KX Pilates makes a stand on sham contracting

In the wake of the liability dilemma surrounding a hospitalised client of Snap Fitness and a contracted personal trainer, fitness franchise KX Pilates has announced that all its trainers are to become PAYG employees and receive associated benefits.

Explaining the move, KX Pilates founder and Chief Executive Aaron Smith advised “KX has done this to give back to, and benefit, our trainers.

“The fitness industry for years has accepted sham contracting as the norm.

“It's easier for trainers to be contractors as employers can fire them easily, don't have to worry about paying their payroll tax, and also get out of paying Work Cover and Private Indemnity Insurance.

“So basically, business owners are saving money whilst their trainers are being exploited.”

The move is likely to see KX Pilates incur extra expenses as a result of mean additional bookkeeping expenses for payroll tax as well as Personal Indemnity and Work Cover costs. It also means that KX will no longer be able to end a relationship with a trainer in a week, but will have to performance manage and afford them time and training to get up to scratch, with significant notice if they are to be let go.

Despite this, Smith said the decision was a “no brainer”, not just for the benefit of the trainers but also to truly play within the Fair Work rules. 

Smith added “if you asked any accountant or did the 'Contractors vs Employees’ test on the ATO website, our trainers are not contractors. They are employees.

“They start and stop at times we tell them, they do the same shifts every week, they wear our uniforms, they have a manager and the studio provides all their equipment.

“It's pretty black and white, and I bet you would find it’s the same for many other gyms and fitness studios as well.”

Smith said he hopes the move will encourage the fitness industry to follow suit.

The switch to PAYG employment contracts at KX across its franchises will come into effect immediately and will be strictly monitored by the franchisor.

Image: Aaron Smith.

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