Beauty and hair businesses saw the National Living Wage (NLW) rise by 2.2% from April 2021, and for the first time, the NLW must now be paid to those salon employees aged 23 and over (previously, the NLW was paid to those aged 25 and over).
This rise takes hourly pay for employees on the NLW from £8.72 to £8.91 from 1st April 2021.
Based on a 35-hour week this is a £345 increase in annual earnings from April 2021 (£8.91) versus the 2019/20 NLW rate (£8.72).
The new National Minimum Wage (NMW) rates increased at the same time so remember to change all your salon or clinic payroll.
In this blog I run through:
- the increased rates from 1 April 2021
- how much hair and beauty apprentices must be paid
- how to avoid the traps which can lead to large fines and your salon being publicly ‘named and shamed’.
What’s the difference between National Minimum Wage & 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 23 are entitled to. I’ve set out the new NMW rates from 1 April 2021 below.
The National Living Wage
This applies to your salon employees who are aged 23 and over. The new NLW rates from 1 April 2021 are set out below.
So what’s the bottom line for your salon or clinic from April 2021?
National Minimum Wage & Living Wage rates from 1st April 2021 for beauty and hair industry employees:
#1. New National Minimum & Living Wage Rates 1st April 2021
Increases from 1st April 2021 (note that those over the age of 23 must now be paid the NLW):
|Old rate 1st April 2020||New rate 1st April 2021|
|NLW: 23 and over||£8.72||£8.91|
|NMW: 21 to 22||£8.20||£8.36|
|NMW: 18 to 20||£6.45||£6.56|
|NMW: Under 18||£4.55||£4.62|
This equates to:
- A 2.2% increase from £8.72 to £8.91 in the NLW
- A 2.0% increase from £8.20 to £8.36 for 21-22-year-olds
- A 1.7% increase from £6.45 to £6.56 for 18-20-year-olds
- A 1.5% increase from £4.55 to £4.62 for under-18s
- A 3.6% increase from £4.15 to £4.30 for salon apprentices
Salons need to keep a note of team member birthdays as an employee may become entitled to a higher rate of pay on their birthday during the year.
For example, an employee who becomes 21 years old in October 2021 will be entitled to an increase in NMW from £6.56 to £8.36 per hour from their birthday, as they will move up an age bracket (see above table).
I suggest you set up calendar alerts well in advance so you can flag changes to your payroll supplier.
#2. Paying hair & beauty apprentices the right amount
It is very easy to get this wrong and find your hair or beauty salon on the government’s ‘named and shamed’ list. You may also be fined up to £20,000 for each employee’s wages that you get wrong.
Salon apprentices are entitled to the apprentice rate (£4.30 from 1st April 2021) 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 National Minimum Wage for their age if they:
- 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 the apprenticeship rate of £4.30 (from 01/04/21).
A salon apprentice aged 22 who has completed the first year of their apprenticeship is entitled to the National Minimum Wage of £8.36 (from 01/04/21).
So think through the financial implications if you take on a slightly older apprentice.
This higher rate applies even if you still refer to them as ‘an apprentice’.
#3. What’s the National 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 counts as ‘working hours’ for hair & beauty employees?
Don’t get caught out.
Many failures to pay the correct NMW or NLW are because the salon owner hasn’t understood the exact hours ‘worked’ and taken those extra minutes and hours into account.
When calculating the number of hours worked for NMW and NLW you must include all time spent:
At the salon and required to be working
This includes any downtime when your beauty or hair employees don’t have clients, even if they are on standby in the team room or in a nearby coffee shop (but don’t include rest breaks that are taken).
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.
Travelling on salon business
Travelling in connection with work, including travelling from one work assignment to another. If you have employees visiting hair and beauty clients at home watch out for this one. Or if your team travel between locations within your salon group.
Pay NMW and NLW for training
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
- when away from work on rest breaks, holidays, sick leave or maternity leave
- when taking industrial action
#5. Exemptions to the National Minimum & Living Wage
I only have one salon employee. Surely the NMW and NLW rates don’t apply to me?
There are no exemptions, so even if you only have one employee in your hair or beauty business the law says you must pay the relevant National Minimum or Living Wage.
Hair and beauty workers including employees, commission workers, agency workers, part-time workers and casual workers must receive the relevant National Minimum or Living Wage.
Those not entitled…
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
#6. What payments count towards the National Minimum & 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 suggestion schemes.
Deductions which you make from a salon employee’s pay or payments made by your employee to you for items or expenses must not take their pay below the NLW or NMW they are entitled to. This includes safety clothing, team uniforms and tools (such as scissors) needed for the job.
#7. Penalties for salons failing to pay the correct National Minimum or Living 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/NLW 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 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 salons
The government regularly names and shames businesses that have failed to pay the NMW or NLW, including beauty and hair businesses.
Having your salon or clinic called out in the local media for underpaying your team is never going to be good for business, your brand or your local reputation.
Check your salon payroll
Avoid an admin mix up. Check your payroll and pay rates now and make sure all your staff are being paid the correct wages.
Don’t forget: for the first time, the NLW must now be paid to those aged 23 and over (previously, the NLW was paid to those aged 25 and over).