The law has tightened up in these areas.
If the student is obliged to work in a salon for x number if hours/days a week in order to complete the course, then it can’t be classed as voluntary.
Voluntary work requires free will. The ‘worker’ can choose to donate their time for free or not to.
The student in this case, cannot choose not to work in the salon, as it’s a course requirement.
Therefore, in my mind, they are entitled to receive payment.
I think salons that turn a blind eye are at risk of prosecution for not paying minimum wage and that’s why the college won’t put anything into a formal contract as it will drastically reduce the number of salon placements available.
My other concern for you as a salon owner is, what’s to stop students changing their mind after qualifying and sue for non payment of wages, (plus holiday and sick pay etc)?
You can go around the houses trying to figure out your own definitions of voluntary work and work experience but if there are existing legal definitions, then you can’t ignore simply them.
ACAS is your best bet.