Is Your Staff Member an Employee or an Independent Contractor?

Bek Pink
Sep 19
5 min read

Spoiler alert: The answer is probably employee!

Hey there, fitness business owner! If you run classes—dance, yoga, cheerleading, gymnastics, pilates, F45, whatever—this question has probably kept you up at least once: should I treat this person as an employee or a contractor? It’s not just about fairness or what feels right—it’s about compliance, risk, and making sure your business is solid.

Here’s what you need to know, especially under the Fitness Industry Award (MA000094) and the Australian Taxation Office (ATO) rules, so you can make the right call.

The Basics: What the Law Says

The Fitness Industry Award (MA000094), even if you don't feel like your business is strictly 'fitness', covers many roles in class-based businesses: fitness centres, class teachers, yoga/pilates/dance/cheer coaches, etc. Those employees are covered by minimum pay rates, superannuation, leave, penalties, overtime, etc.

While historically there has been a lot of grey area, these days the ATO is really clear: whether someone is an “employee” or “independent contractor” depends on the actual nature of the working relationship—not only what you call them or whether or not they send an invoice.

Key considerations include the consistency of their work (are they teaching the same classes, every week?), control (do you tell them to teach Jazz on a Monday at 4:45 pm, or is it their call?), how integrated they are into your business, whether they supply tools, and whether they can delegate. Also while what the contract says is important a ruling would also consider how the relationship is performed in practice, not just what is on paper.

Our View: When You Should Treat Staff as Employees

When should someone be classified (and paid) as an employee in class-based businesses? Almost always!

If they work regular, recurring shifts—for example: same class times each week, same studio, attendance required regularly.
If they are part of your roster, subject to your scheduling, following your directions about how class is run (dress, content, timing, etc).
If they rely on your business for most of their income (not doing a handful of gigs here & there).
If they don’t have freedom to subcontract.
If they are paid hourly or via salary, i.e.: for their time, rather than for “results only”.

Because under the Fitness Award, employees have entitlements: minimum wages, overtime/penalties, superannuation, leave, etc. Mis-classifying someone who is in effect an employee as a contractor can lead to back pay, super liabilities, and possibly penalties.

When Independent Contractor Agreements Might Be More Appropriate

Yes, there are scenarios where contracting works—and can legally make sense—but they have to be set up carefully. This arrangement is more likely to be appropriate when:

The worker is doing one-off jobs (e.g. a guest workshop teacher, a competition adjudicator, maybe an external specialist) rather than being part of the regular class schedule.
They invoice you, they have their own business structure (maybe tools, insurance, working for multiple clients), more control over how/when they work, and the ability to subcontract in their arrangements.

Even then, watch out. Just calling someone a “contractor” is not enough if all the signs point to them behaving like an employee. The ATO will look at both the contract and how the work is actually done.

Legal Must-Haves If You Use Independent Contractors

If you do decide to engage someone as an independent contractor, make sure you’re doing the right thing:

Put the agreement in writing: Include clear terms about what’s expected, when, how much, what each party is responsible for. Don’t rely purely on “verbal understandings.” The recent ATO guidance gives weight to what the written contract says.
Superannuation obligations: Just because someone is a ‘contractor’ doesn’t automatically mean no super. If the contractor is functioning like an employee (including working set hours, being under your direction, etc.), you most likely have super obligations. I have found that superannuation is often the root of the ''employer vs contactor'' debate, these days the ATO is clear that in some contractor arrangements, super may still need to be paid.
Insurance and liability: Make sure both you and them have appropriate insurance (public liability, professional indemnity, etc). If something goes wrong with a class, your business can still be exposed. It's also smart to check whether the contractor’s insurance covers them and your studio operations when they work for you.
Pay & tax compliance: Withholding PAYG where required, and reporting on payments are your responsibility regardless of employee status.

The Gap & That “Missing Link”

Here’s where things get tricky, especially for class-based businesses:

Many people working in dance, yoga, cheer etc have multiple employers or multiple income streams (e.g. teaching in multiple studios, doing workshops, even having an unrelated 'day job', etc). Sometimes being classed as a contractor (for some parts of their work) gives them benefits—especially when they are taxed on secondary income differently, or when overlapping roles complicate super/tax.
In my opinion, the law hasn’t always kept up with the messy reality of the class-based industries and this sometimes leaves room for ambiguity. But the recent ATO rulings (and High Court decisions) are tightening things up. The old ways of loosely calling someone a “contractor” with no real basis are under closer scrutiny.

Why “I Didn’t Know” Won’t Protect You in 2025

Let’s be real: this isn’t a new conversation. Over the past decade, studios and class-businesses have grappled with this issue. The covid-pandemic especially forced scrutiny, with many freelance/contract arrangements being closely examined.

In 2025, the ATO has made clear in rulings and in guidance that ignorance is not an excuse. If you are found to have misclassified someone, you can be liable for past amounts (wages, super, penalties). So it’s far better to be proactive and get this right now.

Action Steps: What You Should Do Today

If you run a class-based business, here are steps you can take (so you don’t end up in a messy legal mess):

Review all your regular class teachers, instructors etc. Ask: Do they work consistent shifts? Are they under your control? If yes, treat them as employees.
If you have contracts that say “contractor,” read them carefully. Do they reflect reality? Are they written well? Are people behaving according to them?
Get legal or accounting advice if you’re unsure. It’s an investment.
Make sure all your employees get correct pay under the correct Award (in this case, usually the Fitness Award) and check classification, penalties, overtime, leave, etc.
If engaging contractors, ensure you meet your super obligations, insurance, tax reporting etc.
Document everything. Keep agreements, contracts, proof of insurance etc ready in case someone (or ATO or Fair Work) asks.

Final Thought

Running a studio or class-based business is hugely rewarding, but it also comes with responsibility. When your staff are regular, consistent parts of what you do, they should be paid and treated as employees. Leave independent contracting to those special, irregular gigs where it genuinely fits.

Because at the end of the day, protecting your people (and your business) matters. It keeps things fair, reduces risk, and lets you sleep better at night.

Do you need to switch contractors to employees or update your staff agreements?

At Bek of All Trades, I support small business owners in making sense of legislation and rules. If you have independent contractors that you need to convert to employees or you would like to review your current agreements but you are not sure where to start, let’s chat! Side note: This article is talking about teachers / instructors / coaches. When it comes to performers, it's a completely different kettle of fish ... but I can help with that too!

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