Self employed contract/terms

[Lpolky]

Hi guys,
So does anyone have advice as to some form of self employed contract or terms I could use?
I have staff in the salon that work for me and under my business and we all work as a team. However they are classed as self employed and I pay them a percentage per client per week.

So at the moment I don't have any type of contract as not sure if there is anything I could use. I tend to email them terms and conditions and the rates and percentage we agree etc so they have it all in writing.

Is there anything I can use that would be more Official? Like an an actual contract stating sickness, holiday to be advised, notice period, working terms etc?

Does anyone do the same as this?
Thankyou

 

[PicklePie]

I think you'll find that as they are self employed, it means exactly that in terms of sickness, holiday, notice etc. They take their own money and set their own prices and hours. Effectively you are just their landlord.

I'm sure there will be other Geeks that can advise on a contract regarding percentage etc.

 

[AcidPerm]

Hi guys,
So does anyone have advice as to some form of self employed contract or terms I could use?
I have staff in the salon that work for me and under my business and we all work as a team. However they are classed as self employed and I pay them a percentage per client per week.

I think you'll find that HMRC might have a different perspective.
They are not your staff.
They are responsible for their insurance, tax and NI contributions and so therefore, independent business owners.

If you try to draft a contract incorporating your business terms and someone later decides they're not happy and complains to HMRC, you could find your self paying back ££££ in minimum wages, tax, NI and a big fine.

Just do it properly.

Either employ them if you want to dictate terms or accept that they run their own business as they choose.

 

[Annabel123]

Hi guys,
So does anyone have advice as to some form of self employed contract or terms I could use?
I have staff in the salon that work for me and under my business and we all work as a team. However they are classed as self employed and I pay them a percentage per client per week.

So at the moment I don't have any type of contract as not sure if there is anything I could use. I tend to email them terms and conditions and the rates and percentage we agree etc so they have it all in writing.

Is there anything I can use that would be more Official? Like an an actual contract stating sickness, holiday to be advised, notice period, working terms etc?

Does anyone do the same as this?
Thankyou

What you're doing is illegal, you can't have your cake and eat it unfortunately.

 

[Eloise86]

You can have a 'terms and conditions' but not a contract. You shouldn't be paying them a percentage per client, it should be a percentage of their takings or day/ hourly rental fee. The terms would include what those fees are,what's included in those fees, any 'rent free' days, notice period etc. They must be responsible for own monies, columns, prices. You cannot dictate what days/hours they work, they are. If they are off sick they should be able to send someone else in their place if they choose. I would seek legal advice and get it written up professionally to make sure you understand how it works so you don't get a big bill from hmrc because you could find yourself in a lot of trouble if hmrc finds your booth renters as employees. Don't mess with the tax man.

 

[Lpolky]

Thankyou all for your comments.
Yes I totally understand there is a big difference and they are happy that they are their own business as such and need their own insurance and also do their own self assessment etc plus they can choose what hours they work.

However it seems to work that I state what hours I need and we work together to make sure what they want and what I want is the same thing for example I won't take on someone who only wants to work 3 days a week with hours that are no good to me.

Im happy and understand that I can't give them a contract but maybe salon terms and conditions that would apply? I know it's a fine line.

So why can't I do a percentage per client? Why does it have to be per day? Just because the percentage may change per client but if I have to set one per day that's fine.

I have a meeting with my accountant so will ask their advice also.

 

[Eloise86]

I think it's something to do with the fact you can't be seen to be paying them? An accountant will tell you what's best for your pocket. An accountant once recommended and old salon owner of mine to do lots of things she shouldn't. I'd be taking advice from elsewhere if I were you. Call hmrc for advice. Xx

 

[beautyxperts]

You can't take any money or card payments for self employed as this will be classed as your turnover not the self employed turnover. In turn you should be declaring it to the inland revenue otherwise they will class the self employed as employed and you will be liable for back dating sickness, holidays and min wage.
Your self employed therapists maybe happy with your current set up but you need to be aware of what can happen regardless - it only takes a disgruntled ex "self employed" therapist to get in touch with IR and they will investigate/audit your business - it happens!

If your paying them a percentage then YOU are paying them. It needs to be the other way around THEY should be paying you at the end of the week from their turnover so example:
• they have taken £500 for a week you will receive 20% from that paid by them to you.
• they are only renting space from you, so any clients they do are theirs (obviously clients have their own free will).
• are responsible for their own working hours, you can't dictate their hours, holidays, sickness.

You need either an agreement in writing or like above terms and conditions which can be put into an agreement.

These are not legal documents as they aren't contract just an agreement between both parties.

 

[Eloise86]

You can't take any money or card payments for self employed as this will be classed as your turnover not the self employed turnover. In turn you should be declaring it to the inland revenue otherwise they will class the self employed as employed and you will be liable for back dating sickness, holidays and min wage.
Your self employed therapists maybe happy with your current set up but you need to be aware of what can happen regardless - it only takes a disgruntled ex "self employed" therapist to get in touch with IR and they will investigate/audit your business - it happens!

If your paying them a percentage then YOU are paying them. It needs to be the other way around THEY should be paying you at the end of the week from their turnover so example:
• they have taken £500 for a week you will receive 20% from that paid by them to you.
• they are only renting space from you, so any clients they do are theirs (obviously clients have their own free will).
• are responsible for their own working hours, you can't dictate their hours, holidays, sickness.

You need either an agreement in writing or like above terms and conditions which can be put into an agreement.

These are not legal documents as they aren't contract just an agreement between both parties.

Yeah I mean what happens if one of the booth renters has a baby and can no longer do those hours.. do they then get notice?

Personally I think this is a having your cake and eating it scenario and you think it ok as the booth renters are happy with it.. and I think very thin ice is being trodden.
Please seek legal advice NOT from an accountant. If you get in trouble it's you that has to pay it.. NOT the accountant.

 

[Zoey92]

I may be a soft touch but where im from self employment in a salon, You pay the salon owner each week or month & thats that really, everything else is down to the worker (stock,books,tax,NI etc)
If you're paying them a percentage it's not really self employment.

 

[salonfrog]

Hi

I would revisit the agreement that was made between the National Hair Federation and HMRC (it's one of the sticky threads) and just see that you are covering yourself. At first glance, it looks like you are open to attack from HMRC with your current arrangement of giving commission; and this could be very expensive if uncovered.

 

[Lpolky]

Thankyou all this is why I wanted to ask. It's all a learning curve for me and if I want to be stepping up to a bigger premises I need to get my head around it all and get it right.
I have always declared absolutely everything and all goes through my books but prob not doing myself any favours.

A friend has just told me about FSB website https://www.fsb.org.uk so will be getting in touch with them to make sure I am doing everything fairly and correct,

Thanks again xx

 

[shellie11]

Hi, yes there is contracts that you can use. If you are a member of the nhf you can download the contract from the website, if not you can just pay and order one from them. I have a salon and have a self employed stylist on a percentage basis, if you have this contract in place it clearly defines their position in your salon x

 

[Lpolky]

Thanks Shellie,

So how does your self employed stylist work? Do you pay her from the takings or does she pay you the percentage? Do her clients go through your till or direct to her?

 

[Eloise86]

https://www.hji.co.uk/business/legal-advice-for-self-employed-hairdressers/

 

[shellie11]

She has her own insurance, we on a percentage basis with me supplying products. At the end of each day we split her daily takings. I write her an invoice each week for the amount I have taken. In terms of them choosing there own hours this can be a difficult one, we had an arrangement that she would work the full salon hours of the working day that SHE had chosen to work. Over time she would want to leave as soon as she had finished her last client. I had made it clear from day one that if she wanted to work random hours I would require a set rent.......however they are entitled to work whatever they wish to work, this has caused quite a few problems for me. If they are on percentage and decide to work only in the morning you have a chair left all afternoon earning no money, sometimes better to have a fixed rate so your covered whatever they decide to do. It's a difficult decision and pros and cons on both sides.

 

[Eloise86]

Shellie, could you not just tell her that if she wants to do that then you'll have to charge her a day or half day rental?

 

[Lpolky]

All starting to make a bit more sense Thankyou. So there is no way I can do self employed with a hairdresser in the salon where the clients pay their bills direct to the salon as I'm not allowed to pay the self employed hairdresser?

Would rather not have it separate to confuse the clients and want it to work as one salon. Think I will have to go down the employee route

 

[BannerPenguin]

All starting to make a bit more sense Thankyou. So there is no way I can do self employed with a hairdresser in the salon where the clients pay their bills direct to the salon as I'm not allowed to pay the self employed hairdresser?

Would rather not have it separate to confuse the clients and want it to work as one salon. Think I will have to go down the employee route

You're correct. Just think of it like when you rent your house or shop, it's the same principle, you're merely just a landlord. The only finances that should be on your books are what they're paying as rent wether than be a percentage or set rate.

By the sounds of it employment sounds right if you want control but it's a big commitment as you have to pay holiday pay, sick pay, maternity leave should it happen, tax, NI, enrol them into a pension scheme and you have to pay at least minimum wage. Most people self employed, don't want to be employed officially as they earn less. You only need to have a look through this forum to see how people have been looking for over a year for a decent member of staff.

 

[salonfrog]

All starting to make a bit more sense Thankyou. So there is no way I can do self employed with a hairdresser in the salon where the clients pay their bills direct to the salon as I'm not allowed to pay the self employed hairdresser?

Would rather not have it separate to confuse the clients and want it to work as one salon. Think I will have to go down the employee route

As part of the Salon's contract with their self employed stylists, it can collect the monies at its POS (paid by ALL clients) on behalf of its self employed stylists; and then remit these monies back to each of them at a later date. It would at the same time issue its self employed stylists an invoice for the associated rent. So you could do arrange it that way.

Collecting and banking cash on behalf of its renters becomes just another service it offers (in the same way it provides water or lighting to them).

Just make sure you're in line with those NHF/HMRC guidelines.