Tegan Barton v Obstinate Group Pty Ltd
[2024] FWC 1529
•17 JUNE 2024
| [2024] FWC 1529 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.365—General protections
Tegan Barton
v
Obstinate Group Pty Ltd
(C2023/8245)
| DEPUTY PRESIDENT BELL | MELBOURNE, 17 JUNE 2024 |
Application to deal with contraventions involving dismissal - jurisdiction objection - no dismissal – personal trainer - not an employee – application dismissed.
The applicant, Ms Tegan Barton, has applied under s 365 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (Commission) to deal with a general protections dispute involving dismissal. As a threshold matter, the respondent, Obstinate Group Pty Ltd, has raised a jurisdictional objection stating that Ms Barton was not an employee but was an independent contractor.
The respondent is an owner of a gymnasium, trading under the name ‘Totally Fit Gym’. Ms Barton is a qualified personal trainer. Broadly, the circumstances in which the dispute arose concerned a sale of the Totally Fit Gym business from the previous owner of the gymnasium business to the respondent. Ms Barton was engaged (to use a neutral term) by the previous owner and, when the new owner took over, continued to perform essentially the same work for the respondent. Within a short period of weeks, however, the new owner wished to make changes to how Ms Barton would work and offered a formal employment contract for aspects of work she had performed to date (which was not accepted). Disputes about the rates of pay proposed led to a breakdown between the parties and the respondent terminated Ms Barton’s engagement. Ms Barton contends those events constituted unlawful adverse action.
As Ms Barton is making an application under s 365 of the Act, a jurisdictional condition of that application is that she was “dismissed”.[1] The term “dismissed” has a meaning defined by s 386 of the Act, which relevantly requires a dismissal in her capacity as an employee, not an independent contractor. This decision solely concerns that issue.
For the reasons that follow, I find that Ms Barton was at all relevant times an independent contractor and, for that reason, her application must be dismissed.
The parties were self-represented, with the respondent being represented by its two directors, Mr Nick Juneja and Mr Mani Sehgal. Ms Barton filed a brief witness statement, and a reply statement, on behalf of herself, together with various attachments. The respondent filed a statement by Mr Juneja, as well as very brief email statements by the Gym Manager, the Company Accountant, a solicitor who assisted with the business acquisition, and the previous owner. No witnesses were cross-examined by the other party.
Factual background and findings
Ms Barton was awarded her Certificate IV in Fitness on 15 January 2020 by the Australian Institute of Personal Trainers. After receiving that qualification, she was employed by Jetts as a Personal Trainer/Assistant Manager up to the beginning of 2022. During that period, Jetts deducted income tax and issued payslips to her.
In January 2022, she commenced work for the previous owner of the Totally Fit Gym.
For the 2022 period until her engagement with the respondent in late October 2023, Ms Barton was engaged under a contract titled “Personal Training Contract”. The Personal Training Contract does not appear to have been drafted with any legal assistance. For example, it does not identify with clarity the employing entity (as opposed to a trading name), although it was signed by a person styled as “Director”, suggesting that there was a corporate entity.
More pertinent to the current dispute, the Personal Training Contract intermingles the inconsistent language of “employment” and engagement as a “Contractor”. Other correspondence in evidence by the former owner also contains inconsistent references to employment and contracting in the same document, further underscoring the lack of clarity with the documents.
Despite its deficiencies, aspects of the Personal Training Contract are clear. The obligations on the Totally Fit Gym included:
· Providing a safe and clean workplace.
· Providing full access to the Trainer (i.e. Ms Barton) on a 24 hour unlimited access basis to “the trainer and all clients of the trainer, regardless if they are members of the gym or not” (my emphasis).
· Holding of various insurances, including “Work Cover insurance”.
· Committing to negotiate “Rent”.
The obligations of Ms Barton were more detailed. They included:
· Representing the facility in a professional manner at all times, including outside the gym when wearing gym attire.
· To maintain her Certificate IV qualification.
· To have personal liability insurance at all times.
· To pay a “weekly rental amounts of $100” each Monday.
· To give direct supervision to clients at all times.
· To not sit behind the reception counter at any time, unless undertaking paid reception duties.
· To provide assistance in safety and cleanliness (picking up weights, and emptying bins if required).
Under a term of the Personal Training Contract titled “Clients”, the contract provided that:
· “The trainer is authorised to train any clients at the gym, regardless of membership or not. All clients MUST fill out and sign a Par-Q before beginning training, which will be held by the gym.”
· “Clients who are NOT gym members, must not use the gym outside training sessions with the trainer.”
The Personal Training Contract could be terminated by the owner at any time.
As to remuneration, rates were set out in a “proforma invoice” that was attached, which was required to be submitted each Saturday for payment. The invoice was titled “Totally Fit Gym Contractor Invoice”. It specified a “Contractor Name” and various rates for different activities. For example, “Admin hours” were charged at $25/hr. “Schedule 3 classes” were charged at $50. Somewhat ambiguously, the proforma invoice did not make it clear if rates changed at different times of the week (e.g. weekends).
At some point, possibly from the very beginning, the requirement for Ms Barton to pay the former owners of the Totally Fit Gym any “rent” under the Personal Training Contract was waived.
Throughout this period, Ms Barton was responsible for paying her own tax. She was paid upon rendering invoices after relevant periods of work. The evidence indicated that Ms Barton was not paid for annual leave or other similar amounts, including sick leave.
Ms Barton also obtained her own liability insurance, although she also stated that all gyms required personal trainers to hold insurance. I have little doubt that nearly all personal trainers who are independent contractors would (or should) hold liability insurance, although I am less clear whether that is the case for employees. Ms Barton’s insurance was paid for by her.
Throughout this period, Ms Barton had a number of her own clients. The specific numbers, and arrangements, for these clients was not in evidence before me but I infer that Ms Barton provided person training services to those clients, either as a ‘one on one’ basis or in limited groups.
Ms Barton was paid by her own clients directly.
The timing for training sessions for Ms Barton’s own clients varied. Sometimes it occurred outside of the specified shifts for Totally Fitness Gym and at other times it occurred during her shifts. Ms Barton said that under the previous owner, it was not considered a problem for her training her own clients during paid shifts. I have no doubt this was the case and it was Ms Barton’s practice of training her own clients during the time when she was being paid by the previous owner for work – it was no secret and was specifically approved.
Ms Barton also says that most gyms value personal trainers because “you bring clients to the gym”. As Ms Barton explained, when she moved from Jetts to Totally Fit Gym in 2022, she had a number of her clients follow her, who became paid members at Totally Fit Gym.
On or around 23 October 2023, Ms Barton was aware that ownership of the Totally Fit Gym had changed hands. She was told by the outgoing owner that nothing would change with the transfer of business, including with her role or shifts.
As the incoming owner, the respondent was unaware of the written Personal Training Contract between Ms Barton and the outgoing owner. At around that time, the respondent told the previous owner that the respondent (as the new owner) would keep all of the subcontractors and employees (of whom, there was one specifically understood to be an employee) but that new agreements would be sent in due course. Ms Barton took the initiative to ensure a smooth transition for herself and sent the new owner her Certificate IV Fitness, her Guild insurance details, and her first aid and CPR certificates. The Personal Training Contract was not sent.
On 4 November 2023, Ms Barton asked for – and was granted – an increase from her base payment rate from $25/hour to $29/hour.
Otherwise, in about the month and a half that followed from the change of ownership, Ms Barton’s work was materially the same as the work she undertook when engaged by the previous owner. In relation to the “Admin” shifts that Ms Barton performed, the gym manager (for whom there was no dispute was an employee) was completing the same Admin shift work that Ms Barton was completing. This was before and after the change in ownership.
Shortly before 4 December 2023, the respondent directors became aware that Ms Barton was conducting her personal training business (with her own clients) during Admin shifts. The respondent’s commercial preference was that anyone performing admin (i.e. front desk and cleaning) work should not be performing personal training sessions for their own clients during that time.
Late on 4 December 2023, Ms Barton was sent an email (it was seen by Ms Barton on 5 December 2023) attaching a proposed contract of employment. The employment contract was for casual work and was described in the email, accurately enough, as “purely admin which includes cleaning and attending the desk”. That email also directed Ms Barton that “PT [i.e. personal training] sessions during the admin hours are strictly not allowed.”
An email exchange between the parties then followed. Primarily, that email exchange concerned the parties advancing their respective positions on two issues: the new owner’s insistence that personal training activities (i.e. for private clients) no longer occur during shifts (which Ms Barton did not agree with); and, as a consequence, disagreements about what appropriate remuneration rates should be. The issues were interlinked, at least initially, as indicated by Ms Barton’s query on 5 December 2023 as to whether the new owners “will consider matching the pay at other gyms if I am unable to train clients during the shifts.”
On 8 December 2023, Ms Barton sent an email referring to advice about pay rates she had apparently received from the Fair Work Ombudsman. The respondent’s evidence indicates that it, too, had sought advice from the Fair Work Ombudsman, which was supportive of its position. I accept that each party proceeded sincerely with their respective positions, although the evidence before me falls a long way short of allowing me to express a view as to which party was ‘right’ or ‘wrong’ or if, indeed, either party was asking the Fair Work Ombudsman the correct questions. It is also not a matter I need to decide for this decision.
By later in the evening on 8 December 2023, it was clear that the parties’ differences would not be reconciled. The respondent told Ms Barton her services would be put “on hold”, albeit she would be paid for the next day’s shifts. The respondent (impermissibly in my view), also told Ms Barton she was not to attend the premises without the owner’s permission.
In response, Ms Barton replied “I am also trying to run a business and I have clients booked for tomorrow…”.
The respondent’s response was to tell Ms Barton that she was not to conduct any personal training sessions without providing a certificate of currency for public liability insurance (which I note Ms Barton had previously provided) and to begin paying the “rent” (no amount was specified) prior to those sessions, despite never having required or indicated rent was required previously. Quite clearly, the respondent was determined to end the relationship by its heavy-handed (and, I consider, in breach of the Personal Training Contract) claim for immediate rental payments and that is exactly what occurred.
Consideration
Applicable principles
As to the principles to be applied in characterising whether a particular contract is a contract of employment or an independent contracting arrangement, I consider the starting point for consideration is CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (Jamsek).
Where there is a wholly written contract whose terms are not disputed, there is usually no difficulty identifying those terms for the purpose of undertaking the exercise in characterisation (although the task of characterisation may still be a difficult one).
Evidence of post-contractual conduct is generally irrelevant to the question of characterisation, although it may be relevant to establish the existence of a contractual term or terms, or where the validity of the contract is challenged as a sham or the terms of which are otherwise varied, waived or the subject of an estoppel: Personnel Contracting at [43] (Kiefel CJ, Keane and Edelman JJ); [177] (Gordon J).
Putting aside questions of identification of the terms, sham or variation, etc, recourse may be had to external events, where appropriate for the purpose of characterising the contract: Personnel Contracting at [175] (Gordon J).
Once the terms of the contract have been properly identified, the task of characterising the contract is often informed by two particular considerations. As Wigney J recently stated[2] in JMC Pty Limited v Commissioner of Taxation [2022] FCA 750 (JMC v COT) at [23] (emphasis added):
“The first consideration is the extent to which the putative employer has the right to control how, where and when the putative employee performs the work: Personnel Contracting at [73]-[74] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); see also Brodribb at 24 (Mason J) and 36-37 (Wilson and Dawson JJ). The second is the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer – the so-called “own business/employer’s business” dichotomy: Personnel Contracting at [36]-[39] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); cf [180]-[183] (Gordon J). Neither of those considerations are determinative and both involve questions of degree.”
In relation to the element of control, as stated by Kiefel CJ, Keane and Edelman JJ in Personnel Contracting at [73] (and see also JMC v COT at [24]):
“ … the existence of a right of control by a putative employer over the activities of the putative employee serves to sensitise one to the subservient and dependent nature of the work of an employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services.”
As for the “own business/employer’s business” dichotomy, Wigney J summarised the matter thus in JMC v COT at [25] (original emphasis):
“ … it also “usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon 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 enterprise”: Personnel Contracting at [39] (Kiefel CJ, Keane and Edelman JJ); cf [180]-[182] (Gordon J). Another way of framing the question, which focusses more directly on the terms of the contract, is whether the person “is contracted to work in the business or enterprise of the purported employer”: Personnel Contracting at [183] (Gordon J) (emphasis in original). One consequence of answering that question in the negative may be that the person is not an employee.”
While the elements of control and the own/employer’s business dichotomy are usually significant matters, it remains appropriate to consider the “totality” of the relationship between the parties albeit – importantly – as framed by the rights and duties established by the parties’ contract. As stated by Kiefel CJ, Keane and Edelman JJ in Personnel Contracting at [61] (citations omitted, emphasis added):
“The foregoing should not be taken to suggest that it is not appropriate, in the characterisation of a relationship as one of employment or of principal and independent contractor, to consider "the totality of the relationship between the parties" by reference to the various indicia of employment that have been identified in the authorities. What must be appreciated, however, is that in a case such as the present, for a matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties' contract, and not simply an aspect of how the parties' relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties.”
With the important limitation placed upon recourse to the “various indicia” being established from the terms of the parties’ contract, the indicia described in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 (Stevens) at 24 per Mason J remain relevant (citations omitted, emphasis added):[3]
“But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question:… Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.”
To similar effect, Wilson and Dawson JJ said in Stevens at 36 – 37 (emphasis added):
“The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.”
What were the contractual terms?
The first issue it is necessary to deal with is what were the contractual terms in place between the parties.
The conduct of the parties does not make the resolution of this question particularly straightforward, although I find that the contract between the parties was an implied contract, based upon the substantive written terms of the Personal Trainer Contract.
Somewhat unusually, the respondent was not aware of the terms of the Person Trainer Contract. However, even if the respondent had no awareness at all about the existence or terms of the Personal Trainer Contract, that does not of itself preclude the incorporation of that contract’s substantive terms to the contractual terms between Ms Barton and the respondent. As part of the arrangements during the purchase of the business, the respondent told the outgoing owner it would keep all of the preexisting subcontractors and employees (of whom, there was one specifically understood to be an employee) but that new agreements would be sent in due course.
In the present case, viewed objectively, the respondent was content to adopt the contractual terms of the incoming subcontractors and employees – whatever those terms might be – on the basis that it was intending to review them shortly and proposed changes were likely. Objectively, those intentions were communicated between the parties to this dispute via the previous owner (who had been told nothing immediate would change and in turn told Ms Barton that her terms would remain the same) and the intermediaries for the current owners during the sale of business process. Quite clearly, various communications with the previous owner had been passed on to Ms Barton, given that she sent her qualifications and insurance details to the new owner.
While the respondent, in apparently failing to make full enquiries as to the complete contractual terms of the incoming contractors and employees, evinced some degree of commercial risk to it as the acquiring party, there is nothing impermissible about it. The position is somewhat analogous to a party signing a contract without having read it. It matters not that the party did not read it, because the affixation of a signature is, objectively, a representation to an ordinary reader of the document that the party intends to be legally bound by it “or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be”: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [45].
While the general rule in cases such as this is that post-contractual evidence is inadmissible for the task of characterisation of a contract, this is a case where post-contractual evidence can assist in identifying the terms of the contract between the parties. The evidence before me about the parties conduct after the point in time ownership of the gym changed hands in late October 2023 points to a conclusion that the terms of contract agreed by the parties were those in the Personal Trainer Contract. Specifically, the old rates remained the same, as were the nature of the shifts, invoicing, and the work undertaken.
The characterisation of the Personal Trainer Contract
Having concluded that the Personal Trainer Contract is the primary embodiment of the contractual terms between the parties, other than terms implied by law, I note that the agreement can be better described as a simple agreement, rather than a comprehensive written agreement. I do not consider anything turns on this, as the essential commercial terms are set out sufficiently clearly. The point in time for assessment is when Ms Barton commenced working for the new owner in about late October 2023.
Addressing the various “indicia” of matters concerning the task of characterisation, I start with “control”. The terms of the agreement provide little in the way of direct contractual control over Ms Barton’s performance, although I accept that for the ‘Admin’ shifts, the level of control is higher and is largely akin to the control for work performed by an employee (noting in this case, there was an employee performing identical ‘Admin’ work). Likewise, the contractual obligation to represent the facility in a professional manner is suggestive of a degree of control (and is also suggestive of Ms Barton operating in the business of the respondent, rather than her own business).
For scheduled classes, there is a degree of control in that it is necessarily implied that the respondent will dictate when those classes will occur, where they will occur, and what type of class is to be performed. Against this, there is little prescription as to how the classes are to be run[4], other than within the general parameter as to the type of class to be undertaken.
In circumstances where the primary purpose of the Personal Trainer Contract is for the respondent to utilise the expertise of Ms Barton in the broad area of personal training and fitness, I consider that the factor of “control” is not a decisive factor.
By contrast, the “own/employer’s business dichotomy” points much more strongly to an independent contracting relationship. The terms of the contract expressly contemplate that Ms Barton was entitled to run her own personal training business and that she would do so. Such clients were Ms Barton’s clients for that purpose, not the clients of the gym (although it would be expected that most of Ms Barton’s clients would also be, or become, members of the gym).
While the ‘Admin’ shifts are clearly more in the nature of work for the respondent’s business, even that aspect is a benefit to Ms Barton’s business as she remained able to promote – and at times conduct – her own business during those periods.
The contract envisages a synergistic benefit to both parties – Ms Barton will be largely free to run and expand her business around the direct needs of the respondent’s business (including by drawing upon members of the gym by running group classes for the gym) while the gym obtains the benefit of Ms Barton’s fitness and training expertise for its own members. The gym also obtains the benefit of attracting new members (being Ms Barton’s clients) or entrenching the loyalty of existing members to the gym. In my view, these features point strongly to an independent contracting relationship.
Turning to some of the other factors recognised by the authorities, namely the mode of remuneration, the provision for paid holidays, the deduction of income tax, and the provision for insurance, these are factors generally pointing against an employment relationship save for mode of remuneration.
The mode of remuneration for work undertaken for the gym was paid on an hourly basis for the type of work undertaken. While that is not inconsistent with a contracting relationship, it is also consistent with a traditional indicia of employment.
By contrast, the responsibility of Ms Barton for her income taxation and her responsibility for superannuation are factors pointing to an independent contracting relationship, as is the obligation to obtain and pay for insurances.
Finally, the case law is replete with caution about the relevance (if any) of the “labels” that parties might use in written contracts which state whether the contract is an “employment” or a “contractor” relationship. In this case, that caution is more pertinent given the obviously inconsistent usage of both terms in the Personal Training Contract. I give those labels no weight and have focused only on the substantive terms of the contract, which I have set out above.
Considering the totality of the arrangements, I find that, properly characterised, Ms Barton’s contractual relationship was a contract for service as an independent contractor, not a contract of services by employment.
Disposition
As Ms Barton was not an employee, it follows that she was not “dismissed” within the meaning of s 365 of the Act. The respondent’s jurisdictional objection is upheld and Ms Barton’s application is dismissed. An order[5] giving effect to that decision will be separately issued.
DEPUTY PRESIDENT
Appearances:
T Barton on her own behalf
N Juneja and M Sehgal from the Respondent
Determinative conference details:
2024.
Melbourne:
April 4.
[1] Coles Supply Chain Pty Ltd v Milford and Another (2020) 279 FCR 591.
[2] While the decision was overturned on appeal, his Honour’s statement of the principles described above was accepted as correct: see JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76 at [9].
[3] See also Personnel Contracting, [174] (Gordon J).
[4] Compare JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76 at [91] – [103] where the Full Court considered the presence of “lesson plans” for a lecturer did not indicate sufficient control for the performance of that work.
[5] PR776066
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