Opening a hair salon — how do you set commission pay, chair rental, and social insurance?

In short: At a hair salon, commission pay must still meet the minimum wage and the guaranteed wage, and the line between chair rental (subcontracting) and employment is decided by the actual working reality, not by the title of the contract. Whether social insurance (health and pension) is compulsory turns on whether you are a corporation or a sole proprietor, and on headcount.

Before opening, we often hear, "Stylists are on commission," or "We use chair rental, so labor law doesn't apply." But commission pay has a floor too, and even with chair rental, if the reality is employment, it is treated as employment. Designing around this leads to later claims for unpaid wages and back premiums. First, pin down where the legal lines are.

Does commission pay alone still have to meet the minimum wage?

Yes. Commission pay (piecework) is subject to two floors at once.

Floor	Basis	Content
Guaranteed wage under piecework	Article 27, Labor Standards Act	Even in a low-output month, guarantee a certain wage in proportion to hours worked
Minimum wage	Article 4(1), Minimum Wage Act	The hourly figure, commission divided by monthly total hours, must be at or above the regional minimum wage

Article 27 of the Labor Standards Act provides that "for a worker used under a piecework or other contract system, the employer must guarantee a certain wage in proportion to hours worked." Even on full commission, once a worker has come in and worked, wages cannot be zero. The amount of the guaranteed wage is not written in the article, but administrative notices require it to be set so that "income not far from ordinary actual earnings is always guaranteed," and since the leave allowance is 60% of average wages or more (Article 26), that level is commonly used as a guide.

The minimum wage is a separate yardstick. However high you set the commission for nominations and technique fees, if the hourly figure falls below the minimum wage in a month with few nominations, the company must pay the shortfall. In practice, a base salary plus commission is often used, so the base covers the minimum wage and the guaranteed wage. Which way to lean the contract and operation is organized together with the line between subcontracting and employment is not decided by the contract.

Where is the line between chair rental / subcontracting and employment drawn?

By the reality of the work, not the title of the contract. Article 9 of the Labor Standards Act defines a "worker" as one who is used by a business and paid wages; the contract name is not part of the test. The framework is the set of factors shown in the Labor Standards Act Study Group report (19 December 1985), which are weighed as a whole.

Point examined	Leans to employment	Leans to chair rental (business operator)
Freedom to refuse requests/instructions	Cannot refuse	Chooses which services to take
Command/supervision, time and place restraint	Attendance and shifts are set	Sets own business days and hours
Fees and customers	Salon sets fees, assigns salon's customers	Own customers, own fees
Nature of pay	Paid for time	Pays chair rent out of sales
Bearing of equipment and tools	Salon provides	Provides some tools themselves

Even if you call it "chair rental," if you build shifts, assign the salon's customers, and direct the work, worker status tends to be recognized. Conversely, if you lend a chair and equipment, and the stylist serves their own customers at their own prices and pays the salon rent based on sales, business-operator character grows stronger. The key is that no single factor decides it; it is a holistic judgment of all the facts. Note that even with chair rental, whoever operates as a beauty salon must file the beauty-salon opening notification and place a managing beautician (Beauticians Act), separate from whether it is employment or subcontracting.

When does social insurance (health and pension) become compulsory at a salon?

First, it divides sharply by corporation versus sole proprietor.

Business form	Health insurance / employees' pension
Corporation (KK, GK, etc.)	Compulsory even with one director (a representative receiving remuneration is also insured)
Sole proprietor	Not compulsory no matter how many staff (the beauty business is not among the statutory applicable industries)

Article 3(3) of the Health Insurance Act and Article 6 of the Employees' Pension Insurance Act make individual workplaces with five or more regular staff compulsorily applicable, but exclude service businesses such as agriculture/forestry/fisheries, restaurants, and barber/beauty businesses from the applicable industries. A barber/beauty business run as a sole proprietorship is not a compulsorily applicable workplace for health/pension even with five or more staff (it can enroll voluntarily as a voluntarily applicable workplace with approval). From October 2022, professional practices (lawyers, tax accountants, Shakai Hoken Roumushi, etc.) were added to the applicable industries, but the beauty business is not included. In 2024, a Ministry expert panel proposed abolishing the excluded industries, but no effective date is set, so confirm the latest with the Japan Pension Service.

If you incorporate and become compulsory, each employee's enrollment is judged by whether prescribed weekly hours and monthly working days are both three-quarters or more of a regular worker's, or, at a specified applicable workplace with 51 or more insured persons, by 20 or more weekly hours and monthly wages of 88,000 yen or more. The counting is summarized in what happens to social insurance when you hire for short hours.

How far do a stylist's workers' accident and employment insurance go?

Labor insurance is judged differently from social insurance.

• Workers' accident insurance: compulsory for any business that uses even one worker, regardless of corporation/sole proprietor and industry, and regardless of nationality, residence status, or hours. On the other hand, the business owner or an officer is not a "worker," so they are outside workers' accident coverage; to cover injury while working, they use the separate special-enrollment scheme for small-business owners. The order of enrollment is in officers get no workers' accident cover — and a one-person company can't even take special enrollment.
• Employment insurance: a worker with 20 or more prescribed weekly hours (10 or more from October 2028) and expected employment of 31 days or more is insured. If a chair-rental stylist is truly a business operator, they are not a worker, so employment and workers' accident insurance do not apply. Here too, the "employment versus business operator" reality test governs.

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In other words, even if you meant to design chair rental / subcontracting, if the reality is judged to be employment, retroactive enrollment and premiums for workers' accident and employment insurance become an issue. Drawing the line at the entrance prevents later retroactivity.

Who should you ask about the salon notification and contracts?

Opening a salon divides by qualification, each a separate contract.

What to do	Main person in charge
Work rules, wage (commission/guaranteed) design, social/labor insurance application and procedures, payroll	Shakai Hoken Roumushi (our office)
Drafting and filing the beauty-salon opening notification (public health center)	Gyoseishoshi
Drafting chair-rental/subcontract agreements, disputes over worker status	Attorney
Tax on opening, tax return	Tax accountant
Brokerage and important-matters explanation for the store property	Real estate agent

The beauty-salon notification can be connected to 四葉行政書士事務所 and the store property to 四葉不動産, but 四葉行政書士事務所 and 四葉不動産 are separate, independent entities from our office, and the Shakai Hoken Roumushi work, the Gyoseishoshi work, and the real estate work are contracted separately (we do not take them on under one engagement). Our office does not receive referral fees. For the structure and equipment standards of the notification, see the beauty-salon opening notification and structure/equipment standards (Gyoseishoshi site); for property-side requirements, see properties usable for a beauty/barber salon and the health-center notification (real estate site).

四葉社会保険労務士事務所 can advise on wage design that meets the guaranteed wage and minimum wage, work rules that reflect the chair-rental/employment split, and the application and procedures of social and labor insurance. Fees are summarized in the fee schedule.

Frequently asked questions

Q. If we go full commission, can we pay nothing in slow months?
A. No. As long as the person is a worker, the guaranteed wage under Article 27 applies, and you must guarantee a certain wage in proportion to hours worked once they come in. Further, if the commission converted to an hourly figure falls below the minimum wage, the company must pay the shortfall. Even on full commission, wages cannot be zero.

Q. If we use chair rental, can we assume no social insurance and no overtime apply?
A. If the chair rental is truly a place-lease to a business operator, labor law and social insurance do not apply. But if the reality shows building shifts, assigning the salon's customers, and directing the work, it is judged as employment regardless of the contract title, and social insurance, overtime, and labor insurance can apply retroactively. The judgment is by reality.

Q. As a sole proprietor salon, do we not enroll in social insurance even with five or more staff?
A. For health and pension, the beauty business is not among the statutory applicable industries, so as a sole proprietorship it is not a compulsorily applicable workplace even with five or more staff. It can enroll voluntarily as a voluntarily applicable workplace with approval. Workers' accident insurance, by contrast, is compulsory once you use even one worker, regardless of industry or headcount.

Q. We put a stylist on subcontract — what about workers' accident insurance?
A. If the reality is a business operator (a true subcontract), they are not a worker, so workers' accident and employment insurance do not apply. Conversely, if the reality is judged to be employment, retroactive enrollment in workers' accident and employment insurance becomes an issue. To cover the owner's own injury while working, consider special enrollment for small-business owners on the premise that you employ workers.

Sources

• Labor Standards Act (Act No. 49 of 1947): Article 9 (definition of worker), Article 26 (leave allowance), Article 27 (guaranteed wage under piecework)
• Minimum Wage Act (Act No. 137 of 1959): Article 4(1) (effect of the minimum wage)
• Labor Standards Act Study Group report "On the criteria for judging a 'worker' under the Labor Standards Act" (19 December 1985), confirmed against the original published by the Ministry of Health, Labour and Welfare
• Level of the guaranteed wage under piecework: not set in the article; a notice requires "income not far from ordinary actual earnings," and the leave allowance (60% or more of average wages) is used as a common guide
• Health Insurance Act (Act No. 70 of 1922) Article 3(3) and Employees' Pension Insurance Act (Act No. 115 of 1954) Article 6: corporations are compulsory even with one director; individual workplaces are compulsory with five or more regular staff, but service businesses such as barber/beauty are excluded from the applicable industries (Japan Pension Service "Applicable workplaces and insured persons," accessed 20 September 2026)
• Addition of professional practices to the applicable industries: effective 1 October 2022 (Japan Pension Service, accessed 20 September 2026). Abolition of the excluded industries is at the proposal stage of a 2024 Ministry expert panel, with no effective date
• Industrial Accident Compensation Insurance Act (Act No. 50 of 1947): compulsory for a business using workers; officers/owners use special enrollment. Employment Insurance Act (Act No. 116 of 1974) Articles 4 and 6: workers with 20 or more weekly hours, etc., are insured; 10 or more from October 2028
• All provisions confirmed on 20 September 2026 via e-Gov and each agency's published materials. Rates, firm-size requirements, and applicable industries are revised, so confirm the latest with the Japan Pension Service and the Ministry of Health, Labour and Welfare

This article does not decide whom to consult. Wage design, work rules, and the application and procedures of social and labor insurance are the work of a Shakai Hoken Roumushi. The beauty-salon notification is a Gyoseishoshi's, contract drafting and worker-status disputes an attorney's, opening tax a tax accountant's, and property brokerage a real estate agent's — each contracted separately as separate, independent entities. Our office does not receive referral fees. For fees when consulting 四葉社会保険労務士事務所, see the fee schedule; for frequently asked questions, see the FAQ.

This article is general information. Individual judgments, such as the appropriateness of commission pay or chair rental and the obligation to enroll in social insurance, are made by a qualified professional after a consultation. Written by Joji Uramatsu (Shakai Hoken Roumushi, Gyoseishoshi, Registered Real Estate Transaction Specialist).