Recently a Hairdressers Journal reader wrote in requesting information on the rights of stylists in the Western Cape with regard to their salary structures as she and some other salon owners had become concerned with the high number of salons being opened by unqualified persons and stylist rights being infringed upon. Specific reference was made to staff contracts and deductions from staff salaries.
In this article I will take a look at some of the basic minimum requirements with regards to staff contracts, commission calculations as well as salary deductions. Note that the bargaining council points raised in this article related to the Western Cape and may vary from council to council.
The Basic Conditions of Employment act states that an employer must supply an employee, when the employee commences employment, with the following particulars in writing—
(a) the full name and address of the employer; (b) the name and occupation of the employee, or a brief description of the work for which the employee is employed; (c) the place of work, and, where the employee is required or permitted to work at various places, an indication of this; (d) the date on which the employment began; (e) the employee’s ordinary hours of work and days of work; (f) the employee’s wage or the rate and method of calculating wages; (g) the rate of pay for overtime work; (h) any other cash payments that the employee is entitled to; (i) any payment in kind that the employee is entitled to and the value of the payment in kind; (j) how frequently remuneration will be paid; (k) any deductions to be made from the employee’s remuneration; (l) the leave to which the employee is entitled; (m) the period of notice required to terminate employment, or if employment is for a specified period, the date when employment is to terminate; (n) a description of any council or sectoral determination which covers the employer’s business; (o) any period of employment with a previous employer that counts towards the employee’s period of employment; (p) a list of any other documents that form part of the contract of employment, indicating a place that is reasonably accessible to the employee where a copy of each may be obtained.
Therefore, everything that is agreed upon in terms of the conditions of employment must be supplied to the stylist in writing, including how their salary will be calculated as well as the deductions that will be taken off. It’s also important to note that any changes to the original agreement must be done in writing and the employee given a copy of the changes.
Non-qualified persons opening salons
The current minimum requirement is that at least one person in the salon must be qualified and therefore it is not mandatory that the person opening the salon is qualified. If this were the case then it would be mean that business investors who see opportunity in opening a hair salon would need to be qualified stylists. However, they will need to ensure that they hire at least one qualified stylist to work within the salon.
In the Western Cape there is a minimum monthly gross salary that stylists must earn. Newly-qualified stylists (in the first 12 months) must earn a minimum of R3078 per month, qualified stylists (after 12 months) R4376 per month and non-qualified stylists (no trade test) R2723 per month.
These figures are Gross Salary figures, which mean that basic deductions like UIF may apply (with the current tax tables these figures fall below the taxable level for PAYE).
Therefore, no matter what commission structure the stylist is on they must earn a minimum gross salary of the abovementioned amounts or, put another way, they earn whichever is higher, their commission structure or the minimum salary.
A note with regard to non-qualified stylists is that after 4yrs experience they can apply to do a trade test. The reason why their salaries are lower than newly-qualified stylists is in order to incentivise them to get qualified. One may argue that they are experienced and earn sufficient salary in their current position as a non-qualified but they will experience problems if they move salons as their earnings will most likely suffer due to the minimum amount they are required to earn being so low. For more information on this contact the Western Cape Bargaining Council for more details on Section 28.
Commissions & Deductions
When it comes to commission structures employers and stylists may be as creative as they like and set up whatever commission structure they want, as long as the stylist does not earn less than the minimum required amounts specified above.
Commission structures can be very simple or very complicated. A common structure would be to set a target that the stylist must first generate before they start earning commission, for example, they might need to double their basic salary and once they have done this they will start earning sa straight commission percentage.
However, you may have a sliding scale that says R0-R10 000 they earn 0%, R10 001-R15000 they earn 20%, R15001-R20000 they earn 25% and so on. This is a little more complicated to manage but offers the stylist an incentive to generate more turnover and their earnings will increase at a higher rate than a straight commission structure.
I believe that the type of commission structure depends on the person and the environment as some prefer more aggressive structures with a slightly higher risk if they don’t perform and others prefer a more moderate structure with less earning potential but less risk if they don’t perform.
There are certain deductions that are not mandatory but will come about as a result of the negotiation between the owner and the stylist with regard to their salary structure.
These include things like Docket Fees (which go towards general expenses like washing hair etc.), Stock Deductions (which cover stock used during services) and even things like Credit Card fees (which are deducted whenever a client pays by credit card as there is a cost involved in taking credit card payments).
If a salon is VAT registered they may also deduct VAT from turnover before calculating commission as VAT is not revenue earned by the salon but rather money that must be passed on to SARS.
The same requirements apply in negotiated deductions, namely, they must be stipulated on the staff contract or letter of employment; calculation of deductions must be available for the staff to see and; the stylist must earn at least the minimum required salary as already stated.
If you are a stylist then there are certain deductions that the employer is required to take off by law and these include things like PAYE and UIF. These can’t be negotiated in a contract and it is the responsibility of the employer to pay these over to SARS each month on your behalf. As proof that they have deducted the money from you they are required to provide you with an IRP5 at the end of a tax period. The IRP5 is your saving grace when it comes to doing your own personal tax return each year because without it you will not be able to very easily prove to SARS that you have already paid tax on your earnings for the year.
The employer is also required to submit a reconciliation to SARS that indicates the entire stylist PAYE that they have deducted for the respective tax period so that by the time you do your submission SARS should already have a record of what tax your employer has deducted and paid over.
Council Fees are also mandatory and must be deducted by the employer. The employer must contribute the equivalent of what they deduct from the stylist and pay this over to the council.
Other types of deductions
Other types of deductions include damages/losses where it has been proven that it is the fault of the stylist. The employer must follow fair procedure and give the stylist an opportunity to present why they believe they are not responsible for the damages. Also the employer cannot deduct more than one quarter of the stylist’s salary in any given month. Therefore it may take a number of months for the stylist to pay back the full damages.
Loan repayments and staff purchases can also be deducted from salaries and this is similar to what takes place with garnishing orders.
Overpayments on previous salaries are another example of deductions that can be taken off a salary and do not require consultation with the stylist.
There are certain minimum standards that must be met with regards to the Basic Conditions of Employment Act and on top of this the Western Cape Bargaining Council also has some basic requirements. Thereafter it is between the employer and the stylist to come up with a structure between themselves and as long as it is agreed upon upfront and kept transparent throughout the working relationship then all requirements should be met.
However, it is apparent that the simpler things are the better as stylists are left less confused and asking less questions.
Thanks to Nizar Davids at the Bargaining Council for the Hairdressing Trade (CAPE PENINSULA) for his input on these matters.