contractors opt for alternative products. Additionally, should contractors wish to use a salon’s products, the salon owner may consider imposing supplementary charges, as the contractor is a separate business.
In terms of day-to-day operations, independent contractors in rent-a-chair setups can determine their working hours, client load, and are not mandated to accept assignments from the salon. Independent contractors are also responsible for managing their own bookings and finances as they effectively run their own businesses.
While this autonomy can be an advantage, it can introduce unpredictability into a salon’s operations. It may be useful to salon owners to state in the contract that contractors must adhere to standard salon opening hours, and offer services during those times. However, caution must be exercised to avoid overstepping legal boundaries in terms of control, because the contractor isn’t an employee. If relinquishing control is a concern, hiring regular employees may be a preferable option for a salon owner.
What should a salon chair rental agreement cover?
A rent-a-chair agreement in the UK should cover the following aspects to protect all parties involved:
- The names and contact information of both the salon owner and the independent contractor.
- The term of agreement, i.e. whether the rental is a fixed-term or ongoing arrangement, along with any provisions for renewal or termination.
- Rental rate and payment terms, with the agreed rate for the chair and any other fees such as services fees for overheads.
- Hours of operation, during which the contractor is allowed to use the chair and provide services (including details of holidays and special times when the salon is closed).
- Details of the services the contractor can offer clients while using the chair, such as hair treatments, skincare, etc. There should also be details on any restrictions to services.
- Use of facilities and equipment the contractor is permitted to use.
- Insurance and liability requirements, including public liability insurance and professional indemnity insurance. Make sure the agreement is clear on who is responsible/liable for damages during the rental period.
- How clients are managed and allocated between the salon owner and the contractor, e.g. how bookings are handled and processed.
- The conditions under which either party can terminate the agreement, including any enforced notice periods. This section should also include renewal options and changes to rental rates or terms upon renewal.
- A check that the agreement follows relevant UK laws and regulations governing salon operations and rental agreements. Determine the jurisdiction and governing law that will apply to the agreement, (typically the laws of England and Wales).
- Confidentiality and non-compete clauses to protect the salon’s confidential information and trading secrets. A non-compete clause prevents the contractor from competing with the salon within a specified time frame or geographic area after termination of the agreement.
- Specify procedures for resolving disputes or disagreements between the parties (mediation).
By covering the above in a clear contract, the rent-a-chair agreement can establish clear expectations and responsibilities for the salon owner and the independent contractor.
We can help create rent-a-chair agreements and resolve disputes
Whether you need help drafting a rent-a-chair agreement or have a conflict with a contractor who is using one, our team of professionals at Neathouse Partners can help you to stay compliant with the law.
Get in touch by calling 0333 041 1094 today or use our contact form.
