Payroll for salons and spas

Base salary and the wage rule

The base is paid as basic, DA, HRA and a special allowance. Salons that kept basic tiny to hold PF down now have to rework it. The wage rule in the Code on Wages sets basic plus DA at a minimum of half of total remuneration, and any excess in the allowances is counted back into wages for PF, gratuity and bonus. Commission and product incentives sit on top of the base as monthly earnings. For staff within the ESI wage limit, check the ESI rules, since many junior stylists and helpers fall inside it.

Commission slabs, product incentives and tips

Calculate these in your salon software or on a sheet the manager signs, then enter them as incentive inputs in Direct Payroll by the cut-off date. Set that cut-off early, such as the 2nd, because each month's wages have to reach staff by the 7th of the month after; see the payment timelines.

• Service commission: a percentage of service revenue above a monthly target
• Product incentive: a percentage of retail product sales
• Package incentive: for memberships and prepaid packages sold
• Tips: card tips passed on through payroll as your policy states
• Bridal incentive: a fixed amount per bridal booking

Worked example: a senior stylist's month

Deepak's fixed gross is ₹25,000. The salon pays 10 percent commission on his service revenue above ₹1,00,000 a month and 5 percent on retail products he sells. In December his service revenue is ₹1,80,000 and his product sales ₹24,000. Commission is 10 percent of ₹80,000, which is ₹8,000, and the product incentive is 5 percent of ₹24,000, which is ₹1,200. He took one day of leave without pay, and the salon uses a fixed 30-day basis, so ₹25,000 divided by 30, or ₹833.33, is deducted. His earnings are ₹25,000 less ₹833.33 plus ₹8,000 plus ₹1,200, which is ₹33,366.67.

Advances and recoveries

Salary advances are common in salons, especially before festivals and trips home. Record every advance, agree the instalments in writing, and recover them as advance recovery deductions so each payslip shows what remains. Keep every recovery within the permitted deductions, and never deduct for a damaged product or a client complaint without a fair inquiry first.

How to set it up in ZeniaHR

1. Fix each stylist's base as a monthly gross, and set Basic and HRA percentages so basic plus DA is half or more.
2. Write down the commission formula and the monthly cut-off date for commission sheets.
3. Enter commission, product incentives and tips as incentive inputs, and advances as advance recovery deductions.
4. In the Deduction policy, set loss of pay on a fixed 30-day month.
5. Finalize the run, approve the payment batch and share payslip PDFs on the mobile app.

Read more about payroll in ZeniaHR.

Roles this applies to

Frequently asked questions