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What you need to know about contracts and sole traders

October 2, 2020

We know a lot of senior stylists are ready to spread their wings, but starting a fully-fledged all on your own business is a serious commitment.  Becoming a sole trader seems perfect, right? You get to make your own rules and hours, look after your clientele, and be your own boss, without the commitment of managing staff or running a salon.

Unfortunately, a lot of sole traders fall victim to ‘Sham Contracting’ under Rent-A-Chair agreements. This is a big problem in heaps of industries across Australia. Sham Contracting is when an employer signs an agreement with someone they call an independent contractor, so they don’t have to pay out full benefits, like leave, or superannuation, but then treats them like an employee.

Does this sound familiar? Here are some warning signs that you might be in a sham contract:

1: You have set days/hours. If you must be in the salon on certain days or hours, then you might be an employee. There may be an agreement on how many hours you need to work, but you can’t be told exactly when you need to show up. The same goes for leave – you should be able to take time off when you need it without permission.

2: You don’t have control over your clients. If you’re forced to use the salon’s booking system, and other people are managing bookings on your behalf, that’s not very ‘independent’. You may share some stuff, like EFTPOS or PayWave machines, but you should be free to manage your own system, payments, and clientele if you want to.

3: You’re told how to work. The point of being a sole trader is to run your own biz! If someone else is giving you work advice, disciplining you, sending you a text or email about your performance, or behaviour, that’s a big red flag. They’re not your manager! ]

Sham contracting is unlawful, and employers caught doing it can get a pretty big fines. If you’re an independent contractor on paper, but feel more like a regular staff member at work, you need to speak out.

At HSA, our legal team can review any contract you’ve signed (or are about to sign!) and advise if you’re under a sham contract, or if there’s anything unlawful that you need to be careful about. Reach out today if you need advice or support at work.

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