"Chair Rental" Agreements & IR35
Many sectors are popular with self-employed individuals. Particularly in the hair and beauty sector, freelancing is popular with all concerned. Salons and similar establishments have simpler financial obligations and individual hairdressers and therapists benefit from greater flexibility and the ability to build up their own client bases.
In such situations, Chair Rental Agreements are generally used. Under a chair rental agreement, a salon will generally provide a work area and (often) the necessary equipment, supplies and products that are required. In return self-employed hairdressers, beauty therapists and other similar freelancers will pay a standard rental fee plus a share of their earnings. Generally, the individual’s clients will be just that – their clients. In some cases, they may also be free to provide their services to the salon’s clients. In those cases, the payment structure will differ and non-solicitation (sometimes known as ‘non-poaching’) will also become important.
Because the relationship between self-employed individuals and salons may often appear, on the surface at least, to be a simple employer-employee relationship, great care must be taken with respect to income tax, national insurance and related issues. Ensuring that the self-employed individual remains self-employed, particularly in the view of HMRC is important. Of particular relevance are the somewhat notorious IR35 rules.
The key factor when it comes to complying with IR35 is independence. The self-employed individual should retain control of their work, be free to work where they choose, be free to provide substitutes and be free to work for other clients (all within reason given the requirements of a particular job, client, or salon).
Compliance with IR35 can be complex, and seeking the advice of suitably-qualified professionals including accountants is always wise; however a contract containing the appropriate ingredients is a key step.
New Documents for Self-Employed Hair and Beauty Specialists
Under the terms of these all-new Self-Employed Contracts from Simply-Docs, the aim is to ensure that the specialist is treated only as a self-employed individual and is never deemed an employee of a salon.
Under the terms of these new contract templates, payment to the salon takes the form of a standard fee plus a percentage of the self-employed individual’s takings. Optional clauses in the contracts also allow the specialists to provide services to salons’ own clients. In this case, the clients would pay money directly to the salon with the salon then paying a percentage to the hairdresser.
The documents are written in such a way that there is a clear distinction between the individuals’ clients and the salons’ clients. In addition, the specialists are prevented from soliciting the salons’ clients. Optional elements within each contract allow this provision to be ‘softened’ or ‘toughened’ as appropriate.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.