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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 detail 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 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 labor.

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 job interview with 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.


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 their membership.

Ending employment

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 two weeks notice when resigning for a job, but that may not be legally enforceable.

Employment contract


In Australia there is the controversial Australian Workplace Agreement.


In the Canadianmarker province of Ontariomarker, formal complaints can be brought to the Ministry of Labour . In the province of Quebecmarker, grievances can be filed with the Commission des normes du travail.


Indiamarker 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 Acts.


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 Statesmarker, 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. 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.

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

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.

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 2

World War 2 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 2

In the post-World War 2 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 left school and 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, or vehicles, or investments for the future.

The sheer number of people in the workforce during this period created heightened competition for work, so that corporations who supplied jobs could be increasingly selective and demanding, and workers would do more and more to keep the job they had. 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 "so, 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 isn't as much supply of workers to replace them, so corporations have had to become more accommodating in order to attract the best from this cohort, who've enjoyed less competition and more flexibility than previous generations. Terms like "work life balance", "telecommuting and work from home" and flexible benefits packages have developed in part to offer more attractive options for a generation that has more choice .

Work as an economic component


Capitalism demarcates "work" as something that is supplied by "owners" and demanded by "non owners" to a great degree. In this viewpoint, the risk associated with owning and operating a business is seen as fairly rewarding the risk-taker with the lion's share of profits, even though in reality the lion's share of the "work" to provide the good or service is provided at the worker level. Unsafe and unfair work conditions and a lack of profit-share are among the key factors that contributed to the establishment of unions.


The purpose of a union is 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

Opponents of capitalism, such as Marxist 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, or purports to allow, 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 communistic 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 "you can do whatever you want", or "you don't have to work hard to get by okay". 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 the debate rages, and different countries subscribe to and build their society on different approaches, clearly "work" plays a great role in the definition of a society and the culture of government that will be in place to administer its functioning.

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 Sorbonnemarker 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.


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:
  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


  • 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

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