Don’t forget to adjust your salon, spa or clinic payroll on the 1st April 2017 as the new UK National Minimum Wage rates come into force.
At-a-glance: Minimum & Living Wage rates from 1st April 2017…
What is the difference between the National Minimum Wage and the National Living Wage?
- The National Minimum Wage (NMW) is the minimum pay per hour most workers aged under 25 are entitled to. The exact hourly rate payable depends on the worker’s age and whether they are an apprentice. The new NMW rates are set out below.
- The National Living Wage was first introduced last April 2016. It only applies to your salon employees who are aged 25 and over. On 1st April 2017 it rises from £7.20 to £7.50 per hour.
So what’s the bottom line for your salon or clinic?
1. New Minimum & Living Wage Rates from 1st April 2017
Increases from 1st April 2017:
|Current rate||Rate from 1st April 2017|
|25 and over||£7.20||£7.50|
|21 to 24||£6.95||£7.05|
|18 to 20||£5.55||£5.60|
2. Minimum Wage for Hair & Beauty Apprentices from April 2017
Salon apprentices are entitled to the apprentice rate (£3.50 from 1st April 2017) if they’re either:
- aged under 19
- aged 19 or over and in the first year of their apprenticeship
But apprentices are entitled to the Minimum Wage for their age if they both:
- are aged 19 or over
- have completed the first year of their apprenticeship
How does this impact on your hair or beauty business?
Let me give you an example:
A salon apprentice aged 22 in the first year of their apprenticeship is entitled to a minimum hourly rate of £3.50 (from 01/04/17).
A salon apprentice aged 22 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £7.05. This rate applies regardless of whether you still call them an apprentice.
3. Minimum Wage for Saturday Assistants in salons
Workers must be at least school leaving age (last Friday in June of the school year they turn 16) to get the National Minimum Wage.
4. What are NMW ‘working hours’ for hair & beauty employees?
Don’t get caught out.
Many failures to pay the correct minimum wage are because the salon owner hasn’t correctly taken the exact hours ‘worked’ and taken these extra minutes and hours into account…
When calculating the number of hours worked you must include all time spent:
 At work and required to be working
This includes any downtime when your team don’t have clients, even if they are in the team room or on standby in a nearby coffee shop (but don’t include rest breaks that are taken).
 Equipment breakdown
Include any time they are not working because of equipment breakdown, but are kept at the salon.
 At the salon but not ‘working’
For example, waiting to collect goods, meeting someone for work or starting a job.
 Travel for business
Travelling in connection with work, including travelling from one work assignment to another. If you have employees visiting hair & beauty clients at home watch out for this one.
Did you know the hours spent training and travelling to training all have to be counted? It’s easy to make a mistake especially with salon apprentices who have outside training commitments.
These hours don’t count:
- travelling between home and work
- away from work on rest breaks, holidays, sick leave or maternity leave
- on industrial action
5. Exemptions to the Minimum and Living Wage
But I only have one salon employee…
Surely the NMW and NLW don’t apply to me?
There are no exemptions according to the size of business, so even if you only have one employee in your hair or beauty business by law you must pay the relevant minimum wage rate.
There are a number of people who are not entitled to the National Minimum or Living Wage and these include:
- self-employed people
- company directors
All other hair and beauty workers including commission workers, agency workers, part-time workers and casual workers must receive the relevant minimum wage.
Remember: by law, tips do not count towards the National Minimum Wage regardless of whether they are paid via your payroll or given direct to your team by clients (but salon employees do have to pay tax on them)
Deductions: which you make from a salon employee’s pay, or payments made by your employee to you, for items or expenses that are connected with the job reduce pay for minimum wage purposes. This includes safety clothing, team uniforms and tools (such as scissors) needed for the job.
6. Penalties for failing to pay the correct minimum wage
It is your responsibility as the employer to ensure your salon team are paid at least the minimum rate they are entitled to.
The NMW regulations can be confusing, but the penalty for failing to pay is crystal clear:
It’s a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage.
The government has adopted a high profile ‘naming and shaming’ campaign in the media with a record 360 firms publically listed for underpaying their employees in February 2017.
Whilst high street giant Debenhams topped the February list (and hit national headlines) with almost 12,000 underpaid workers, the naming and shaming isn’t restricted to large companies. A significant number of hairdressers and beauty salons appeared on the list.
The list is circulated to both national and local journalists so offending salons can soon find their brand reputation damaged. Given how complex some of the regulations are, especially about apprentices, it is very easy to fall foul of them and find yourself called out in the local press.
In addition to reputation damage, businesses are also forced to pay back the unpaid minimum wage as well as penalties to HMRC.
Employers who discover they’ve paid a worker below the correct minimum wage must pay any arrears immediately. Use HMRC’s National Minimum Wage and National Living Wage calculator to check your salaries and work out arrears.
HMRC has the right to carry out checks at any time and require to see payment records. They can also investigate employers if an employee complains to them.
Check your payroll before 1st April
Avoid an admin mix up. Do your payroll early in April and give yourself plenty of time to check and update. Otherwise you might find your salon splashed across the local press and your clients thinking you’re a tight-fisted boss who doesn’t care.