Is Your Yoga Teacher A Contractor Or Employee?

Priya runs a small yoga studio in Geelong. She has six teachers on the weekly timetable, pays them per class after they invoice with an ABN, and calls them contractors in her agreements.

But the studio sets the class times, requires teachers to wear branded tops, asks them not to teach at the studio down the road, and doesn't let them send another teacher in their place.

Priya starts wondering: are they really contractors, or has she accidentally created an employment relationship?

If you're asking the same question or need employee or contractor advice, you're not alone. The yoga and wellness industry often sits right on the line between employee and contractor arrangements, so small details in how you run your timetable, brand and classes can make a big difference.

Can A Yoga Teacher Be A Contractor Or Employee?

Yes, a yoga teacher can be either a contractor or an employee, but the right classification depends on how the working relationship actually operates.

A contractor agreement that says 'independent contractor' is helpful, but it won't decide the issue by itself. Under the Fair Work Act 2009, for many studios, particularly Pty Ltd companies and other constitutionally covered businesses, changes from 26 August 2024 mean the employment question looks at the real substance, practical reality and true nature of the relationship, including how the contract is performed in practice, not just the wording of the agreement. Different tests can apply to some unincorporated businesses, such as certain sole traders and partnerships in Victoria, so check which test applies to your business.

For your studio, that means you need to look at the whole arrangement. Ask yourself:

• How much control do you have over the teacher's work?
• Does the teacher run their own teaching business, or are they really part of your studio team?
• Can they work for other studios?
• Can they send a suitably qualified substitute?
• Do they bring their own equipment and teaching methods?
• Are they paid to achieve an agreed service, or paid like a rostered worker?
• Do they carry commercial risk, such as needing their own insurance and fixing issues at their own cost?

No single factor gives you a perfect answer. A teacher might have an ABN and issue invoices, but still be an employee if the relationship looks and feels like employment in practice.

On the other hand, a genuine contractor might teach at several studios, run their own workshops, decide how they deliver classes, bring their own equipment, hold insurance, and have a clear right to accept or reject work.

What Factors Matter In A Yoga Studio?

The main factors are control, independence, substitution, exclusivity, equipment, payment structure and how integrated the teacher is in your studio.

Here is how those factors commonly show up in yoga and wellness settings.

Class Timetables

A regular timetable doesn't automatically make someone an employee. Many contractors provide services at agreed times.

But the more your studio controls the timetable, attendance, class format and availability, the more the arrangement can start to look like employment. For example, if you require a teacher to work every Tuesday and Thursday night indefinitely, attend staff meetings, cover reception when needed and seek approval for any time off, that points more strongly towards employment.

A contractor arrangement is cleaner where the teacher accepts particular classes, workshops or blocks of work, and there's a genuine ability to say no to future work.

Uniforms And Studio Branding

You can protect your customer experience, but strict uniform and branding requirements can point towards employee status.

It's normal to have studio standards. For example, you may require teachers to dress safely, avoid offensive slogans, follow your values, and give students a consistent experience.

However, if a teacher must wear your branded uniform, use your exact scripts, present themselves as your staff member and follow detailed instructions for every part of the class, this suggests a higher level of control.

With contractors, it's usually better to focus on the outcome and safety standards rather than controlling every detail. For example, your agreement might say the teacher must deliver a 60 minute beginner-friendly vinyasa class that meets your safety, music and conduct policies, while leaving room for their own teaching style.

Substitution

A genuine right to send a substitute usually supports contractor status, while a personal obligation to do the work points more towards employment.

That doesn't mean you have to accept anyone. In a yoga studio, it's reasonable to require substitutes to have suitable qualifications, current insurance, experience, and any checks needed for the class type. If children are involved, you may also need to consider Working With Children Check rules in your state or territory.

The key is whether the right is real. If your agreement says the teacher can provide a substitute, but in practice you never allow it, the written clause may not help much.

Exclusivity

Exclusivity can be risky if you're trying to treat a teacher as a contractor.

If you stop a teacher from working for other studios, running their own private classes, or promoting their own yoga business, they start to look less independent. A narrow non-solicitation clause may be reasonable in some situations, such as stopping a teacher from poaching your clients for a short period, but a broad ban on working elsewhere can create classification risk.

Equipment And Space

Using your studio space doesn't automatically make a teacher an employee, but equipment and setup still matter.

If you provide the room, mats, blocks, music system, booking platform, reception support and all customer communications, that can show the teacher is integrated into your business. If the teacher brings specialist props, manages their own bookings for a workshop, or licences their own program to you, that may support contractor status.

Payment And Admin

Contractors commonly invoice for agreed services, while employees are usually paid through payroll for hours worked.

Invoicing with an ABN helps, but it isn't enough on its own. If you pay the teacher a fixed hourly or per-class amount, roster them like staff, require them to personally attend and control how the class is delivered, the label on the invoice may not reflect the real relationship.

What Are Your Obligations If The Teacher Is An Employee?

If the teacher is an employee, you need to meet your obligations under the Fair Work Act, the National Employment Standards, any applicable modern award and other workplace laws.

For many yoga and fitness businesses, the Fitness Industry Award 2020 may be relevant. Award coverage can be technical, especially for boutique wellness studios, mixed pilates and yoga offerings, retreats, or allied health spaces, so it's worth checking carefully rather than assuming no award applies.

If the teacher is an employee, your obligations may include:

• Paying at least the applicable minimum wage or award rate.
• Providing casual loading if they're a casual employee and the award or agreement requires it. A 25% casual loading is common under modern awards.
• Providing paid annual leave and personal or carer's leave for permanent employees. Full-time employees receive 4 weeks of annual leave and 10 days of paid personal or carer's leave per year under the National Employment Standards.
• Providing payslips and keeping proper employment records.
• Paying superannuation. The Superannuation Guarantee rate is 12% from 1 July 2025.
• Following workplace health and safety duties, including safe class sizes, safe equipment and safe systems of work.
• Taking out workers compensation insurance as required in your state or territory.
• Following minimum notice rules if employment ends. Under the National Employment Standards, minimum notice is generally 1 week for less than 1 year of service, 2 weeks for 1 to 3 years, 3 weeks for 3 to 5 years, and 4 weeks for more than 5 years, plus an extra week if the employee is over 45 and has at least 2 years of service.

Employees may be full-time, part-time or casual. A casual arrangement can suit studios with changing class demand, but you still need a proper casual employment contract and correct award treatment if an award applies.

If you're unsure whether the teacher is covered by an award or what classification applies, get employee or contractor advice before setting rates. Small underpayments can grow quickly when you add multiple teachers, weekends, public holidays and back pay.

What Should Go In A Contractor Agreement For A Yoga Teacher?

If the teacher is genuinely a contractor, you should have a written contractor agreement that matches how the arrangement works in real life.

A good contractor agreement for a yoga teacher or fitness instructor should cover:

• Services: the classes, workshops, retreats or programs the teacher will deliver.
• Fees: whether they're paid per class, per workshop, per booking, by revenue share, or another agreed method.
• Invoicing: when invoices are issued and when you pay them.
• GST: whether GST applies if the teacher is registered.
• Class cancellations: what happens if you cancel a class, students don't book, or the teacher can't attend.
• Substitution: whether the teacher can send a substitute and what approval requirements apply.
• Independence: confirmation that the teacher runs their own business and can work elsewhere, subject to any reasonable restrictions.
• Insurance: public liability, professional indemnity and any other cover you require.
• Qualifications: minimum training, first aid, registrations or checks required for your studio.
• Policies: safety, student conduct, complaints, privacy and use of studio facilities.
• Intellectual property: who owns class plans, recorded classes, course materials, photos and branded content.
• Confidentiality: protection for your client lists, pricing, business plans and booking data.
• Client relationships: reasonable rules around contacting or soliciting your students outside the studio.
• Termination: how either side can end the arrangement and what notice is required.

Templates often miss the practical details that matter in studio settings, especially substitution, class cancellations, recorded content and client ownership. The document works best when it reflects your actual business model, not a generic contractor setup.

Be careful not to use a contractor agreement or sub-contractor agreement to paper over an employment relationship. If you need someone on an ongoing weekly roster, under your close control, with no real independence, an employment contract may be the safer and cleaner option.

How Can You Reduce Misclassification Risk?

You can reduce misclassification risk by choosing the right engagement model at the start, then running the relationship consistently with that model.

Start by grouping your teachers based on how they actually work with your studio. For example:

• Core weekly teachers: ongoing timetable, regular shifts, studio branding, limited ability to refuse work. These may be better suited to employment.
• Specialist workshop facilitators: one-off or short course sessions, their own program, their own method, freedom to work elsewhere. These may be better suited to contracting.
• Cover teachers: occasional classes, ability to accept or decline, their own business and insurance. These may be contractors, depending on the detail.

Then check whether your day-to-day practices match your documents. If your contractor agreement says the teacher can work elsewhere, don't tell them they can't teach for anyone else. If it says they can arrange a substitute, have a real process for approving suitable substitutes.

Practical steps that help include:

• Use the right contract, such as an employment contract or contractor agreement, for each teacher instead of one document for everyone.
• Keep contractor arrangements project-based or class-block-based where possible.
• Avoid controlling every part of the teaching method unless safety or brand standards genuinely require it.
• Let contractors advertise and run their own businesses, unless a specific restriction is genuinely needed.
• Require contractors to hold their own insurance and maintain their own qualifications.
• Review your arrangements when a teacher's role changes, such as when an occasional contractor becomes a fixed weekly teacher.

Say you engage Mei to run a four-week prenatal yoga course using her own materials and teaching framework. She invoices your studio, carries her own insurance, can teach elsewhere, and can send another approved prenatal teacher if she is unavailable. That looks more like a contractor arrangement.

Now compare that with Tom, who teaches every Monday, Wednesday and Saturday, wears your uniform, attends staff meetings, can't work for nearby studios, must follow your exact class scripts and needs permission for time off. Even if Tom has an ABN, that arrangement carries much higher employment risk.

What Happens If You Get It Wrong?

If you misclassify a teacher as a contractor when they're really an employee, you may need to back-pay employment entitlements and deal with regulator attention or claims.

The practical consequences can include:

• Unpaid minimum wages or award rates.
• Unpaid casual loading, overtime, penalty rates or allowances if an award applies.
• Unpaid leave entitlements for permanent employees.
• Unpaid superannuation, including where super applies to a contractor because they're paid mainly for their labour.
• Workers compensation issues if the teacher is injured.
• Sham contracting allegations under the Fair Work Act.
• Penalties, interest and back payments that affect cash flow.

The Fair Work Ombudsman can investigate workplace issues, and superannuation obligations are also taken seriously. State and territory workers compensation laws may treat some contractors as workers, even where they aren't employees for every purpose.

The good news is that this is manageable if you review your arrangements early. Many studios can use a mix of employees and contractors, as long as each arrangement is set up properly and reflects what is happening on the ground.

Key Takeaways

• A yoga teacher can be a contractor or an employee, but the label in the contract isn't enough.
• Class timetables, uniforms, substitution rights, exclusivity, equipment and control all matter in studio settings.
• If a teacher is an employee, you need to meet Fair Work Act, National Employment Standards, award, superannuation and workplace safety obligations.
• A contractor agreement should cover practical studio issues like cancellations, substitutes, insurance, class content and client relationships.
• Misclassification can lead to back pay, superannuation issues, penalties and disputes, so it's worth checking your model before problems arise.

If you'd like help with reviewing your teacher arrangements, preparing contractor agreements or employment contracts, and setting up your studio policies, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.