Hair Salon Staff Self Employed

Hair Salon Staff Self Employed

Didn't find your answer?

I have been approached to act for a hair salon who has 5 workers none of whom are currently on the payroll.

One is admin and the others are senior stylists (so work independently with no supervision) and are paid a day rate. They are under no obligation to work, give notice and fully control their own day and bookings albeit through the salon admin. There are currently no written contracts. They usually each work 2 days per week but are free to do more/less. The salon owner cannot and does not question them if they want time off or to leave early etc. and they are free to work elsewhere. Each worker has repeat clients but my guess is that they perceive that they are clients of the salon rather than the individual (although they would probably follow the individual if they left). If a worker does not turn up clients may use another worker in the salon who is paid by the salon rather than the missing worker.

I have had initial discussions with the client regarding this and that my engagement would not include reviewing the workforce for employment status.

I have pointed the client to HMRC ‘Check employment status for tax’ and he says they have come back as ‘self-employed’ other than the admin who will go through the payroll going forward which will be run by a third party.

The client has been emailed details of a recent tribunal case

https://assets.publishing.service.gov.uk/media/5f2194eed3bf7f1b13f64f69/...

I have told the client that I cannot give legal opinion as to the status of his workers and that he should consult a solicitor if required.

I have suggested that HMRC’s starting point would be that they are employees and it would be up to him to defend his position.

My question is, ignoring the potential hassle that comes with this, does the fact that I cannot/am unwilling to advise on the employment status prevent me from acting as bookkeeper, VAT, accounts and tax work for the salon owner on the basis that the client is responsible for employment status checks (my engagement letter will specifically refer to the client being responsible for determining the status of workers)?

My thoughts are that, if I have pointed out the risks, this should not prevent me from acting (should I choose to).

 

 

Replies (21)

Please login or register to join the discussion.

avatar
By bernard michael
16th Dec 2020 08:59

Ok to act

Thanks (1)
avatar
By Paul Crowley
16th Dec 2020 10:14

You gave the warnings
Only client and staff know the true facts
But version you write would be a real problem business to operate

I have one client that claims her shop staff are self employed. She will cease trading on 24th, so not a continuing problem

Others I have taken over from did not (according to client)

Thanks (1)
Replying to Paul Crowley:
avatar
By Elgin
16th Dec 2020 10:35

Thanks.

I must admit that I probably tend to worry more on behalf of my clients than they do about their own affairs!

I'm trying to work out were the line has to be drawn in terms of not being able to act.

I suppose that, if my opinion was that they should be treated as employees and the client disagreed, this would be the point at which I should no longer act.

For these grey arears where I cannot possibly know how it operates on a day to day basis I can point out the risks and go with the clients decision.

Thanks (0)
Replying to Paul Crowley:
avatar
By Elgin
16th Dec 2020 10:36

Thanks.

I must admit that I probably tend to worry more on behalf of my clients than they do about their own affairs!

I'm trying to work out were the line has to be drawn in terms of not being able to act.

I suppose that, if my opinion was that they should be treated as employees and the client disagreed, this would be the point at which I should no longer act.

For these grey arears where I cannot possibly know how it operates on a day to day basis I can point out the risks and go with the clients decision.

Thanks (0)
Replying to Elgin:
RLI
By lionofludesch
16th Dec 2020 10:47

Have you used the employment status app yourself ?

If so, what did it say ?

Thanks (0)
Replying to lionofludesch:
avatar
By Elgin
16th Dec 2020 11:19

'Unable to make a determination'.

My question really is whether or not I even need to look at this if it is not part of my engagement i.e. engagement letter specifically says ' you are responsible for determining the employment status of all workers'.

Thanks (0)
Replying to lionofludesch:
avatar
By Elgin
16th Dec 2020 11:19

'Unable to make a determination'.

My question really is whether or not I even need to look at this if it is not part of my engagement i.e. engagement letter specifically says ' you are responsible for determining the employment status of all workers'.

Thanks (0)
Replying to Elgin:
RLI
By lionofludesch
16th Dec 2020 11:24

CWservices6064 wrote:

'Unable to make a determination'.

My question really is whether or not I even need to look at this if it is not part of my engagement i.e. engagement letter specifically says ' you are responsible for determining the employment status of all workers'.

Probably it isn't within your remit.

But that doesn't stop you offering advice to your client.

If you've got a different answer to the client, you've given different responses to him and it might be worthwhile seeing where you differ.

Absolute minimum is for the client to get some written contracts.

Thanks (1)
A Putey FACA
By Arthur Putey
16th Dec 2020 10:45

Think of all the help you could give the stylists with their SEISS claims and SE tax returns!

Thanks (3)
avatar
By bernard michael
16th Dec 2020 11:01

A lot of salons hire out seats, which completes the self employed situation. Perhaps the OP's client should do this

Thanks (1)
avatar
By claudialowe
16th Dec 2020 12:21

The National Hairdressers Federation do a good "rent a chair" template. If your prospective client is a member they could download this and get their s/e stylists to agree to it.

Thanks (1)
Replying to claudialowe:
avatar
By Paul Crowley
16th Dec 2020 12:34

But that is not current position
they apparently work for a daily rate and business makes the sale
business owner apparently does not know if they will turn up at all or for how long

Not to mention of course the tips problem

My opinion is that they are staff merely choosing what hours they work and have no business risk

Thanks (1)
Replying to Paul Crowley:
avatar
By Elgin
16th Dec 2020 13:34

Thomson Reuters Practical Law:

Mutuality of obligation
The obligation on the employer to provide work and the obligation on the employee to accept that work. This is a necessary feature of the relationship between an employer and an employee. For a contract of employment to exist the employer must be obliged to pay and the employee must be obliged to do the work.

Thanks (1)
Replying to Elgin:
avatar
By Paul Crowley
16th Dec 2020 14:54

That is not enough to make them self employed
Zero hours contracts are still employment
MOO not a deciding factor

Thanks (1)
Replying to Paul Crowley:
By SteveHa
16th Dec 2020 16:04

Zero hours contracts don't typically offer the flexibility to simply refuse the work, which the OP indicates the workers in this case can.

I'm on the side of rent a chair and S/E here.

Thanks (1)
Replying to Paul Crowley:
avatar
By Elgin
16th Dec 2020 23:26

Indeed. My point is that it is too grey and fluid an area for me to want to make a ‘judgement’ particularly as I’m not engaged for payroll.

It’s not clear cut and the client has , in my opinion, provided sufficient evidence that there is a position to defend.

My question really is does being aware that there may or may not be an issue in an area of the business that I will specifically mention in my engagement letter as being the clients responsibility mean I cannot act?

I can see that , if I was convinced that he was not operating PAYE when he should be, and refused to act on my advice I should not continue to act.

Thanks (0)
avatar
By RetiredTax
16th Dec 2020 17:49

I don't think there is sufficient info here to make any real judgement on the status position. The case mentioned shows the extent of info needed to be more certain. You do say however that the admin worker is to be accepted as an employee "going forward", perhaps suggesting nothing to be done for the past. If so what then of the potential liability to ( at least) any NIC Ers for earlier periods for this worker? If there should have been some liability, do you (as the agent dealing with the accounts and SA Return) have any MLR matters to consider?
Just a thought!

Thanks (0)
avatar
By Elgin
17th Dec 2020 10:33

I have worked through CEST with the client and Employed or Self Employed in this case and using the CEST tool is down to 'yes' or 'no' to 'Will the worker have to buy equipment before your organisation pays them?'

All workers do indeed have to purchase their own equipment for use in the salon and are free to use whatever they like - not huge value though, does it matter in terms of relying on CEST?

Thanks (0)
avatar
By Greavesandco
17th Dec 2020 14:46

From memory I think that the Hair Dressers Federation have a
HMRC approved scheme with regard to self employed stylists - might be worth your client giving them a ring if they are a member?

Thanks (0)
Routemaster image
By tom123
17th Dec 2020 14:51

Really don't see how an admin person can be so treated?

Thanks (0)
Replying to tom123:
avatar
By Elgin
17th Dec 2020 14:53

The CEST result is for the senior stylists only.

Thanks (0)