is a contract
between two parties
, one being the employer
and the other being the employee
. An employee
may be defined as: "A person in the service
of another under any contract
, express or implied, oral
or written, where the employer has the power
to control and direct
the employee in the material details
of how the work is to be performed
." Black's Law Dictionary
page 471 (5th ed. 1979).
In a commercial setting, the employer conceives of a productive activity, generally with the intention of generating a profit, and the employee contributes labour to the enterprise, usually in return for payment of wages. Employment also exists in the public, non-profit and household sectors. To the extent that employment or the economic equivalent is not universal, unemployment exists.
An employer is a person or institution that hires employees or workers. Employers offer hourly wages
or a salary
in exchange for the worker's labor power
, depending upon whether the employee is paid by the hour or a set rate per pay period. A salaried employee is typically not paid more for more hours worked than the minimum, whereas wages are paid for all hours worked, including overtime
Employers include everything from individuals hiring a babysitter to governments and businesses which may hire many thousands of employees. In most western societies, governments are the largest single employers but most of the work force is employed in small and medium businesses in the private sector.
Although employees may contribute to an enterprise, the employer maintains control over the productive base of land and capital, and is the entity named in contracts. The employer typically maintains ownership of intellectual property created by an employee within the scope of employment and as a function thereof. These inventions or creations become the property of the employer based on a concept known as "works for hire".
An employers’ relative level of power over employees is dependent upon numerous factors; the most influential being the nature of the employment relationship. The relationship employers share with employees is affected by three significant factors – interests, control and motivation. It is up to employers to effectively manage and balance these factors to ensure a harmonious and productive working relationship.
Interests can be best described as monetary constraints and economic pressures placed on organizations in their pursuit of profits. It covers facets such as labour productivity, wages and the effect of financial markets on businesses.
Wood et al (2004, p 355) describe control as being either output focused, focusing on desired targets with managers defining, and using, their own methods for reaching targets, or process controls, which specify the manner in which tasks will be achieved (Ibid, p. 357). Employer and managerial control within an organization rests at many levels and has important implications for staff and productivity alike, with control forming the fundamental link between desired outcomes and actual processes. Employers must balance interests such as decreasing wage constraints with a maximization of labour productivity in order to achieve a profitable and productive employment relationship.
Motivation is the third and most difficult of the factors for employers to effectively manage in the employment relationship . Employee motivation can often be in direct conflict with control mechanisms of employers, and can be broadly defined as that which energizes, directs and sustains human behaviour (Stone, 2005, p 412). Dubin (1958, p 213) further elaborates on this, noting motivation as “something that moves a person to action, and continues him in the course of action already initiated.”
The employment relationship is thus a difficult challenge for employers to manage, as all three facets are often in direct competition with each other, with interests, control and motivation often clashing in the equally important quest for individual employee autonomy, employer command and control and ultimate profits.
An employee contributes labor and expertise to an endeavour. Employees perform the discrete activity of economic production. Of the three factors of production
, employees usually provide the labour.
Specifically, an employee is any person hired by an employer to do a specific "job". In most modern economies, the term employee refers to a specific defined relationship between an individual and a corporation, which differs from those of customer, or client.
Becoming an employee
Most individuals attain the status of employee after a thorough process of interviews with several departments within a company. If the individual is determined to be a satisfactory fit for the position, he or she is given an official offer of employment within that company for a defined starting salary and position. This individual then has all the rights and privileges of an employee, which may include medical benefits and vacation days. The relationship between a corporation and its employees is usually handled through the human resources
department, which handles the incorporation of new hires
, and the disbursement of any benefits which the employee may be entitled, or any grievances that employee may have.
There are differing classifications of workers within a company. Some are part-time
and Some are full-time
and permanent and receive a guaranteed salary
, while others are hired for short term contracts or work as temps or consultants
. These latter differ from permanent employees in that the company where they work is not their employer, but they may work through a temp-agency or consulting firm. In this respect, it is important to distinguish independent contractors
from employees, since the two are treated differently both in law
and in most taxation
systems. In the United States
, employers are required to withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. Employers generally do not pay or withhold payroll taxes
on payments to independent contractors.
Many companies further classify employees as exempt or non-exempt. This designation is used to separate employees that are eligible for overtime from those that are not. An exempt employee is one that is typically salaried and is not eligible to earn overtime. Non-exempt employees are typically paid hourly and are eligible for overtime pay.
Employees can organize into trade unions
or labor unions, who represent most of the available work force in a single organization. They utilize their representative power to collectively bargain with the management of companies in order to advance concerns and demands of
An offer of employment, however, does not guarantee employment for any length of time and each party may terminate the relationship at any time. This is referred to as at-will employment
. In some professions it is customary to offer 2 weeks notice when resigning for a job. However, leaving two weeks notice may not be legally enforceable.
In the United States
, the standard employment contract
is considered to be at-will
meaning that the employer and employee are both free to terminate the employment at any time and for any cause, or for no cause at all. However, if a termination of employment
by the employer is deemed unjust
by the employee, there can be legal recourse to challenge such a termination. In unionised
work environments in particular, employees who are receiving discipline
, up to and including termination of employment can ask for assistance by their shop steward
to advocate on behalf of the employee. If an informal negotiation
between the shop steward and the company does not resolve the issue, the shop steward may file a grievance
, which can result in a resolution within the company, or mediation
, which are typically funded equally both by the union and the company. In non-union work environments, in the United States, unjust termination complaints can be brought to the United States Department of Labor
. In Australia
there is the highly controversial Australian Workplace Agreement
. In the Canadian province
, formal complaints can be brought to the Ministry of Labour (Ontario)
. In the province of Quebec
, grievances can be filed with the Commission des normes du travail
India is having Contact Labour Act, Minimum Wages Act and Provident Funds Act. The contract labour in India has to be paid minimum wages and a lot of facilities are to be provided to labour. But a lot of work needs to be done to fully implement the Acts.
Opponents of capitalism such as Marxists
oppose the capitalist employment system, considering it to be unfair that the people who contribute the majority of work to an organization do not receive a proportionate share of the profit and that full employment is rarely reached under capitalism.
The Surrealists and the Situationists were among the few groups to actually oppose work, and during the partially surrealist-influenced events of May 1968 the walls of the Sorbonne were covered with anti-work graffiti.
A developing model of employment, as practiced by such companies as Semco, Google, DaVita, Freys Hotels and Linden Labs, seeks to set aside the "master-servant relationship" implicit in the traditional employment contract. The concommitant employment practices are often grouped under the heading Workplace democracy
, and are characterised by high levels of employee engagement; principles-based rather than rules-based work relations; and a problem-solving approach to workplace conflict. In this model management
(including its employment function) effectively becomes a domain shared between managers and staff. The resurgent New Unionism
movement promotes this employment model, and seeks to extend it.
When an individual entirely owns the business for which he or she labours, this is known as self-employment. Self-employment often leads to incorporation. Incorporation offers certain protections of one's personal assets. Laws of incorporation vary from state to state with Delaware having the most incorporated businesses of any state in the U.S.
Workers who are not paid wages, such as volunteers, are generally not considered as being employed. One exception to this is an internship, an employment situation in which the worker receives training or experience (and possibly college credit) as the chief form of compensation.
Those who work under obligation for the purpose of fulfilling a debt, such as an indentured servant, or as property of the person or entity they work for, such as a slave, do not receive pay for their services and are not considered employed. Some historians suggest that slavery is older than employment, but both arrangements have existed for all recorded history.
Globalization and employment relations
The balance of economic efficiency and social equity is the ultimate debate in the field of employment relations. By meeting the needs of the employer; generating profits to establish and maintain economic efficiency; whilst maintaining a balance with the employee and creating social equity that benefits the worker so that he/she can fund and enjoy healthy living; proves to be a continuous revolving issue in westernized societies.
Globalization has effected these issues by creating certain economic factors that disallow or allow various employment issues. Economist Edward Lee (1996) studies the effects of globalization and summarizes the four major points of concern that affect employment relations:
- International competition, from the newly industrialized countries, will cause unemployment growth and increased wage disparity for unskilled workers in industrialized countries. Imports from low-wage countries exert pressure on the manufacturing sector in industrialized countries and foreign direct investment (FDI) is attracted away from the industrialized nations, towards low-waged countries.
- Economic liberalization will result in unemployment and wage inequality in developing countries. This happens as job losses in un-competitive industries outstrip job opportunities in new industries.
- Workers will be forced to accept worsening wages and conditions, as a global labour market results in a “race to the bottom”. Increased international competition creates a pressure to reduce the wages and conditions of workers.
- Globalization reduces the autonomy of the nation state. Capital is increasingly mobile and the ability of the state to regulate economic activity is reduced.
What also results from Lee’s (1996) findings is that in industrialized countries an average of almost 70 per cent of workers are employed in the service sector, most of which consists of non-tradable activities. As a result, workers are forced to become more skilled and develop sought after trades, or find other means of survival. Ultimately this is a result of changes and trends of employment, an evolving workforce, and globalization that is represented by a more skilled and increasing highly diverse labour force, that are growing in non standard forms of employment (Markey, R. et.al. 2006).
- Lee, E. (1996), "Globalization and employment", International Labour Review, Vol. 135 No.5, pp.485-98.
- Raymond Markey, Ann Hodgkinson, Jo Kowalczyk (2002), “Gender, part-time employment and employee participation in Australian workplaces” Employee Relations, Vol. 24 Iss. 2 Pp. 129 - 150
- Wood , J, Wallace, J, Zeffane, R, CHampan, J, Fromholtz, M, Morrison V(2004), Organisational Behaviour:A global perspective, 3rd edition, John Wiley and Sons, QLD, Australia.p 355-357.
- Stone, R, (2005), Human Resource Management, 5th edition, John Wiley and Sons, QLD Australia.p 412-414
- Dubin, R, (1958) The World Of Work: Industrial Society and Human Relations, Prentice – Hall, Englewood Cliff, NJ, p 213