Employment is a relationship between two parties, usually based on contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee. Employees work in return for payment, which may be in the form of an hourly wage, by piecework or an annual salary, depending on the type of work an employee does or which sector they are working in. Employees in some fields or sectors may receive gratuities, bonus payment or stock options. In some types of employment, employees may receive benefits in addition to payment. Benefits can include health insurance, housing, disability insurance or use of a gym. Employment is typically governed by employment laws, organisation or legal contracts.
Employees and employersAn employee contributes labor and expertise to an endeavor of an employer or of a person conducting a business or undertaking and is usually hired to perform specific duties which are packaged into a job. In a corporate context, an employee is a person who is hired to provide services to a company on a regular basis in exchange for compensation and who does not provide these services as part of an independent business.
An issue that rises in most companies, especially the ones that are in the gig economy, is the classification of workers. A lot of workers that fulfill gigs are often hired as independent contractors.
As a general principle of employment law, in the United States, there is a difference between an agent and an independent contractor. The default status of a worker is employee unless specific guidelines are met, which can be determined by the ABC test. Thus, clarifying whether someone who performs work is an independent contractor or an employee from the beginning, and treating them accordingly, can save a company from trouble later on.
Provided key circumstances, including ones such as that the worker is paid regularly, follows set hours of work, is supplied with tools from the employer, is closely monitored by the employer, acting on behalf of the employer, only works for one employer at a time, they are considered an employee, and the employer will generally be liable for their actions and be obliged to give them benefits. In order to stay protected and avoid lawsuits, an employer has to be aware of that distinction.
Employer–worker relationshipEmployer 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 labor productivity in order to achieve a profitable and productive employment relationship.
Labor acquisition / hiringThe 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. However, a study has shown that such consultants may not be reliable when they fail to use established principles in selecting employees. A more traditional approach is with a "Help Wanted" sign in the establishment. Evaluating different employees can be quite laborious but setting up different techniques to analyze their skill to measure their talents within the field can be best through assessments. Employer and potential employee commonly take the additional step of getting to know each other through the process of job interview.
Training and developmentrefers to the employer's effort to equip a newly hired employee with necessary skills to perform at the job, and to help the employee grow within the organization. An appropriate level of training and development helps to improve employee's job satisfaction.
RemunerationThere are many ways that employees are paid, including by hourly wages, by piecework, by yearly salary, or by gratuities. In sales jobs and real estate positions, the employee may be paid a commission, a percentage of the value of the goods or services that they have sold. In some fields and professions, employees may be eligible for a bonus if they meet certain targets. Some executives and employees may be paid in stocks or stock options, a compensation approach that has the added benefit, from the company's point of view, of helping to align the interests of the compensated individual with the performance of the company.
Under the faithless servant doctrine, a doctrine under the laws of a number of states in the United States, and most notably New York State law, an employee who acts unfaithfully towards his employer must forfeit all of the compensation he received during the period of his disloyalty.
Employee benefitsare various non-wage compensation provided to employee in addition to their wages or salaries. The benefits can include: housing, group insurance, disability income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation, social security, profit sharing, funding of education, and other specialized benefits. In some cases, such as with workers employed in remote or isolated regions, the benefits may include meals. Employee benefits can improve the relationship between employee and employer and lowers staff turnover.
Organizational justiceis an employee's perception and judgement of employer's treatment in the context of fairness or justice. The resulting actions to influence the employee-employer relationship is also a part of organizational justice.
Workforce organizingEmployees can organize into trade or labor unions, which represent the work force to collectively bargain with the management of organizations about working, and contractual conditions and services.
Ending employmentUsually, either an employee or employer may end the relationship at any time, often subject to a certain notice period. This is referred to 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. In some professions, notably teaching, civil servants, university professors, and some orchestra jobs, some employees may have tenure, which means that they cannot be dismissed at will. Another type of termination is a layoff.
Wage laborWage labor is the socioeconomic relationship between a worker and an employer, where the worker sells their labor under a formal or informal employment contract. These transactions usually occur in a labor market where wages are market determined. In exchange for the wages paid, the work product generally becomes the undifferentiated property of the employer, except for special cases such as the vesting of intellectual property patents in the United States where patent rights are usually vested in the original personal inventor. A wage laborer is a person whose primary means of income is from the selling of his or her labor in this way.
In modern mixed economies such as that of the OECD countries, it is currently the dominant form of work arrangement. Although most work occurs following this structure, the wage work arrangements of CEOs, professional employees, and professional contract workers are sometimes conflated with class assignments, so that "wage labor" is considered to apply only to unskilled, semi-skilled or manual labor.
Wage slaveryWage labor, as institutionalized under today's market economic systems, has been criticized, especially by both mainstream socialists and anarcho-syndicalists, using the pejorative term wage slavery. Socialists draw parallels between the trade of labor as a commodity and slavery. Cicero is also known to have suggested such parallels.
The American philosopher John Dewey posited that until "industrial feudalism" is replaced by "industrial democracy", politics will be "the shadow cast on society by big business". Thomas Ferguson has postulated in his investment theory of party competition that the undemocratic nature of economic institutions under capitalism causes elections to become occasions when blocs of investors coalesce and compete to control the state plus cities.
AustraliaAustralian employment has been governed by the Fair Work Act since 2009.
BangladeshBangladesh Association of International Recruiting Agencies is an association of national level with its international reputation of co-operation and welfare of the migrant workforce as well as its approximately 1200 members agencies in collaboration with and support from the Government of Bangladesh.
CanadaIn the Canadian province of Ontario, formal complaints can be brought to the Ministry of Labour. In the province of Quebec, grievances can be filed with the .
Pakistanhas no contract Labor, Minimum Wage and Provident Funds Acts. Contract labor in Pakistan must be paid minimum wage and certain facilities are to be provided to labor. However, the Acts are not yet fully implemented.Department of Labor and Employment.
United KingdomIn the United Kingdom, employment contracts are categorized by the government into the following types:
- Fixed-term contract: last for a certain length of time, are set in advance, end when a specific task is completed, ends when a specific event takes place.
- Full-time or part-time contract: has no defined length of time, can be terminated by either party, is to accomplish a specific task, specified number of hours.
- Agency staff
- Freelancers, Consultants and Contractors
- Zero-hour contracts
"For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term “employee” also includes an officer of a corporation." This definition does not exclude all those who are commonly known as 'employees'. “Similarly, Latham’s instruction which indicated that under 26 U.S.C. § 3401 the category of ‘employee’ does not include privately employed wage earners is a preposterous reading of the statute. It is obvious that within the context of both statutes the word ‘includes’ is a term of enlargement not of limitation, and the reference to certain entities or categories is not intended to exclude all others.”
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.
In non-union work environments, in the United States, unjust termination complaints can be brought to the United States Department of Labor.
Labor unions are legally recognized as representatives of workers in many industries in the United States. Their activity today centers on collective bargaining over wages, benefits, and working conditions for their membership, and on representing their members in disputes with management over violations of contract provisions. Larger unions also typically engage in lobbying activities and electioneering at the state and federal level.
Most unions in America are aligned with one of two larger umbrella organizations: the AFL-CIO created in 1955, and the Change to Win Federation which split from the AFL-CIO in 2005. Both advocate policies and legislation on behalf of workers in the United States and Canada, and take an active role in politics. The AFL-CIO is especially concerned with global trade issues.
American business theorist Jeffrey Pfeffer posits that contemporary employment practices and employer commonalities in the United States, including toxic working environments, job insecurity, long hours and increased performance pressure from management, are responsible for 120,000 excess deaths annually, making the workplace the fifth leading cause of death in the United States.
SwedenAccording to Swedish law, there are three types of employment.
- Test employment, where the employer hires a person for a test period of 6 months maximum. The employment can be ended at any time without giving any reason. This type of employment can be offered only once per employer and in employee combination. Usually a time limited or normal employment is offered after a test employment.
- Time limited employment. The employer hires a person for a specified time. Usually they are extended for a new period. Total maximum two years per employer and employee combination, then it automatically counts as a normal employment.
- Normal employment, which has no time limit. It can still be ended for two reasons: personal reason, immediate end of employment only for strong reasons such as crime, or lack of work tasks, 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 is a type of employment contract which is common but not regulated in law, and that is Hour employment, which can be Normal employment, but the work time is unregulated and decided per immediate need basis. The employee is expected to be answering the phone and come to work when needed, e.g. when someone is ill and absent from work. They will receive salary only for actual work time and can in reality be fired for no reason by not being called anymore. This type of contract is common in the public sector.
Younger age workersYoung workers are at higher risk for occupational injury and face certain occupational hazards at a higher rate; this is generally due to their employment in high-risk industries. For example, in the United States, young people are injured at work at twice the rate of their older counterparts. These workers are also at higher risk for motor vehicle accidents at work, due to less work experience, a lower use of seat belts, and higher rates of distracted driving. To mitigate this risk, those under the age of 17 are restricted from certain types of driving, including transporting people and goods under certain circumstances.
High-risk industries for young workers include agriculture, restaurants, waste management, and mining. In the United States, those under the age of 18 are restricted from certain jobs that are deemed dangerous under the Fair Labor Standards Act.
Youth employment programs are most effective when they include both theoretical classroom training and hands-on training with work placements.
In the conversation of employment among younger aged workers, youth unemployment has also been monitored. Youth unemployment rates tend to be higher than the adult rates in every country in the world.
Older age workersThose older than the statutory defined retirement age may continue to work, either out of enjoyment or necessity. However, depending on the nature of the job, older workers may need to transition into less-physical forms of work to avoid injury. Working past retirement age also has positive effects, because it gives a sense of purpose and allows people to maintain social networks and activity levels. Older workers are often found to be discriminated against by employers.
Working poorEmployment is no guarantee of escaping poverty, the International Labour Organization estimates that as many as 40% of workers are poor, not earning enough to keep their families above the $2 a day poverty line. 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. According to the UNRISD, increasing labor 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%. Both increased employment opportunities and increased labor productivity 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 labor market policies. This approach does highlight how higher productivity has helped reduce poverty in East Asia, but the negative impact is beginning to show. In Vietnam, for example, employment growth has slowed while productivity growth has continued. Furthermore, productivity increases do not always lead to increased wages, as can be seen in the United States, where the gap between productivity and wages has been rising since the 1980s.
Researchers at the Overseas Development Institute argue that there are differences across economic sectors in creating employment that reduces poverty. 24 instances of growth were examined, in which 18 reduced poverty. This study showed that other sectors were just as important in reducing unemployment, such as manufacturing. 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.
Models of the employment relationshipScholars conceptualize the employment relationship in various ways. 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. In economic theorizing, the labor 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. 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, and some conflicts of interests are seen as inherent in the employment relationship. Lastly, the critical paradigm emphasizes antagonistic conflicts of interests between various groups that are part of a deeper social conflict of unequal power relations. As a result, there are four common models of employment:
- Mainstream economics: employment is seen as a mutually advantageous transaction in a free market between self-interested legal and economic equals
- Human resource management : employment is a long-term partnership of employees and employers with common interests
- 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
- 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.
Academic literatureLiterature on the employment impact of economic growth and on how growth is associated with employment at a macro, sector and industry level was aggregated in 2013.
Researchers found evidence to suggest growth in manufacturing and services have good impact on employment. They found GDP growth on employment in agriculture to be limited, but that value-added growth had a relatively larger impact. The impact on job creation by industries/economic activities as well as the extent of the body of evidence and the key studies. For extractives, they again found extensive evidence suggesting growth in the sector has limited impact on employment. In textiles however, although evidence was low, studies suggest growth there positively contributed to job creation. In agri-business and food processing, they found impact growth to be positive.
They found that most available literature focuses on OECD and middle-income countries somewhat, where economic growth impact has been shown to be positive on employment. The researchers didn't find sufficient evidence to conclude any impact of growth on employment in LDCs despite some pointing to the positive impact, others point to limitations. They recommended that complementary policies are necessary to ensure economic growth's positive impact on LDC employment. With trade, industry and investment, they only found limited evidence of positive impact on employment from industrial and investment policies and for others, while large bodies of evidence does exist, the exact impact remains contested.
Researchers have also explored the relationship between employment and illicit activities. Using evidence from Africa, a research team found that a program for Liberian ex-fighters reduced work hours on illicit activities. The employment program also reduced interest in mercenary work in nearby wars. The study concludes that while the use of capital inputs or cash payments for peaceful work created a reduction in illicit activities, the impact of training alone is rather low.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 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 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 uncompetitive industries outstrip job opportunities in new industries.
- Workers will be forced to accept worsening wages and conditions, as a global labor 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.