Employment Laws

Running head: EMPLOYMENT LAWS
Employment Laws
Name of the Student
Name of the University
Author Note

1EMPLOYMENT LAWS
Issue 1
Whether Bob is now a contractor or can it be argued that he is an employee.
Rule
In the common law, the contractors are different from employees and the employment
laws are not applicable on the contractors. The multi factor test that has been developed by
the Courts is applied to draw such a distinction between an employee and a contractor. This
test has evolved with the case of Ready Mixed Concrete Ltd v Minister of Pensions [1968] 2
QB 497. In this case a threefold test has been formulated to determine whether a person can
be implied to be a contractor or not.
The first decisive factor in determining whether a person is a contractor is the control
factor. In case of an employee, the works that are assigned to them or the manner in which
the work needs to be performed is the pure discretion of the employer and the employee does
not have much option with respect to the same. However, a contractor is independent in
initiating to perform a piece of work and may perform the work in his own method. The
employer does not have much control over the works that he chooses to perform. However,
there are certain conditions that the contract between the employer and the contractor might
contain and the same are binding on the employer.
The second decisive factor is the exclusiveness in the work. An employee exclusively
works for the employer in general. However, the contractor may serve more than one client.
The contractor may render services to multiple businesses.
The third decisive factor is the power to delegate. A contractor usually delegates his
powers to complete the task that he has been assigned with by virtue of the contract. The
contractor further hire other people to complete the work.

2EMPLOYMENT LAWS
Another decisive factor is the timing during which the work needs to be performed.
Contractors does not have any fixed timings set by the employer to perform the job. The
contractors are free to decide their own timing for work. In case of employees, the work
needs to be performed within the fixed office timing.
The payment made to a contractor or an employee can be a decisive factor in
differentiating between the employee and a contractor. The employees are paid with respect
to time whereas the contractors are paid with respect to units of work completed.
In the case of Short v J W Henderson Ltd [1946] 62 TLR 427, four criteria has been
identified in differentiating between an employee and a contractor namely, right of
suspension, control, dismissal and remuneration.
In Australia, a person is not automatically rendered to be a contractor for the reason of his
availing the Australian Business Number (ABN). He needs to satisfy other decisive factors as
well.
Application
In the present situation, Bob has been initially employed as an employee by the RSL club.
After working for a number of years as an employee, he has been asked to avail the ABN to
become a contractor. This has been effected in the furtherance of a decision of the club to
operate their work relating to bar by a contractor. A contractor may apply for an ABN for the
purpose of issuing invoices. However, this will not automatically render Bob to be a
contractor. He will be required to satisfy the multi factor test in that context.
After availing the ABN, Bob is still being controlled by the Club and is not independent in
his endeavours. This does not satisfy the control factor that a contractor must have in
performing his work. As the control of the work is in the hands of the employer, Bob is more
of an employee than being a contractor.