Salon commission structures in Australia: how to pay stylists fairly (and profitably)
Commission sounds simple until you run it next to the award. Here's how Australian salons actually structure pay, what the common percentages look like, and the mistake that turns a generous scheme into an underpayment claim.
Wemu Team
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Every salon owner eventually asks the same question: should I pay my stylists commission, or an hourly wage? The honest answer is that in Australia the question is slightly wrong, because for employees the award sets a floor that commission has to clear regardless. What you are really choosing is how to structure incentive on top of an obligation.
This guide covers the structures Australian salons actually use, the numbers behind them, and the compliance trap that catches well-meaning owners.
Start here, not with a percentage
Employees in hair and beauty are generally covered by the Hair and Beauty Industry Award 2020. It sets minimum hourly rates, penalty rates for weekends and evenings, junior rates, overtime and allowances, and those minimums are reviewed annually. Any commission scheme must leave the employee no worse off than the award for the hours they actually worked. Check current rates on the Fair Work Ombudsman's pay calculator, and get advice before you design a scheme.
The four structures you will see
1. Hourly only
The employee is paid their award rate for hours worked, with no commission. Simple, predictable, entirely compliant when rates are right, and the easiest to budget. Its weakness is motivational: a stylist earns the same whether the chair is full or empty, and retail sales get no reward at all.
2. Hourly plus service commission
The most common structure in Australia. The stylist receives their award hourly rate as a guaranteed base, plus a percentage of the service revenue they personally generate — often once they pass a threshold. This keeps you compliant by construction, because the base never drops below the award, while still rewarding a busy chair.
3. Hourly plus retail commission
Usually layered on top of the above. Retail commission is normally a higher percentage than service commission, because the salon's margin on product is different and because retail is the thing stylists most often neglect. It is also the easiest incentive to measure honestly, since a product either sold or it did not.
4. Rent a chair
Not a pay structure at all: the stylist is an independent operator renting space from you, with their own clients, pricing and ABN. It is a fundamentally different business model with its own legal tests, and getting it wrong is expensive. We cover it properly in rent a chair vs employing stylists.
What the percentages typically look like
| Structure | Typical range | When it fits |
|---|---|---|
| Service commission above a threshold | 10% – 20% of service revenue over target | Established stylists with a following; the threshold protects your wage cost |
| Service commission from dollar one | 5% – 12% of service revenue | Simpler to explain; the lower rate reflects that no threshold is applied |
| Retail commission | 10% – 20% of retail sales | Almost always worth paying — retail is high-margin and easily ignored |
| Team or salon-wide bonus | 1% – 5% shared | Rewards front desk and assistants who influence revenue they don't personally ring up |
The threshold makes the maths work
A common approach is to set a weekly service target of roughly two to three times the stylist's wage cost, and pay commission only above it. That way commission is funded by revenue you were not otherwise receiving, rather than eroding the margin that pays your rent.
The mistake that becomes an underpayment claim
The classic error is paying commission instead of the award rather than on top of it. A stylist on a straight percentage might earn well in a busy month and fall below their minimum entitlement in a quiet one — including penalty rates for the Saturday they worked. The shortfall is recoverable, often with interest and penalties, and years later.
Two habits prevent it: guarantee the award-based wage as the floor and treat commission as an addition, and keep accurate records of hours worked, not just revenue generated. If you cannot show the hours, you cannot show you met the minimum. Reporting those wages correctly is a separate obligation — see our STP Phase 2 guide.
Making it run without a spreadsheet
Commission schemes fail in practice for a boring reason: the calculation is manual, so it happens late, gets argued about, and eventually gets simplified into something nobody is happy with. The fix is to have the numbers accumulate as the work happens.
- Set the commission rule once per stylist — fixed rate or percentage, per service and per product
- Let clock-ins build the timesheet, so hours and revenue sit side by side
- Show each stylist their own numbers in their app, so payday holds no surprises
- Export the pay run when it is time, instead of rebuilding it every fortnight
- Roster to demand rather than habit — see how to build a staff roster
Stop calculating commission by hand
Wemu tracks hours, service revenue and retail sales per stylist and calculates commission automatically. A$49 per location per month, unlimited staff.
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