The Fair Work Commission (FWC) was recently invited to consider a jurisdictional objection in a matter[1] involving a personal trainer who used the premises of a gym to conduct his own personal training business pursuant to a written Personal Training Agreement (PT Agreement). The PT Agreement required the personal trainer to pay sums of money for renting the premises to conduct his business. To offset the required rent, the personal trainer was offered the ability to perform tasks (under the direction of the gym) such as handling emails, hiring other personal trainers, organising events and meetings and maintaining the premises.
The personal trainer alleged the entity owning the gym was his employer (and that he was unfairly dismissed) notwithstanding the undertaking of his own personal training business within the gym.
The gym owner relied upon the written agreement which contained the usual terms for a contractor agreement – clauses specifying the personal trainer was conducting its own business and that nothing in the agreement would create a relationship of employment, partnership or agency. The FWC appeared to caution against reliance on a written agreement, stating the gym owner’s “enthusiastic embrace of the PT Agreement being the only evidence, and the ‘killer’ evidence which proves the [personal trainer] was a contractor, is understandable, but misconceived and ignores the principles to be applied”.
In determining whether the personal trainer was an employee or a contractor, the FWC applied (consistent with existing precedent) a multi-factorial examination of his relationship with the gym. As noted in an earlier decision[2] by the Full Bench of the FWC (which dealt with Uber Eats), the purpose of such an examination is to obtain “an overall picture from the accumulation of detail” to determine the true nature of the relationship between two parties.
By way of a summary, the following key factors were applied in the FWC’s decision making:
- Control – The PT Agreement referred to the additional work that could be performed by the personal trainer as ‘additional duties’ resulting in the FWC concluding the ‘duties’ were separate to the personal trainer’s own business. The additional duties were subject to the direction of the gym and the personal trainer was rostered by the gym to perform the additional duties. In practical terms, the ability for the gym to control hours of work, the place of work and the duties performed were suggestive of an employment relationship (notwithstanding there was no obligation on the personal trainer to perform the additional duties).
- Benefit – The personal trainer’s clients were required to become members of the gym (and be permitted to access the gym) in order to become clients of the personal trainer. Furthermore, the personal trainer was required by the PT Agreement to provide training sessions for any new members of the gym (regardless of whether they were the personal trainer’s clients). Whilst the personal trainer may have received some benefit from the arrangement, there was a direct financial benefit to the gym suggestive of an employment relationship.
- Payment terms – For the additional duties, the personal trainer was paid on an hourly basis for the completion of an assorted number of tasks per shift as opposed to payment upon the completion of specific tasks. The payment of periodic wages without reference to tasks or projects was suggestive of an employment relationship.
- Delegation – The personal trainer was personally required to perform the additional duties under the direction of the gym. The personal trainer could not delegate the work involved in responding to email inquiries on behalf of the gym, handling telephone inquiries, or housekeeping work. In circumstances where the work cannot be delegated (or there is no genuine entitlement to delegate work), it suggested there was an employment relationship as opposed to a contractor relationship.
Whilst the FWC is occasionally invited to consider whether a worker is an employee or a contractor, this matter was somewhat unusual given it recognised that an employment and independent contractor relationship can co-exist and be ‘dual faceted’. To be clear, whether a worker is an independent contractor does not necessarily exclude the possibility they may be an employee at the same time.
As a result the FWC found that the trainer also was treated and utilised as an employee for part of his job – this meant that the jurisdictional objection was denied and the unfair dismissal claim could proceed.
Implications for employers
Employers must continue to be mindful of their engagement of contractors (particularly where they are working under similar terms and conditions as employees). We wish to caution employers against adopting a false sense of security on the basis their engagement of contractors in a certain manner if commonplace within their industry. Of course, we also caution against an employer treating a worker as a contractor merely because of a written agreement or because invoices and ABN’s are used to pay the worker. Decisions of the FWC make it clear the conduct of the parties is a critical consideration in determining whether a worker is an employee or a contractor.
The decision is most applicable to industries where workers are engaged as a contractor on the understanding the contractor can make use of a business’ tools and equipment for the contractor’s own business. Business which may potentially be at risk include gyms, vehicle repair shops, fabrication workshops, laboratories or other businesses with specialised (and often cost-prohibitive) plant and equipment.
Employers who operate such businesses are welcome to contact NB Lawyers, lawyers for employers for an obligation free consultation to discuss how we can assist you with any concerns you may have on +61 (07) 3876 5111.
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NB Lawyers – Lawyers for Employers
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About the Authors
Jonathan Mamaril leads a team of handpicked experts in the areas of employment law and commercial law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.
Dan Chen is a lawyer at NB Lawyers, the lawyers for employers, and specialises in employment law. Dan is passionate about assisting business owners, small and large understand their obligations under Australia’s complex workplace relations system.
[1] Christopher Bond v Doxi Pty Ltd T/A Jetts Wanneroo [2020] FWC 2538.
[2] Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd T/A Uber Eats [2020] FWCFB 1698.