What is a rent a chair agreement?
– What is a Rent-A-Chair Agreement? It’s the agreement to rent a chair? What I am crazy? No, I’m not crazy and it is, it’s an agreement to rent a chair, but in what industry? Well stick around and I’ll tell ya.
Hi everyone, Simon here from the Contract company, contracts that’s what we do all day, every day and sometimes overnight, I know lucky us.
What a Rent-a-Chair Agreement Is
A Rent-A-Chair Agreement, well, it is the document you use if you run a hair salon and you want to rent out one or two of the hairdresser’s chairs.
So what you can do if you run a hairdressing salon, is that you may have say only enough employees, two or three, to mean, two or three chairs. But in fact, you may actually have five chairs or five spots on the floor.
So what you can do is if you’ve only got three spots filled by your employees, you can rent out the other two chairs to independent contractors. That is what a Rent-A-Chair Agreement is.
It is the contract for you as the owner and operator of the salon to rent out those chairs. So two main risks in those agreements.
Risks of a Rent-a-Chair Agreement
One is this concept of sham contracting which is trying to put in place an independent contractor agreement. Or perhaps trying to say that those people renting chairs are independent contractors and not employees.
So if you can try and make them out as to be independent contractors. Then you don’t have to pay their super and any sort of leave entitlements so that sort of thing.
So, you wanna make sure that they are truly independent contractors. Otherwise you can be brought undone by sham contracting laws under the fair work act.
And that basically means that, if they were found to be employees, you actually have to pay their super and leave and all that sort of stuff.
And the other big issue with Rent-A-Chair agreements is that you need to consent sometimes with the landlord. So if you’ve leased out premises and you wanted to allow a third party, one of the Rent-A-Chair people to rent a chair off you, sometimes you’ll need the landlord’s consent to do that.
A Recap on This Arrangement
So just let’s recap there. You can rent out the chair as the salon owner, and you wanna do that under a Rent-A-Chair agreement.
The person who gets the right to operate the chair is then an independent contractor. They basically run their own shop.
So you can do certain things in the agreement, like specify the hours. But you need to be very careful because you don’t want to exert any control.
The more control you as the salon owner have over the person hiring the chair, the more danger you are in as the salon owner.
This is because there is more risk that you are actually found to be an employer and they are your employee. This means you’d have to pay super, leave and that sort of thing.
So as the salon owner, renting out the chair, you wanna be very careful and don’t mandate too much onto those independent contractors.
If you wanna mandate hours, all I’d suggest is you say something like, you know, the salons open from 8:00 AM to 6:00 PM. Then you Mr independent contractor, can cut hair or do whatever at any time between the hours of eight and six, that’s it.
Don’t specify they actually have to be there between eight and six, otherwise, you’re starting to control them. No, no.
The other thing you can do is mandate that the independent contractor brings their own tools around. These include scissors, clippers, all that sort of stuff.
If possible independent contractors, should be, you know, get paid from the client in their own unique way. This means they shouldn’t be necessarily using the till of the salon owner or their systems.
So they could, you know, just accept payment through phones or that sort of thing. That’s not a deal-breaker.
The Risk in Controlling the Contractor
In terms of that sort of risk or a key risk in the salon owner is being found to be an employer. The key risk really is control.
So if the salon owner controls that independent contractor, then they’re more likely to be found an employee.
What else can I tell ya? Oh, so you do need that consent of the landlord sometimes to allow the independent contractor person to hire a chair off you. And yeah, that’s about it.
There are other things you might want to think about. For example, if your salon has a specific arrangement with a certain manufacturer or producer of certain goods. You only use Vidal Sassoon shampoo in your salon and your independent contractor who is hiring one of the chairs uses something else.
Well, that could potentially, you know, create some sort of internal conflict in your salon and with customers.
So you just need to think about a few things like that, but that is basically what a Rent-A-Chair-agreement is.
Anyway, I’m Simon from The Contract company. If you have any questions, feel free to give us a call 180355455 or Simon at contractcompany.com.au I hope that’s clear as mud.