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Employment 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 of hire, express or implied, oral or written, where the employer has the power or right 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).



An employee contributes labor and expertise to an endeavor of an employer and is usually hired to perform specific duties which are packaged into a 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.

Other types of employment are arrangements such as indenturing which is now highly unusual in developed nations but still happens elsewhere.

The employer-worker relationship

An employer's level of power over its workers is dependent upon numerous factors, the most influential being the nature of the contractual relationship between the two. This relationship is affected by three significant factors: interests, control and motivation. It is generally considered the employers' responsibility to manage and balance these factors in a way that enables a harmonious and productive working relationship.

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.

Finding employees or employment

The main ways for employers to find workers and for people to find employers are via jobs listings in newspapers and online, also called job boards. Employers and job seekers also often find each other via professional recruitment consultants which receive a commission from the employer to find, screen and select suitable candidates.

Workforce organizing

Employees can organize into trade or labor unions, which represent the work force to collectively bargain with the management of organisations about working and contractual conditions.

Ending employment

Usually, either an employee or employer may end the relationship at any time. This is called as at-will employment. The contract between the two parties specifies the responsibilities of each when ending the relationship and may include requirements such as notice periods, severance pay, and security measures.

Employment contract


In Australia there is the controversial Australian Workplace Agreement. In March 2008 a bill was passed in the Austons for workers to be transferred from AWAs into intermediate agreements [1]


In the Canadian province of Ontario, 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.


Pakistan has Contract Labour, Minimum Wage and Provident Funds Acts. Contract labour in Pakistan must be paid minimum wage and certain facilities are to be provided to labour. However, a lot of work has yet to be done to fully implement the Acts.


India has Contract Labour, Minimum Wage and Provident Funds Acts. Contract labour in India must be paid minimum wage and certain facilities are to be provided to labour. However, a lot of work has yet to be done to fully implement the Act.


In the Philippines, private employment is regulated under the Labor Code of the Philippines by the Department of Labor and Employment.

United States

In the United States, the standard employment relationship 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[2] by the employer is deemed unjust by the employee, there can be legal recourse to challenge such a termination. Unjust termination may include termination due to discrimination because of an individual's race, national origin, sex or gender, pregnancy, age, physical or mental disability, religion, or military status. Additional protections apply in some states, for instance in California unjust termination reasons include marital status, ancestry, sexual orientation or medical condition. Despite whatever agreement an employer makes with an employee for the employee's wages, an employee is entitled to certain minimum wages set by the federal government. The states may set their own minimum wage that is higher than the federal government's to ensure a higher standard of living or living wage for their residents. Under the Equal Pay Act of 1963 an employer may not give different wages based on sex alone.[3]

Employees are often contrasted with independent contractors, especially when there is dispute as to the worker's entitlement to have matching taxes paid, workers compensation, and unemployment insurance benefits. However, in September 2009, the court case of Brown v. J. Kaz, Inc. ruled that independent contractors are regarded as employees for the purpose of discrimination laws if they work for the employer on a regular basis, and said employer directs the time, place, and manner of employment.[4]

In non-union work environments, in the United States, unjust termination complaints can be brought to the United States Department of Labor.

Trade Unions in the United States

In unionized 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 or arbitration, which are typically funded equally both by the union and the company.

In the US, employment law and, in particular, unionized employees terminating employment varies among companies, unions, and states. Some states have right to work vs. employment at will and therefore, ending employment can change from state to state. Secondly, different companies have different rules and processes for ending employment. In certain companies and industries they take the 3-step process: written warning, second written, final written and then termination. In addition, different unions have different steps for ending employment. Something that doesn't change is the stewards and unions protecting their employees with regards to violations of policies. In most all cases, union and stewards will protect their employees even if they feel the employee violated the policy ending to termination.


According to Swedish law[5], there are three types of employment.

  • Test employment (swe: Provanställning), where the employer hires a person for a test period of max 6 months. The employment can be ended at any time without giving any reason. This type of employment can be offered only once per employer and employee. Usually a time limited or normal employment is offered after a test employment.
  • Time limited employment (swe: Tidsbegränsad anställning). The employer hires a person for a specified time. Usually they are extended for a new period. Total maximum two years per employee per employer and employee, then it automatically counts as a normal employment.
  • Normal employment (swe: Tillsvidareanställning / Fast anställning), which has no time limit (except for retirement etc.). It can still be ended for two reasons: personal reason, only strong reasons such as crime. Or: lack of work tasks (swe: Arbetsbrist), cancellation of employment, usually because of bad income for the company. There is a cancellation period of 1-6 months, and rules for how to select employees, basically those with shortest employment time shall be cancelled first.

There are no laws about minimum salary in Sweden. Instead there are agreements between employer organisations and trade unions about minimum salaries, and other employment conditions.

Working Poor

Employment is no guarantee of escaping poverty, the International Labour Organisation (ILO) estimates that as many as 40% of workers as poor, not earning enough to keep their families above the $2 a day poverty line.[6] For instance, in India most of the chronically poor are wage earners in formal employment, because their jobs are insecure and low paid and offer no chance to accumulate wealth to avoid risks.[6] This problems appears to be caused by the decreasing likelihood of a simultaneous growth in employment opportunities and in labour productivity.[6] According to the UNRISD, increasing labour productivity appears to have a negative impact on job creation: in the 1960s, a 1% increase in output per worker was associated with a reduction in employment growth of 0.07%, by the first decade of this century the same productivity increase implies reduced employment growth by 0.54%.[6] Both increased employment opportunities and increased labour productivity (as long as it also translates into higher wages) are needed to tackle poverty. Increases in employment without increases in productivity leads to a rise in the number of "working poor", which is why some experts are now promoting the creation of "quality" and not "quantity" in labour market policies.[6] This approach does highlight how higher productivity has helped reduce poverty in East Asia, but the negative impact is beginning to show.[6] In Viet Nam, for example, employment growth has slowed while productivity growth has continued.[6] Furthermore, productivity increases do not always lead to increased wages, as can be seen in the US, where the gap between productivity and wages has been rising since the 1980s.[6]

Researchers at the Overseas Development Institute argue that there are differences across economic sectors in creating employment that reduces poverty.[6] 24 instances of growth were examined, in which 18 reduced poverty. This study showed that other sectors were just as important in reducing unemployment, as manufacturing.[6] The services sector is most effective at translating productivity growth into employment growth. Agriculture provides a safety net for jobs and economic buffer when other sectors are struggling.[6]

Growth, employment and poverty[6]
Number of episodes Rising agricultural employment Rising industrial employment Rising services employment
Growth episodes associated with falling poverty rates 18 6 10 15
Growth episodes associated with no fall in poverty rates 6 2 3 1

Culture and social considerations

Ideological shifts in demographic eras:

The Depression era

The Depression placed great emphasis on work when it was so scarce that to not work literally meant to starve. Families were separated as men went looking for work wherever it could be found, whatever it was, no matter how menial. Life expectancy in the 1930s was also not as long as the current (2008) expectancies, so the option for a family to "move back in with parents" wasn't worthwhile, as parents either weren't alive, or didn't have the investment environment to have had a "nest egg" to depend on.

World War II

World War II dramatically flipped the supply and demand of both work and labour. Manufacturing of war supplies created plenty of work, but the absence of men due to recruitment opened the floodgates for labour demand that would be met by women and those who could not enlist and fight.

Post World War II

In the post-World War II period, the workplace had changed as women who had reported for work during the war to replace the men who had gone overseas to fight remained in the workplace to a significant extent. While the demand for manufacturing wasn't as high once the war ended, the new optimism and new social phenomena including urban sprawl created new demands for supply that would create new jobs in road-building, real estate development, etc. Work remained high in social value.

Babyboom competition

As the baby boomers started working in the 1970s, the oil crisis and economic lag slowed their engagement in consumerism. As the 1980s dawned, the largest generation were now in their peak employment years, peaking in terms of income, and were now fully engaged in buying, whether homes, vehicles, or investments for the future.

The sheer number of people in the workforce during this period created heightened competition for work, so that businesses and government bodies could be increasingly selective and demanding, and workers would do more and more to get and keep jobs. As such, commitment to work became sacrificial, as having a good job and the social status it provided became all-consuming for many. This was the era marked most significantly by the standard introduction of "what do you do?"

Baby bust and echo

The baby bust generation, or Generation X, is the smallest of the last 50 years. As baby boomers retire, there are not as many workers to replace them, so employers have had to become more accommodating to attract the best employees. Terms like "work life balance", "telecommuting", "working from home" and "flexible benefits" have been developed to offer more attractive options for a generation that has more choice[citation needed].

Models of the employment relationship

Scholars conceptualize the employment relationship in various ways.[7] A key assumption is the extent to which the employment relationship necessarily includes conflicts of interests between employers and employees, and the form of such conflicts.[8] In economic theorizing, the labour market mediates all such conflicts such that employers and employees who enter into an employment relationship are assumed to find this arrangement in their own self-interest. In human resource management theorizing, employers and employees are assumed to have shared interests (or a unity of interests, hence the label “unitarism”). Any conflicts that exist are seen as a manifestation of poor human resource management policies or interpersonal clashes such as personality conflicts, both of which can and should be managed away. From the perspective of pluralist industrial relations, the employment relationship is characterized by a plurality of stakeholders with legitimate interests (hence the label “pluralism), and some conflicts of interests are seen as inherent in the employment relationship (e.g., wages v. profits). Lastly, the critical paradigm emphasizes antagonistic conflicts of interests between various groups (e.g., the competing capitalist and working classes in a Marxist framework) that are part of a deeper social conflict of unequal power relations. As a result, there are four common models of employment:[9]

  1. Mainstream economics: employment is seen as a mutually advantageous transaction in a free market between self-interested legal and economic equals
  2. Human resource management (unitarism): employment is a long-term partnership of employees and employers with common interests
  3. Pluralist industrial relations: employment is a bargained exchange between stakeholders with some common and some competing economic interests and unequal bargaining power due to imperfect labor markets
  4. Critical industrial relations: employment is an unequal power relation between competing groups that is embedded in and inseparable from systemic inequalities throughout the socio-politico-economic system.

These models are important because they help reveal why individuals hold differing perspectives on human resource management policies, labor unions, and employment regulation.[10] For example, human resource management policies are seen as dictated by the market in the first view, as essential mechanisms for aligning the interests of employees and employers and thereby creating profitable companies in the second view, as insufficient for looking out for workers’ interests in the third view, and as manipulative managerial tools for shaping the ideology and structure of the workplace in the fourth view.[11]

Work as an economic component

Capitalism demarcates "work" as something that is supplied by "owners" and demanded by "non-owners" to a great degree. "Owners" in this context are the employers, which are rewarded for the risk they take in owning and operating a business with keeping most of the profits. Some see this as unfair as most of the day-to-day work of a business is performed by people who receive less of the profits. This idea contributed to the establishment of trade unions, although unsafe work conditions also played a major part.


The purpose of a union is the formulation of a written contract between the employer and the employee, specifying the rights and duties of each.

Prior to the existence of unions, very few labor contracts existed, allowing the employer to re-define the job any time, occasionally to the detriment of the employee.

In the purest sense, a union leverages the collective strength of a group of workers to force owners and management to increase their compensation.

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, regardless of their level of financial risk, do not receive a proportionate share of the profit and that full employment is rarely reached under capitalism.

Other "isms"

Marxist communism reorders the hierarchy to suggest that all citizens of a society, regardless of individual differences, are equal owners and are thus entitled to equal share of the wealth of the society.

Value of labor

The value of work is also informed by the economic system in which it functions.

Capitalism allows the marketplace to determine the value of a good or service based on demand, rather than impose a value on a good or service. In a communist environment, the state determines the value a job may have, and may also open or close avenues to those jobs, creating less of a sense of freedom as to who may occupy those jobs.

Socio-psychological concepts of freedom, self-actualization, motivation and aspiration are thus tested in a society where a person is not taught the value of contributing to enterprise. The capitalist system suggests that success is unlimited or directly proportional to how much an individual wants to work at it, while opponents of communism suggest that imposing value takes away the motivation for someone to be better at their job than the next guy who isn't working as hard but the value in what they do is fixed regardless of performance.

While different countries subscribe to and build their societies on different approaches, clearly "work" plays a great role in the definition of a society and its culture.

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. Bob Black is an anarchist author who is well known for exploring the ideas of opposition to work in the essay The Abolition of Work, published in 1985.


Workplace democracy

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 characterized 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 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.

Indenturing and slavery

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.[12] 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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).

See also


  1. ^ House of Reps seals 'death' of WorkChoices - ABC News (Australian Broadcasting Corporation)
  2. ^ "Employment (Broken Link)". http://careerfield.org/blog/2010/08/23/employment/. 
  3. ^ "Equal Pay Act of 1963 - Wage Discrimination". http://www.finduslaw.com/equal_pay_act_of_1963_epa_29_u_s_code_chapter_8_206_d. 
  4. ^ "Brown v. J. Kaz, Inc., No. 08-2713 (3d Cir. Sept. 11, 2009)". http://www.employmentlawblog.info/2009/09/brown-v-j-kaz-inc-no-08-2713-3d-cir-sept-11-2009.shtml. Retrieved 2010-01-23. 
  5. ^ Lag om anställningsskydd (1982:80)
  6. ^ a b c d e f g h i j k l Claire Melamed, Renate Hartwig and Ursula Grant 2011. Jobs, growth and poverty: what do we know, what don't we know, what should we know? London: Overseas Development Institute
  7. ^ Kaufman, Bruce E. (2004) Theoretical Perspectives on Work and the Employment Relationship, Industrial Relations Research Association.
  8. ^ Fox, Alan (1974) Beyond Contract: Work, Power and Trust Relations, Farber and Farber.
  9. ^ Budd, John W. and Bhave, Devasheesh (2008) "Values, Ideologies, and Frames of Reference in Industrial Relations," in Sage Handbook of Industrial Relations, Sage.
  10. ^ Befort, Stephen F. and Budd, John W. (2009) Invisible Hands, Invisible Objectives: Bringing Workplace Law and Public Policy Into Focus, Stanford University Press.
  11. ^ Budd, John W. and Bhave, Devasheesh (2010) "The Employment Relationship," in Sage Handbook of Handbook of Human Resource Management, Sage.
  12. ^ Budd, John W. (2004) Employment with a Human Face: Balancing Efficiency, Equity, and Voice, Cornell University Press.


  • 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
  • Freeman, Richard B. and Daniel L. Goroff (2009). Science and Engineering Careers in the United States: An Analysis of Markets and Employment. University of Chicago Press. ISBN 9780226261898. 

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