Here is an extract from a recent decision of the Fair Work Commission dealing with the legal principles in play when determining whether a worker is an employee or contractor, obviously a profound issue when there is a contest about it.
“Consideration
[36] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (CFMMEU)1 and ZG Operations Australia Pty Ltd v Jamsek (ZG Operations)2 are the most recent High Court authorities in relation to the employment relationship.
[37] These cases held that where the parties’ relationship was comprehensively committed to a written contract, the validity of which was not challenged as a sham, and the terms of which were not varied, waived or the subject of an estoppel – the question of whether a person was an employee or an independent contractor is to be resolved solely by a consideration of the terms of the contract and not by reference to performance of the contract.3
[38] Where the terms of the relationship between the parties has not been committed comprehensively to a written agreement, the characterisation of a relationship as being either one of employment or one of principal and independent contractor is to be determined by reference to ‘the totality of the relationship between the parties’.4 In examining the totality of the relationship between the parties, relevant matters include whether the putative employee’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise5 and the existence of a right of control by a putative employer over the activities of the putative employee.6
[39] Other matters which may be relevant in determining the nature of the relationship include the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax and the delegation of work.7
[40] In the current matter, there is no written agreement between the parties about the relationship between them. I am therefore required to examine the totality of the relationship between WGP and Mr Franklin for the purpose of determining whether Mr Franklin was an employee.
Payment arrangements
[41] The issuing of invoices by Mr Franklin and Mr Franklin paying his own tax are matters which tend to suggest that he was not in an employment relationship with WGP. Mr Franklin was not provided with paid annual leave or personal leave which also points towards him being an independent contractor, however these are also features of casual employment. A further matter which is relevant to whether the relationship was one of employment or one of principal and independent contractor is the method of setting pay. WGP claimed in its written material that the rate of pay was open to negotiation, however, this was not supported by the evidence. Mr White conceded during the hearing that the same rates were usually paid to all instructors.
I accept Mr Franklin’s evidence that the rates of pay were not open to negotiation, and I accept Mr Franklin’s submission that this is indicative of an employment relationship, as is the payment of superannuation.
Right of control
[42] The evidence establishes that Mr Franklin was not involved in setting or advertising the timetable and that once Mr Franklin was assigned to classes based on his availability, Mr Franklin had little discretion in the performance of his work. Mr Franklin was required to deliver the specific classes he was allocated at the time(s) stipulated in the timetable. Mr Franklin had no authority to change the time that the classes were delivered or to change the type of class delivered. Mr Franklin was required to follow the choreography of the specific class he was delivering. Mr Franklin was required to advise his manager at WGP if he was not available to deliver a class. All of this points to the existence of a right of control by WGP over the activities of Mr Franklin which is indicative of an employment relationship.
Whether Mr Franklin was working in his own business or WGP’s business
[43] The matters which may show that Mr Franklin was working in his own business were the issuing of invoices by Mr Franklin and Mr Franklin paying his own tax and insurance.
[44] WGP’s contention that Mr Franklin ‘supplied his services to anyone he elected to’ was correct in the sense that there was no barrier to Mr Franklin working for another gym. However,
Mr Franklin was not free to choose which members of WGP to deliver classes to. Rather, Mr Franklin was required by the terms of his verbal contract with WGP to deliver specific classes at specific times to any members who attended those classes, once the timetable was set.
[45] The matters which may show that Mr Franklin was working in WGP’s business are that he had no involvement in promoting or advertising the classes, he received a set pay rate which he could not negotiate, he was expected to deliver classes in accordance with the timetable once it was set, participants in the classes were customers of WGP rather than of Mr Franklin, he was required to advise his manager if he was unavailable to deliver a class and that he used WGP’s premises and equipment to perform the work. I accept Mr Franklin’s evidence in this regard. I note that WGP claimed that fitness instructors will generally supply their own smaller, transportable equipment. Although Mr Franklin agrees that he supplied his own music, there is no evidence which established that he provided any other equipment in performing his work for WGP.
[46] WGP may be correct in submitting that Mr Franklin could ‘accept or decline as many classes as [he] wish(ed) and that ‘instructors work to their own schedules across different businesses and are able to work to their own requirements’. However, it is clear on the evidence that Mr Franklin only had the option of accepting or declining classes during the period when the timetable was being developed. I accept Mr Franklin’s evidence that once the timetable was confirmed, he was expected to deliver the classes allocated to him unless he was unwell, injured or on holidays.
[47] While Mr Franklin was initially responsible for identifying a replacement instructor if he was not available, this responsibility appeared to be taken over by an automated system which allowed other instructors to indicate that they were available once Mr Franklin notified his absence. Mr Franklin may have had a limited ability to delegate his work before the automated system was introduced, however the evidence establishes that this was confined to periods of leave only and after WGP was notified. There is no suggestion that Mr Franklin was free to delegate his class to whoever he wanted to, whenever he wanted. Further, Mr Franklin’s evidence was that when he was absent, he did not receive payment to pass on to the replacement instructor. Rather, the replacement instructor was paid directly by WGP. If Mr Franklin was running his own business, it is likely that WGP would have directed payments to him in respect of each completed class, regardless of who was delivering the class.
[48] Taking all of these matters into account, I find that Mr Franklin was working in WGP’s business and not his own business, when performing work for WGP.
Conclusion
[49] I have considered the totality of the relationship between the parties, including whether Mr Franklin was working in his own business or WGP’s business, the degree of control, the mode of remuneration, the provision and maintenance of equipment, the obligation to work and the hours of work. The matters which potentially indicate a relationship of principal and independent contractor are Mr Franklin having an ABN, issuing an invoice for payment and paying his own tax and for his insurance. However, these matters are outweighed by the degree of control exercised by WGP while Mr Franklin was performing work, and that Mr Franklin was working in WGP’s business not his own. These matters are indicative of an employment relationship. In my view, my findings about all of the relevant considerations demonstrate that Mr Franklin was an employee of WGP during the period from 24 August 2020 until 6 April 2024 for the purpose of the FW Act.
[50] The jurisdictional objection raised by WGP is dismissed and I order accordingly. “
Franklin v The Trustee For World Gym Melbourne Investment Unit Trust [2024] FWC 3045delivered 4 November 2024 per Wright DP