It does look as if he's just pasted on top. What you need is interaction between the fabric of the garment, and the dog. The dog's paws would be sunk into the fabic, and also the back legs wouldn't be stuck together like that, they'd be straddling the width of the back, so would be at different angles. Also the dog's "shirtfront" would be smusheed against the person's back, so wouldn't be rounded and fluffy in front.

Does this help?