Here is a quick guide to Rent-a-Chair arrangements for your salon. Essential reading for all you hairdressers, stylists and beauty therapists out there!
You’re a salon owner. You want passive income (who doesn’t?!) and you have a spare chair. You’ve decided to get a freelancer in to fill the gap and line your pockets. Sounds good, right?
Slow down Lovely.
Before you start interviewing, let’s make sure you know what you’re getting yourself into and ensure you do it right.
What is a rent-a-chair arrangement?
As the name suggests, a Rent-A-Chair Arrangement is an arrangement whereby a self-employed hairdresser (or other stylist/therapist) rents a chair in an established salon. They are an independent contractor and effectively run their own business alongside you and your salon staff.
The pros – they’re not employed so aren’t entitled to sick leave, annual leave, maternity leave, superannuation or any other employment benefits. In fact, they pay you to be in your salon.
The cons – they’re running their own business which is effectively competing with your own, on your premises. Also, you have little control over their behaviour. If they have a big night and don’t rock up for work the next day, you could be left to turn away their customers. Not amazing for your salon’s reputation.
A sham-contracting arrangement is when an employer attempts to disguise an employment relationship as an independent contracting arrangement. This is usually done to avoid paying employee entitlements.
The Fair Work Ombudsman’s Office conducts inspections into rent-a-chair arrangements on a regular basis to make sure that they aren’t in fact sham-contracting arrangements. If you are convicted of sham-contracting, you could be hit with a fine of up to $12,600 as well as back-payment of wages and entitlements that you should have been paying your ‘employee’ from the start.
It’s essential that your Rent A Chair Agreement makes it crystal clear that this is a true independent contractor arrangement. To do this you need a water tight contract.
What type of agreement should you use?
These arrangements can take the form of a licence or a lease. Chat to your lawyer to get the right agreement properly drawn up to suit your specific circumstances. Yes, you will have to pay a lawyer, but the price will be a lot less than that fine if Fair Work come knocking. It’ll also help to protect your business (think restraint clause to protect you from client-poaching etc.). Trust me, it’s a good investment.
What should be covered in your agreement?
These are some of the main things you’ll want included in your agreement:
- Money – what fees will the independent contractor pay you? A weekly/monthly rental or licence fee, or a percentage of her takings? Maybe a combination of both?
- Permitted use – what exactly is the contractor allowed to do at your salon?
Length of agreement – month to month or fixed period?
- Hours of work and access – can they work whenever they want or only during your business’ opening hours?
- Tools and products – do they bring their own or use yours?
- Reception, telephone, client booking system, EFTPOS, apprentices – responsible for their own or use yours?
- What does the ‘chair’ include? Appropriate workstation including mirror, counter, plug points access to sinks and storeroom etc.
- Common areas use – rules around the contractor’s use of sinks, kitchen, bathroom etc.
- Charges for cleaning, electricity and other utilities – absorbed into the contractor’s weekly/monthly fee or paid on top?
- Insurance – what insurances do you require the contractor to have and maintain?
- Risk – specify liability for damage and injury caused by the contractor
- Termination – how can either of you terminate the agreement?
If you’re considering entering into a rent-a-chair agreement, feel free to call us for a free 15 min chat. You can book by clicking here.