Super Contributions for Yoga Teachers
Note: Laws surrounding the payment of super to contractors in Australia, and workplace relations in general, are complex and the views expressed in this interview are for general information purposes only.
A Short History of Super
Superannuation is designed to support Australians in building a secure financial future, offering a supplement to the government’s age pension system. Employers contribute a portion of their workers’ wages into super funds, fostering a financial nest egg over time. The current mandatory contribution rate sits at 12 per cent, having reached its final scheduled step on 1 July 2025, a significant addition that helps ensure a more comfortable retirement.
The concept of superannuation was introduced in response to Australia’s aging population and the growing pressure on government-funded pensions. The conversation around superannuation took shape in the 1980s when the Australian Council of Trade Unions (ACTU) began advocating for a national super scheme. Back then, the construction industry witnessed many workers shifted to contractor status under the assumption of equal pay rates, only for some to discover later that they were responsible for their own tax payments. This led to widespread frustration and a drive for greater transparency.
Super Reform and the Impacts for Studios and Teachers
In the year 2000, the introduction of GST and the creation of ABNs brought about significant changes aimed at streamlining income tracking for sole traders.
In July 2022 the Commonwealth removed the $450 monthly earnings threshold, so employers now pay super from the first dollar a worker earns. This affects many yoga teachers and studios, since super was rarely a point of concern for a teacher taking two or three classes a week.
This shift in regulation offers studios and teachers a timely opportunity to reassess working arrangements and super obligations.
Employee and Contractor Status
Since 26 August 2024 the Fair Work Act has settled this under section 15AA, which looks to the real substance, practical reality and true nature of the whole relationship. The written agreement counts as one piece of evidence, and the way the engagement runs from week to week counts alongside it. Many yoga teachers show the ordinary marks of employment.
- Following a set schedule with an expectation of ongoing work
- Using equipment supplied by the studio, such as mats and blocks
- Receiving a specified fee for services, without bearing financial risk
- Being paid regularly
A regular pattern of work feeds that assessment without deciding it. Section 15A, which commenced the same day, defines a casual employee by the absence of a firm advance commitment to continuing and indefinite work, and it names a regular pattern of work as an indicator that falls short of settling the question on its own. A teacher who has taught the same Tuesday evening class for three years may be a casual, a part-time employee, or a genuine contractor, and the answer comes from how the engagement works rather than from how long it has run.
The ATO puts it plainly. “If you pay independent contractors mainly for their labour, they are employees for superannuation guarantee (SG) purposes.” A teacher engaged as a contractor, invoicing under an ABN, is owed super where the engagement is mainly for their own labour, and teaching a class is mainly labour in most arrangements.
Three things put an engagement outside that test. A contractual right to delegate the class to another teacher takes it outside, even where that right is limited. So does a contract for a specified result rather than for the teacher’s own labour, and so does the use of substantial capital equipment. A teacher who invoices through their own company also sits outside, since the studio contracts with the company, and any super is the company’s to pay.
We spoke to Jennifer Tutty, Founder and Managing Principal of Studio Legal, an Australian law firm providing legal services to clients in the creative and wellness industries including fitness, pilates and yoga. First and foremost, Jennifer reiterated that the laws surrounding the payment of super to contractors in Australia are complex and any comments made in this interview are for general information purposes only.
“There is a lot of confusion around whether yoga studios should be paying super to yoga teachers hired as contractors. When assessing this, yoga studios should firstly be asking, is a teacher actually an independent contractor at law or should they be hired as a part time or casual employee?
It’s critical to know that just because a studio enters into a contractor agreement with a teacher (even at the teacher’s request), the arrangement is not necessarily a lawful contractor arrangement.”
Grey Areas
There are indeed grey areas, and studios operate in quite different ways.
- A teacher working for multiple studios or on a flexible, ad-hoc schedule may appear more as a contractor than an employee, as their “expectation of continuing work” is lower.
- A shared preference for a contracting arrangement has no legal weight on its own, so a teacher who asks to be engaged as a contractor leaves the studio’s obligations exactly where they were.
A key distinction often lies in the degree of control. Contractors generally retain control over how they perform their work. For example, some studios require adherence to specific sequences or teaching protocols, which could resemble employment characteristics. By contrast, a teacher given full freedom over the class structure and content may appear to be a genuine contractor.
Consider the example of a yoga teacher who operates independently, teaching at a local park. They may set up a weekly class, manage their own permits, advertise the class, and supply mats. They bear the business risk, as attendance directly impacts income. This teacher, operating as a sole trader, might pay their own super as part of planning for their financial future.
Jennifer Tutty again, on when super is payable.
“When deciding if and when to pay super to a contractor, yoga studios should always look at the individual facts of the teaching engagement. My general rule of thumb is however, if the teacher is a sole trader, is paid a fee to personally teach yoga classes for the studio and does not have a genuine right to delegate their duties and engage other teachers to assist them to perform their teaching services, it’s likely super is payable. It’s helpful to know that if a yoga teacher operates a company in relation to their business, the yoga studio is not required to pay super to the company on behalf of the yoga teacher (this is up to the yoga teacher’s company).
As there are significant penalties for businesses and directors for breaching super laws, we always recommend yoga studios err on the side of caution and pay super to contractors ‘if in doubt’.”
Sham Contracting
Presenting an employment relationship as a contracting arrangement is sham contracting, prohibited by section 357 of the Fair Work Act, and the defence available to a studio changed on 27 February 2024. An employer once had to show they did not know and were not reckless about the true nature of the arrangement. The test now asks whether the employer reasonably believed the contract was one for services, weighing the size and nature of the business and whether the studio took advice before engaging the teacher.
Penalties run into the hundreds of thousands of dollars per contravention for a company, and each misclassified teacher counts as a separate contravention. Both the Fair Work Ombudsman and the ATO ran public campaigns on sham contracting through 2026, so any studio with an arrangement it has never examined should examine it now.
Good Faith, Reputation, and the Path Forward
At the heart of this conversation is a shared commitment to fairness and clarity. Superannuation should support each individual’s financial security, whether contributions come from employers or through self-funding. With changes in the regulatory landscape, studio owners and teachers alike have the chance to approach these discussions with good faith, working together to establish arrangements that respect each party’s responsibilities and intentions.
Yoga is rooted in unity and respect. By engaging in these sometimes challenging conversations, we uphold the spirit of yoga, balancing practicalities with care for all involved. The journey may not always be straightforward, but the intent to nurture positive relationships will ensure a sustainable and fulfilling path for the yoga community.
2026 update. From 1 July 2026 the Payday Super reform moves super onto each payday rather than each quarter, a change of rhythm for any studio paying teachers fortnightly. As part of the same reform the free ATO Small Business Superannuation Clearing House that many small studios use to pay super in one transaction is closing, it stopped taking new registrations in October 2025 and shuts for good on 30 June 2026, so any studio still paying through it should export its full transaction history before 1 July 2026, since the records leave with the service, and move to another method, usually the payroll software already in use or a commercial clearing house.
Common questions
Which regulator decides what?
The ATO administers tax and super. Employment status runs on the Fair Work Act’s whole of relationship test, which commenced on 26 August 2024 and looks at how the engagement works in practice. The two systems answer different questions, so the same teacher can be a genuine contractor for Fair Work purposes and still be owed super. The ATO guidance on super for independent contractors and the Fair Work Ombudsman’s whole of relationship test page set out each side.
Do we pay super to a teacher who invoices under an ABN?
Where the teacher is paid mainly for their own labour, yes. An ABN and an invoice leave the position unchanged, because the ATO treats contractors paid mainly for labour as employees for super guarantee purposes. Its guidance on super for independent contractors spells this out.
Our teacher asked to be engaged as a contractor. Does that settle it?
No. Preference has no legal weight, even when it is recorded in a signed agreement, and the test looks at how the engagement runs in practice. Jennifer Tutty makes the same point in the interview above. The Fair Work Ombudsman’s page on independent contractor changes covers the current law.
Is super part of the class fee or paid on top?
Paid on top, and paid into the teacher’s fund. The minimum is the super guarantee percentage of the labour component of the contract, with any materials, equipment and GST excluded. The ATO states plainly that paying an extra amount to the teacher in place of a contribution does not count, the money must reach their super fund. The calculation is set out in its guidance on super for independent contractors.
A teacher has taught the same class for three years. Are they permanent now?
A regular pattern of work is an indicator, and on its own it falls short of settling the question. Section 15A of the Fair Work Act defines a casual employee by the absence of a firm advance commitment to continuing and indefinite work, so the question is what was committed to, however long the pattern has run. The Fair Work Ombudsman’s casual employees page explains the definition.
The teacher invoices through their own company. Do we still pay super?
The studio contracts with the company, so any super is the company’s to pay. The ATO is explicit, where the contract is with a company, trust or partnership, the studio pays no super for the person the entity employs to do the work. Jennifer Tutty covers the same ground in the interview above.
What is sham contracting?
Presenting an employment relationship as a contracting arrangement, which section 357 of the Fair Work Act prohibits. Since 27 February 2024, an employer defending a claim must show it reasonably believed the arrangement was a genuine contract. The Fair Work Ombudsman’s sham contracting page covers the detail.
How do we get a binding answer?
Apply to the ATO for a private ruling. It costs nothing and it binds the ATO to the answer it gives. A ruling settles tax and super, and the employment questions, unfair dismissal, notice, leave and casual conversion, go to the Fair Work Ombudsman. The private rulings page explains the system, the application form is online, and the Ombudsman’s guidance for anyone who thinks they could be an employee covers the employment side.
