Fitness instructor flexes win in FWC, following unfair dismissal by gym
Have you ever considered terminating an employee for picking up secondary employment with a competitor?
In a recent decision, the Fair Work Commission (Commission) found that World Gym Prospect (WGP) unfairly dismissed fitness instructor, Michael Franklin, after he secured secondary employment at a competing gym. Further, the Commission found that WGP’s decision to reduce Mr Franklin’s work schedule in response to his new role at a competing gym did not constitute a valid reason for dismissal.
Key facts
Mr Franklin commenced employment in 2020 with WGP, a franchisee of the World Gym Australia franchise, to deliver group fitness classes. Over the duration of his employment, it was common practice for Mr Franklin to work across multiple gyms. In March 2024, Mr Franklin accepted an offer from a competing World Gym Australia franchisee to take on additional classes.
Mr Franklin informed WGP that he could no longer continue his Wednesday and Saturday classes, but offered to maintain his Monday evening classes at WGP. To his surprise, Mr Franklin’s manager was disappointed about Mr Franklin’s decision to work for a competitor, and expressed a preference WGP instructors to be “all-in” and committed to WGP’s “awesomeness”.
Ultimately, WGP made the decision to significantly reduce Mr Franklin’s shifts, effectively ending his employment. Not long after, Mr Franklin filed for unfair dismissal.
Jurisdictional objection and employment status
WGP initially raised a jurisdictional objection, arguing that Mr Franklin was an independent contractor, not an employee. However, Deputy President Judith Wright ruled that Mr Franklin was an employee, based on the nature of the relationship, including WGP’s control over his work, and the fact that Mr Franklin worked for a business he did not own. This ruling confirms the need to carefully consider the totality of a working relationship, rather than relying solely on labels such as ‘contractor’ or ‘employee’.
Dismissal found to be unfair
In their defence, WGP contended that there was no dismissal, claiming that Mr Franklin’s employment had ended by mutual agreement. However, the Commission found that WGP’s actions in reducing Mr Franklin’s classes to zero effectively ended the employment relationship, and this amounted to a dismissal.
The Commission criticised WGP for failing to engage in a discussion with Mr Franklin prior to reducing his hours. It was clear from their correspondence that WGP no longer sought to employ Mr Franklin, regardless of his wishes. The decision to remove him from the roster, without any attempt to resolve the matter collaboratively, was found to lack procedural fairness.
Competing job not a valid reason for dismissal
A key point in this case was WGP’s reasoning for terminating Mr Franklin’s employment: he had taken on work at a competing gym. The Commission found that this was not a valid reason for dismissal, noting that it is common practice in the fitness industry for instructors to work across multiple gyms. In addition, there was no prohibition in Mr Franklin’s contract regarding working for competing gyms.
Deputy President Wright observed that WGP could have addressed concerns about membership loss by discussing this with Mr Franklin directly. For instance, WGP could have sought assurances that Mr Franklin would maintain discretion in his new role. The Commission found that WGP’s failure to consider alternative solutions weighed in favour of ruling the dismissal unfair.
Implications for employers
This case serves as a timely reminder for employers to ensure that any decisions regarding employee termination are based on a valid reason and handled with procedural fairness, and that alternatives to dismissal are considered.
If you are considering dismissing an employee for securing secondary employment and require guidance to remain compliant, please contact NRA Legal on 1800 572 679 for a confidential conversation.
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