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Renting a chair - good or bad for salon owners?
Pria Uys of the EOHCB discusses the concept of Rent-a-chair and whether
this is a good or bad idea for salon owners...
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In the last while, many salons have introduced the Rent-a-Chair concept into their stores and the question is: Is this a good move or not?
This article serves to provide some clarity on the issues surrounding this situation to allow for salon owners to make informed decisions.
Are you allowed to sub lease on your own lease agreement?
The majority of development owners, especially in malls and other larger developments do not allow sub-leasing. Should the owners of the building discover that this is ongoing, they have the right to fine you or take civil action.
If your contract stipulates that you cannot sub lease and you do so, you have breached your contractual obligation and the development owner has the right to take you to court. You must bear in mind that the owner of a large development will always have the money to pursue civil actions.
Who pays the rent and answers to the development owner?
As the main leaseholder, it is your responsibility to pay all the rent at the end of the month. If your rent-a-chairs do not have the money to pay their portion then this will have serious financial implications because the development owners will summons you.
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If there are damages inflicted on the premises then the development owner will hold the main leaseholder responsible and there may be further complications with regard to the insurance.
Registration of individual businesses and SARS implications
According to South African law, every person who operates as a business owner must have a registered business. This includes individuals operating as sole proprietors. As the main party to the contract, a development owner expects you to ensure that the business being conducted in their space is entirely legal.
Should an incident occur where an inspector lodges a complaint to the development owners, they have the right to lay a claim against you in a civil court for breach of contractual duties, as the main leaseholder on the contract. Such an inspector could be a SARS inspector.
All working individuals in South Africa must have a tax number. If a SARS inspector discovers otherwise, they could lay fraud charges and once again, the liability first falls on the main leaseholder. This is especially common in salons where the rent-a-chairs operate in pure cash to avoid paying taxes.
The Bargaining Council also has responsibilities to report unlawful activities to bodies such as SARS. If an agent from the Council inspects a salon and discovers such activities; they are obligated to report the mailer. In fact, the Bargaining Council has begun to request all registration papers from salon owners during such inspections and the request is now noted on the invoices sent out monthly.
The Bargaining Council
If a salon is operating as a rent-a-chair store, then every single one of the people renting these spaces needs to be registered with the Bargaining Council. If any employ staff, then each of them will be registered as individual employers. This means that every single rent- a-space must receive an individual invoice from the Bargaining Council. One also needs to bear in mind that fees are payable by individuals renting spaces in salons so they cannot avoid the Bargaining Council fees.
Further complications ensue where two or more rent-a-chairs have employed an operator and they are both paying the salary. It can become a dispute when it comes to contributions towards the Pension or Provident Fund, Bargaining Council etc. Dispute resolution also becomes more complicated as do the duties and responsibilities of this operator to each employer.
A salon owner can never discipline a rent- a-chair. This individual may come and go as they please, they must have full access to your store and they can make their own rules, including whether they want to go on training or not. The only way that the main leaseholder can remove them from the premises would be to terminate the agreement and to try and evict them. If complications ensue then the parties would have to settle the matter in a civil court.
For any business to run successfully there must be a chain of command. A chain of command cannot exist if there is more than one commander.
Source: SA Hairdressers Journal - www.sahair.co.za |
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