NHBF reveals self-employment survey results

NHBF reveals self-employment survey results

Prompted by a string of high-profile cases involving companies such as Uber, Deliveroo and Pimlico Plumbers, the government commissioned a ‘Review of Modern Working Practices’ to investigate how self-employment works in practice, especially for those working in the ‘gig’ economy where freelance workers are allocated to a client via an App and paid per assignment or ‘gig’.

While companies operating this business model are not yet common within the hair and beauty industry, NHBF research in 2016 revealed that self-employment in all forms is well-established with 48% of people working in hairdressing and barbering and 57% of people working in beauty classed as self-employed.

The NHBF responded to the government’s review after carrying out a survey of over 500 hair and beauty business owners, self-employed hairdressers, barbers and beauty therapists, including those working in salons or barbershops and mobile workers.

Business owners value full control

The survey revealed that over half of the business owners employed their staff, saying that ‘having full control over their business’ was the most important reason for rejecting self-employment. Many said they were committed to investing in their teams, developing a strong team spirit and providing stability for their staff and for their business.

Around a quarter had only self-employed people working in their salons or barbershops, while another quarter had a mix of employees and the self-employed. The main reason for those salons and barbershops choosing to work with self-employed people was the savings to be made on holiday pay, maternity/ paternity leave and pensions. The sheer volume of red tape involved for small businesses taking on employees is also a significant factor in deciding not to take on employees.

Self-employed appreciate freedom

They also flagged up that those who are self-employed prefer that model because of the freedom it gives them, a view which was backed up by the survey findings. Mobile workers were motivated by the flexibility to fit round other commitments (50%), whereas the self-employed working in a salon or barbershop were more strongly motivated by the belief that they could earn more through self-employment than they could as an employee (40%).

The vast majority of self-employed respondents (69%) therefore said they were ‘absolutely fine with being self-employed, it works well for me’. Nevertheless, when asked what worried them most about being self-employed, their main concerns were not getting paid sick leave (31%) and not having a pension scheme (24%). A significant minority of the self-employed (15%), especially those working in salons or barbershops, felt they were ‘treated like an employee but with none of the benefits.’

Businesses with employees feel disadvantaged

It was clear that salon and barbershop owners with employees felt disadvantaged compared to those working with self-employed people. The key reasons were summed up by one salon owner who said, ‘employing staff makes it harder for us to operate and offer competitive pricing as wages, taxes, pensions and holidays have to be taken into account.’ VAT was a particularly sore point, because self-employed people are unlikely to go over the VAT threshold of £85,000 and therefore do not have to charge VAT, whereas a salon automatically has to add 20% VAT onto the price of their services, making it harder for them to compete.

NHBF calls for better protection for the self-employed

Chief executive Hilary Hall comments,

“Self-employment is a well-established model within the hairdressing, barbering and beauty industry and, done properly, it can work well for everyone involved. We want to see greater protection for the self-employed against a few unscrupulous business owners who use self-employment simply to reduce business costs, while treating their workers as employees but without any of the rights and benefits of being an employee.

We also want to see a fairer tax system for those business owners who employ their staff. They are burdened not only by the considerable additional costs of employment, but also penalised by the current tax system, both of which put them at a competitive disadvantage compared to those who choose not to take on employees.”