Hairdresser Chair Rental (Service Company) Agreement
In many businesses, particularly those associated with hair and beauty, chair rental agreements, whereby the hairdresser or therapist is independent (i.e. not an employee of the salon) and pays a fee to a salon in order to use the salon's premises and equipment, are popular.
This document is compliant with the GDPR (General Data Protection Regulation).
This Hairdresser (Chair Rental (Service Company) Agreement is designed for use by a salon engaging an independent hairdresser’s personal service company where the salon and the service company enter into an agreement under which the salon permits the personal service company to use the equipment and premises of the salon.
This template aims to help reduce the risk that in reality, the hairdresser carrying out the work through his/her personal service company is deemed to be an employee rather than a self-employed contractor.
Nevertheless, he might still be treated by HMRC, a tribunal, or any other body as an employee, and legislation (such as IR35, or other rules) might still apply in a way which impacts the hairdresser’s or his/her company’s legal, tax or NIC position. Whether that is so will depend not just on what is contained in this contract but also on all other circumstances. Those circumstances may include the way in which the contract is implemented, and all other arrangements between the company, the salon and the hairdresser.
HMRC provides some guidance on its website about employment, self-employment, and IR35. Its decisions on these points are often based on a “balancing exercise” in which it gives weightings to various factors. However, neither the HMRC guidance nor case law are sufficiently precise to enable anyone to predict how in any particular case the “balancing exercise” would be carried out or what HMRC’s conclusion would be about that particular case. For that reason we recommend that, before you decide to use or adapt this document, you and the hairdresser take professional advice in relation to your particular circumstances as to any impact on the service company and the hairdresser of employment law, tax, and NIC.
A carefully worded agreement ensuring the independence of the personal service company is still a key starting point. Unlike an employee, the company is an independent contractor which is free to provide any suitably qualified person (rather than only the hairdresser) to carry out the work at the salon, it is free to determine when and how work is completed (subject of course to the salon’s requirements), and it is free to take on clients in addition to the salon.
Under the terms of this agreement payment to the salon takes the form of a standard fee plus a percentage of the hairdresser’s service company’s takings. Optional clauses in this contract also allow for the hairdresser’s service company to provide services to the salon’s own clients. In this case, the clients would pay money directly to the salon with the salon then paying a percentage to the hairdresser’s service company.
The template is written in such a way that there is a clear distinction between the hairdresser’s service company’s clients and the salon’s clients. In addition, the hairdresser’s service company is prevented from soliciting the salon’s clients. Optional elements within the contract allow this provision to be ‘softened’ or ‘toughened’ as appropriate.
This agreement is suitable for use by a salon only where the hairdresser is operating through a personal service company but we have also included, in the IR35 and Self-employed subfolder another version of this contract, the Self Employed Hairdresser (Chair Rental) Agreement where the hairdresser enters into the agreement with the salon as a self-employed individual rather than through a personal service company.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
This Hairdresser Chair Rental (Service Company) Agreement contains the following clauses:
1. Definitions and Interpretation
2. The Hairdresser’s Services
3. Nature of the Services
4. Status of the Hairdresser
6. Hairdresser’s Indemnity
7. Salon’s Indemnity
10. Data Protection
11. Nature of the Agreement
14. Alternative Dispute Resolution
15. Law and Jurisdiction
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