The multi factor test is used in Australia to identify the true nature of work relationship between a company and a person to determine if he/she is an employee or independence contractor which can be seen in the case of Vabu v. FCT (1996) and Hollis v. Vabu (2001). In Vabu v. FCT (1996) case, Vabu (a courier company) called Crisis Courier that hired couriers and carefully got them to agree that couriers are only independent contractors. The couriers are indeed an independent contractors because they must own and maintain their own vehicle and pay self-taxation etc.
In Hollis v. Vabu (2001) case , Vabu (a courier company) and one its bicycle couriers, who struck down and injured Mr. Hollis on a pavement.
Vabu is vicariously liable to Mr. Hollis for the courier’s negligent performance of his work, the courier would have to be employed by Vabu. The bicycle courier is held by the court to be employees because the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations.In the case of Performing Rights Society v. Mitchell and Book (Palais den Danse) Ltd (1924) where MaCardie J stated that multi factor test is control and other factors. These two key indicators are use to determine if a person is an employee or independence contractor with the company.
Control mean the nature and degree of control which is seen in the case of Federal Commissioner of Taxation v.J Walter Thompson (Australia) Pty Ltd (1944) where the artists were hired by a company to perform radio play. They were paid for their performances but not rehearsals and hence the company claimed that artists are independent contractors.
The court held that artists in the radio play were employees of the radio station because the producer controlled the artists during the rehearsals and performances. There is a certain degree of control exercise over the artist.