How should a UK salon structure stylist commission?

Commission is the part of salon pay that causes the most arguments, and most of those arguments start with a structure that was agreed verbally years ago and never written down. Picking a structure deliberately, and testing it on your own numbers first, saves a lot of awkward conversations later.

This guide is for employed stylists. Self-employed and chair-rental stylists are a different arrangement, covered briefly near the end.

What are the main salon commission structures?

Nearly every UK salon uses one of these three, sometimes with retail commission added on top.

None of them is right for every salon. A new stylist building a column usually needs the security of a basic. A senior stylist with a full diary often prefers a structure where a busy month is visibly rewarded.

How do you work out which structure you can afford? A worked example

Take one stylist and write down four figures from your own records:

• service takings in a busy month,
• service takings in a quiet month,
• retail sales in a typical month,
• the hours they are contracted to work in a month.

Say the busy month is £7,500, the quiet month is £5,000, retail is £500 and hours are 160. Here are three structures, run on both months, before retail:

The busy month looks similar across all three. The quiet month is where they split. Structures A and C pay well under the National Living Wage for 160 hours, so the salon has to top the stylist up anyway, and the percentage in brackets understates what the month really cost. Structure B is safe for the stylist but costs the salon 44% of takings in a slow month.

Add retail at, say, 10%, and the stylist earns another £50 in every structure. Keeping it separate means you can see who is selling, which a single blended rate hides.

Now replace the example figures with yours. The question to answer is simple: across a busy and a quiet month, what share of service takings goes on this stylist's pay, and can the salon live with the worse of the two?

What goes wrong with tiered commission?

Tiers are popular because they reward a full column, but one detail decides whether they work: does the higher rate apply only to takings above the threshold, or to everything once the threshold is passed?

In the example above, 35% applies only to the slice above £5,000. If instead the whole month jumped to 35% once the stylist passed £5,000, a stylist on £4,990 would earn £1,247.50 and one on £5,010 would earn £1,753.50. That is £506 more pay for £20 more takings. Cliff edges like that encourage moving appointments between months and leave the stylist who falls just short feeling cheated. If you use tiers, apply each rate to its own slice and write that down.

Should commission come off takings before or after product cost?

Some salons pay commission on gross service takings. Others take the cost of the colour used off first, on the basis that a stylist who overmixes should not be paid on product that went down the sink.

Either can be fair, but the second only works if the cost is measured. In the busy month above, if £600 of colour is deducted first under structure A, commission falls from £2,250 to £2,070. A stylist will accept that £180 if they can see what was used on each client. They will not accept a flat amount knocked off every colour service. Weighing the bowl to the gram, which is what ColorLab does, turns the deduction into a record rather than a guess, and our colour cost calculator shows what a typical head of colour costs you before you decide.

Does commission have to meet minimum wage?

Yes, for employed stylists. GOV.UK guidance on calculating the minimum wage says sales commission and other performance-related pay count towards minimum wage pay, but tips, gratuities and service charges do not. The check is made over each pay reference period, which is never longer than a month. A great December does not make up for a thin January.

Holiday pay is the other rule salons often miss. GOV.UK guidance on holiday pay says at least 4 weeks of statutory holiday for regular-hours workers must be paid at the normal rate of pay, and the normal rate includes commission. A stylist paid mostly in commission should not see their pay collapse when they take a week off.

This is a practical summary, not legal or tax advice. Check the current minimum wage rates for each stylist's age on GOV.UK, and ask an accountant or employment adviser if you are unsure.

What about self-employed and chair-rental stylists?

Self-employed stylists are usually not paid commission by the salon at all. They keep their own takings and pay the salon rent, or a share, for the chair. Whether someone is genuinely self-employed depends on how they actually work, not on what the contract calls them, and HMRC has a tool to check employment status. Many salons run both arrangements side by side, which is exactly where a spreadsheet starts to struggle.

What should your salon software do for you?

Whatever structure you pick, it has to be calculated the same way every month without someone rebuilding it by hand. Things worth checking in any system:

• Can you set a service rate, a separate retail rate, and override the rate for particular service categories?
• Does it support tiers, and are they applied slice by slice?
• Is commission worked out from the same diary and till the desk uses, not an export?
• Can employed commission and self-employed settlement be handled side by side?

In Daviana Performance, commission levels combine a flat service rate, tiered retail commission and category overrides, and a running commission ledger builds itself from every sale, with employed rates and self-employed settlement side by side. Stylists see their own numbers as the month goes, which is why we think live commission tracking matters as much as the structure itself.

Questions salon owners ask