Workplace Law: Issues of Employee vs Contractor, Code of Conduct and Valid Reasons for Dismissal

Running head: WORKPLACE LAW
Workplace Law
Name of the Student
Name of the University
Author Note

1WORKPLACE LAW
Issue 1
The issue in this situation points towards the fact that whether Bob can be regarded as a
contractor or he still remains an employee.
Rule
The expressions employees and contractors are different in the labour law and the
common law and the employment laws are only applicable to the employees and not to the
contractor. The main problem arises when a demand for the distinction between the two
arises. A multifactor test has evolved in the common law, which enables the differentiation
between the term employee and contractor. The multifactor test has been a modification of
the threefold test that has been formulated by the court in the case of Ready Mixed Concrete
Ltd v Minister of Pensions [1968] 2 QB 497. This test has been formulated to differentiate an
employee from a contractor. The multifactor test provides for certain factors that enables to
draw a distinction between a contractor and an employee.
The person, who controls the work performed by a contractor or an employee is the first
factor to be analysed while drawing a distinction between the contractor and the employee.
The services rendered by the contractor is controlled and coordinated by the contractor only.
The employer does not have any control over the work of the contractor. However, the term
of the contract by virtue of which the task has been assigned to the contractor by the
employer needs to be complied with by the contractor. Again the employee is required to
carry out his job under the instructions given by the employer. The employee does not
exercise any discretion over the method in which the work needs to be done.
The second factor that has been provided by the multi factor test to draw the distinction
between the employer and the employee is the exclusiveness in rendering services. The
services rendered by the employee is exclusive to the employer. The employee does not

2WORKPLACE LAW
render services to multiple employers. However, the contractor may serve more than one
client. The services rendered by contractor is not limited to a single client or employer. The
contractor has the independence to obtain more clients for rendering their services.
The power to make delegations with respect to the work performed is yet another factor
deciding whether a person is a contractor or an employee. In performing the work entrusted
upon the contractor, the contractor may hire other individuals to perform the work on behalf
of him. However, the employees are required to carry out their job on their own. They do not
have the power to delegate their job to others.
The remuneration is another factor of distinction between the employer and the employee.
The employees are paid with respect to time. Whereas the contractors are paid remunerations
in accordance with the contract with the employer. In most of the cases, the payment to a
contractor is made with respect to the units of work that has been completed by the employee.
Under the Australian Laws, the availing of an Australian Business Number (ABN) does
not make an individual, a contractor. The multifactor test needs to be qualified to incur the
status of a contractor.
It has been held in the case of Short v J W Henderson Ltd [1946] 62 TLR 427, that the
multifactor test needs to be qualified by an individual to become a contractor. In deciding the
same, the court has added the right to suspension and dismissal to the multi factor test.
Application
In this given situation, Bob has been working as an employee in the RSL club for certain
years. The club after a certain years of employing Bob has directed Bob to obtain an ABN for
operating the bars as a contractor. This direction has been backed by the desire of the club to
conduct the bars with the help of a contractor. It has also been observed in the case that Bob
has been made to obtain the ABN for the purpose of the issuance of invoices. This will not