10 October 2019

The government has recently closed a consultation about setting up a new ‘Single Enforcement Body’ for employment rights which would be responsible for enforcing laws on the National Living Wage/National Minimum Wage and the rights of employees and workers, including holiday pay and sick pay.  In its response to the consultation, the NHF/NBF called for the new body to do far more to take effective enforcement action against salons and individuals operating in the black economy.

The ‘black economy’ is a term which covers failing to declare earnings, failing to pay tax or VAT, through to illegal activities such as money laundering or modern slavery. In a recent survey, almost 80% of NHF/NBF Members said the black economy was a very big problem (45%) or a big problem (33%) in the hair and beauty sector.  Warning signs that a business may not be completely legitimate included unrealistically low prices, ‘cash only’ businesses and premises which are always open but with very few customers.

"We want to see the authorities targeting businesses like these which break all the rules and yet appear to get away with it.”

Hilary Hall, NHF/NBF chief executive said, “Our Members feel that enforcement is too heavily focussed on employers who make small mistakes when calculating minimum wages. We hear from Members that they’re competing with ‘cash in hand’ businesses, businesses which employ illegal workers or even appear to be fronts for drug dealing. We want to see the authorities targeting businesses like these which break all the rules and yet appear to get away with it.”

She added, “Members also highlighted the financial disadvantages for salons who employ their staff when competing with salons who don’t have employees.  Salons who employ their staff face steep rises in employment-related costs, with both Conservative and Labour policies expected to raise the National Living Wage to the highest in the world. Salons with only self-employed people working in them avoid employment costs, employer National Insurance Contributions at 13.8% and VAT. The new Single Enforcement Body would only be responsible for protecting the rights of employees and workers - and as self-employed individuals have no rights, they will not be protected.  That’s why are also calling for a clear definition of what counts as ‘genuine self-employment’.”