Have you remembered to adjust your salon, spa or clinic payroll on the 1st April 2018? That’s the day the new National Minimum Wage (NMW) and National Living Wage (NLW) rates come into force in the UK.
In this blog I set out the increased rates, explain what hair and beauty apprentices must be paid and show you how to avoid the traps which can lead to your business being publicly ‘named and shamed’.
What’s the difference between the National Minimum Wage and the National Living Wage?
What is the difference between the two? And which should you be paying your salon team?
This depends on a person’s age and whether they are an apprentice. Let me explain:
 The National Minimum Wage (NMW)
Is the minimum pay per hour most workers aged under 25 are entitled to. The new NMW rates from 1 April 2018 are set out below.
 The National Living Wage
This only applies to your salon employees who are aged 25 and over. The new NLW rates from 1 April 2018 are set out below.
So what’s the bottom line for your salon or clinic?
At-a-glance: Minimum Wage & Living Wage rates from 1st April 2018…
1. New Minimum & Living Wage Rates 1st April 2018
Increases from 1st April 2018:
|New rate 1 April 2018||Old rate 1 April 2017|
|25 and over||£7.83||£7.50|
|21 to 24||£7.38||£7.05|
|18 to 20||£5.90||£5.60|
2. Paying hair & beauty apprentices the right Minimum Wage
It is very easy to get this wrong and find your salon on the government’s ‘named and shamed’ list.
Salon apprentices are entitled to the apprentice rate (£3.70 from 1st April 2018) 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 affect your salon or spa business?
Here’s an example:
A salon apprentice aged 22 in the first year of their apprenticeship is entitled to a minimum hourly rate of £3.70 (from 01/04/18).
A salon apprentice aged 22 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £7.38 (from 01/04/18).
Remember: This higher rate applies even if you still refer to them as ‘an apprentice’.
3. What is the Minimum Wage for salon Saturday assistants?
Employees must be at least school leaving age (last Friday in June of the school year they turn 16) to get the National Minimum Wage. Anyone under this age is not entitled to the NMW.
4. What count as ‘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 deliveries, 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. Or if your team travel between locations within your salon group.
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.
6. What payments count towards the Minimum and Living Wage?
By law the following don’t count towards the NMW or NLW:
- Tips regardless of whether they are paid via your payroll or given direct to your team by clients (but your salon employees do have to pay tax on them).
- Pension payments paid to your team.
- Rewards under staff suggestions schemes.
Remember: 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.
Salons that discover they’ve paid an employee 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. If convicted businesses must pay back the unpaid minimum wage to the employee plus penalties to HMRC.
Naming and Shaming campaign
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.
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.