By Catherine Ngo Content writer, presenter and podcaster

The Fair Work Commission (FWC) recently dealt with a dispute in which a worker claimed unfair dismissal and had to prove his employee status first. Despite having an ABN and issuing invoices for payment, the worker contended his work arrangements showed he was an employee rather than an independent contractor.

The case turned on several key questions about modern working relationships: Does having an ABN automatically make someone a contractor? Can an individual who provides services to various businesses simultaneously maintain employee status?

Background

Group fitness instructor Mr F started teaching classes at a Melbourne gym in August 2020. Working at multiple gyms is a common practice in the fitness industry. Mr F taught at the gym’s four other centres.

No written contract existed between the parties. The manager at the time instructed Mr. F to submit invoices for payment. The gym referred to regular instructors like him as "permanent instructors" to differentiate them from infrequent instructors.

For approximately four years, Mr F conducted three weekly classes. The gym paid fixed rates: $40 for 30-minute classes, $55 for 45-minute classes, and $60 for hour-long classes, with superannuation included. Despite the gym's claim that these rates were negotiable, evidence indicated that they remained consistent across instructors.

Employee or independent contractor?

To demonstrate his status as an employee, Mr. F highlighted specific aspects of his working relationship. He emphasised that the gym prescribed the days, times, and duration of work and the type of activities to be performed. Furthermore, he required the work to be carried out personally and could not subconstruct or delegate it to anyone else.

Additionally, Mr. F noted that the gym's equipment was primarily used for classes, and the participants in these classes were considered customers of the gym, not his personal clients. This distinction played a role in his assertion of employee status.

The gym maintained that its instructors operate as independent contractors. It emphasised that it does not dictate how or to whom they provide their services. Instead, instructors are paid a premium rate to teach a set class. The gym argued that instructors are free to accept or decline classes as they wish.

However, this arrangement was called into question when Mr F gave notice that he would be reducing his classes due to opportunities at another gym. In response, the gym suggested that he drop all his remaining classes, stating they needed instructors who could fully commit to the timetable.

Limited authority over the work

Upon close examination of the working relationship, the Commission observed that once the workers were assigned to classes based on their availability, they had limited control over their work. The worker was obligated to deliver the assigned classes at the specified times outlined in the timetable.

The Commission further identified significant control exerted by the gym over the worker's activities. The worker was not involved in promoting or advertising the classes and received a fixed pay rate without the ability to negotiate. Additionally, the class participants were considered customers of the gym, not the worker.

The Commission's decision was based on evaluating several factors. They concluded that while the worker had an ABN, issued invoices for payment, and paid for their own taxes and insurance, these factors were outweighed by the level of control exerted by the gym during the work. Additionally, they found that the worker was operating within the gym's business, not their own. Overall, the Commission determined that Mr F was an employee.

Read the judgement

Franklin v The Trustee For World Gym Melbourne Investment Unit Trust - [2024] FWC 3045