What is a Beauty Room Rental Agreement?
A Beauty Room Rental Agreement is a contract to rent out a room in your beauty salon/spa to a freelancer, such as a beauty therapist, masseuse or cosmetic practitioner.
The freelancer is self-employed and runs their own business. As an independent contractor, they have their own clients, set their own hours and provide their own equipment. They pay a Licence Fee to the salon in exchange for use of the premises.
Do I need a contract?
Yes, we definitely recommend you use a proper contract if you’re renting out a room!
It’s really important to manage a room rental properly so that you protect your salon, your clients and your reputation.
Fair Work conducts inspections into Rent A Room arrangements on a regular basis to make sure that they aren’t sham contracting arrangements. Sham contracting is hiring someone as a contractor when they should be an employee. If you’re convicted of sham contracting, you could be hit with a fine of up to $12,600.
Setting out clear guidelines in a contract will make things easier for you, and your freelancers.
We recommend you also download and keep a copy of this fact sheet from Fair Work before you get started so you understand the key differences between an independent contractor and an employee.
What does the Beauty Room Rental Agreement cover?
Our Beauty Room Rental Agreement template includes everything you need:
★ Licence Fees
★ Term of Agreement (e.g. 1 year)
★ Permitted Use
★ Access and Hours of Work
★ Operating Expenses
★ Client Contacts
★ Dispute Resolution
Can I choose if I want to charge the Licence Fee as a daily amount, or a percentage of revenue?
Yes, you can! We have included both options in the contract. You just need to choose the one you want to use.
How do payments get processed?
A freelancer should always have their own payment facilities to take payments directly (such as a Square Card Reader or EFTPOS machine).
From a legal point of view, it’s important to have separate bank accounts and payment records.
Can I customise the inclusions?
Yes you can. We have included a checkbox format for inclusions so you can mark what is included in your agreement and add any extras if you need to.
How do I work out who pays for marketing?
We have included a marketing clause in the contract.
Normally the renter is responsible for marketing their own business, rather than relying on the salon’s existing client database.
How do I make sure the renter doesn’t underpay me?
We have included a clause in the contract for record-keeping. The renter is required to keep accurate records of all sales.
You can request to see a record of sales (e.g. receipts) to make sure they are paying you the right amount. If they have been underpaying you, you can demand payment of the unpaid amounts.
If they fail to pay, you are within your rights to terminate the beauty room rental agreement.
Can I use this template for a Rent A Chair arrangement?
This template is suitable for room rental in beauty salons, nail salons, tanning salons, hair salons, day spas, massage parlours and tattoo studios.
If you want to rent out a chair or booth in your salon or barber shop, we have a separate Rent A Chair Agreement template for sale in our Shop.
Differences between an employee and a contractor
Whether you are an employee or a contractor depends on many different factors.
Independent contractors generally:
🔹 work for themselves and are their own boss
🔹 are free to accept or refuse work
🔹 control their own working times
🔹 provide their own tools and equipment
🔸 work in someone else’s business
🔸 are subject to controls on how, where and when they do their work
🔸 are paid a wage
🔸 receive employee entitlements, such as sick and annual leave
Any other requirements?
Contractors are self-employed individuals or companies. To legally operate as a contractor in Australia you will need to register for a Tax File Number (TFN), Australian Business Number (ABN) and in certain circumstances you will need to register for Goods and Services Tax (GST).
Still not sure about the difference?
We recommend you visit the Fair Work Ombudsman website to read more. If you’re an employer, visit the ATO’s website to learn the tax and super obligations for both employees and contractors, and read more about the differences between them.
What is sham contracting?
A sham contracting arrangement is when an employer attempts to disguise an employment relationship as an independent contracting arrangement. This is usually done to avoid paying employee entitlements. Even if you make an innocent mistake, you can still be fined!
If you’re convicted of sham contracting, you could be hit with a fine of up to $12,600 as well as back-payment of wages and entitlements.
This agreement makes it crystal clear that you have a true Independent Contractor arrangement.