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Hair & Beauty Australia Industry Association

Contractor and Employee – What is the Difference?

Posted October 10, 2016

Independent Contractor or Employee?

It is important for salon owners in the hair and beauty industry to understand the differences between an employee and an independent contractor to avoid any legal repercussions. There are many different factors to consider and before a salon owner considers a contractor arrangement such as ‘Rent-A-Chair’,  they should familiarise themselves with the aspects which classifies a person as an independent contractor.

What is an Independent Contractor?

Independent contractors are individuals who run their own business on a salon’s premises through an arrangement with a salon owner. Usually, an independent contractor will negotiate their own fees and working arrangements which are generally outlined in a contract between the salon and the contractor. Hair & Beauty Australia advises that an independent contractor agreement should be drawn up by a solicitor to ensure that the contract meets all the necessary legal requirements.

Rent-A-Chair Arrangements?

The hair and beauty industry often has independent contractor arrangements such as ‘Rent-A-Chair’ arrangements. A ‘Rent-A-Chair’ arrangement generally involves an agreement in which a person occupies a small portion of the salon in order to service their own clients. The income which is generated is generally split between the person and the salon owner through an agreement made via a contract. The person is treated as an individual contractor and generally responsible for their own insurance, tax and supplying an Australian Business Number (ABN).

What are the Legal Ramifications of a ‘Rent-A-Chair’ Arrangement?

If the ‘Rent-A-Chair’ arrangement is not set up properly the person renting a chair may be deemed as an employee and then the salon owner can become liable for all employment related entitlements.

Hair & Beauty Australia advises all salon owners to exercise caution when entering into a ‘Rent-A-Chair’ arrangement to ensure they do not treat independent contractors as employees.

For further clarification on your obligations as a salon owner call HABA on 02 9221 9911, or visit www.hairandbeautyaustralia.com.au

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