Payroll tips for hairdressers, spas and beauty salons

Payroll Tips for Hairdressers and Salons

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As demand for beauty, health and wellness services bounces back, it’s more important than ever to manage payroll correctly, says GroForth CEO Sarah Daly.

Investment in customer care is part and parcel of most beauty, health and wellness businesses. This time last year, when the Central Statistics Office studied the social impact of Covid-19 in Ireland, they found that while 4 out of 5 people felt uncomfortable attending outdoor events, almost half of women (47.3%) and one in three (34.9%) men felt Comfortable or Very Comfortable with the prospect of going to a hairdresser/barber.

A likely reason for this is the measures these businesses took to protect their employees and customers. From limiting the number of clients on their premises at any one time to installing screens and sanitising stations, doing temperature checks and purchasing PPE, you couldn’t but be impressed by the commitment of salon owners. It was visible the minute you walked in the door.

While protecting clients and customers from the risks of Covid-19 is an added expense for beauty, health and wellness business owners, there is also opportunity in society’s heightened interest in wellbeing. However, when planning new or additional services, something to keep in mind is that the Government has recently announced details of  a new law to give all workers the right to paid sick leave. If this becomes mandatory, it will be a significant additional payroll cost for business owners.

 

 

Plans for employers to cover the cost of statutory sick pay

So, what does Government envisage? A Statutory Sick Pay Scheme is to be phased in over a four-year period, starting with three days per year in 2022, rising to five days payable in 2023 and seven days payable in 2024. Employers will eventually cover the cost of 10 sick days per year in 2025.

Habic, the Hair and Beauty Industry Confederation has warned that employers may not be able to absorb the costs of this scheme if it is made mandatory.

“The reasons for this include the high costs of doing business, high rents, lack of disposable or discretionary spending by consumers, competition from the black market, etc. Prices within the industry are compressed, and the opportunity to adjust prices is extremely limited,” Habic stated in a press release issued on 11 June 2021.

 

Re-hiring employees

In the short term, a more immediate concern for beauty, health and wellness businesses is re-hiring employees who were temporarily laid off during lockdown. It is important to check that your employee records are up to date. Inaccuracies need to be corrected promptly as they affect your payroll submission to Revenue. Details of the requirements are available on the Revenue website.

 

Government Covid-19 support schemes

If you availed of any of the Government’s Covid-19 support schemes, another thing to watch out for at the moment is changes or updates. I recently covered some of these in my article on Reopening Ireland. For a comprehensive list of supports, check out the Department of Enterprise, Trade & Employment website.

 

Hourly rate vs salary

If you have a mix of permanent employees who are paid a salary and part-time employees who are paid an hourly rate, getting payroll right each time you run it can be complicated.

I recently highlighted examples of common payroll errors including:

 

  • Employees on incorrect tax bands
  • Incorrect wage payments
  • Delayed payments
  • Unlawful deductions
  • Payslips not issued on time
  • Problems with holiday pay
  • Workers labelled as ‘self employed’ when they should be classed as employees.

 

For part-timers in beauty, health and wellness businesses, hours worked can vary from week to week so it’s important to keep your payroll administrator informed of changes. Don’t assume they know if no one has told them! Calculating holiday entitlements can also be tricky. Inevitably, even if you have good payroll system in place, there will be glitches from time to time so it’s important to review payments regularly and make sure errors have not gone unnoticed. If in doubt, seek advice from a payroll specialist because uncorrected errors can turn into a big problem over time.

 

 

Who runs your payroll?

Three key actions that can help reduce payroll errors in beauty, health and wellness businesses are:

 

  • Make sure that the person who runs your payroll is suitably qualified (For more on this, see my recent post about checking your payroll provider’s qualification)
  • Promptly inform your payroll administrator of hours/rota changes, holiday periods, leavers and joiners, etc. Incorrect or delayed information will affect your payroll submissions to Revenue.
  • Have adequate cover in place for times when your payroll administrator is on leave or absent.

 

 

Payroll considerations when forward planning

 

Analysing what you spend on payroll will help you identify potential savings and highlight areas of your business that could potentially generate additional revenue.

With demand for personal services like beauty, hairdressing, barbering, grooming and spa experiences bouncing back after what has been an extremely difficult time for business owners, it’s more important than ever to look after your team. Happy, well-trained, customer-focused employees who enjoy their work are the key to delivering salon services and spa treatments that entice customers to return.

Paying your staff correctly and on time is one of the basic components of running a successful business. This is why managing payroll efficiently is so important. If you are struggling with payroll, or find that it takes up too much time, GroForth would be delighted to help. Contact me for details of our payroll services for beauty, health and wellness businesses.

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– Sarah 

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