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what is the difference between employee and employer

what is the difference between employee and employer

what is the difference between employee and employer?

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what is the difference between employee and employer?

The words employment, employees and employer are quite common in commerce and entrepreneurship. It is needless to say that the existence of both parties is crucial for every business. Let us understand what is the difference between an employee and employer.

An employer and an employee deal in the exchange of services and they are dependent on each other. In order to run a business successfully, an employer would need employees. While employees rely on the former for financial support, growth opportunities and more.

A company or an organization can be called an employer. Similarly, a small or large business, a single individual, NGO, a government entity, a retailer, or a wholesaler can also be termed an employer.

Both the parties should agree to the terms and conditions of employment. We have given a detailed definition of this later in this blog.

On the other hand, an employee generally gets paid for the service he or she provides for the employer. It will depend on the company policy as well. There are several factors that both parties should agree to, such as salary, legal outlines, rules, etc.

An employee can be engaged to serve the organization or individual full-time or part-time as per compensation and rules. An employer can employ for weeks, months, or permanently. It depends on the work type as well.

what is the difference between employee and employer
what is the difference between employee and employer

What is an employer?

An employer is a person or business that hires an individual to perform work. An employer might be an individual, company, organization, government agency, institution or nonprofit organization. The employer pays an employee following employment contract terms.

Employers typically are expected to:

  • Ensure a safe work environment

  • Treat employees with respect

  • Provide tools, equipment and other supplies needed by employees to do their job

  • Pay employees the agreed-upon wages and benefits

  • Give written notice or appropriate severance pay when an employee is terminated or laid off

An employer also may be responsible for providing benefit programs according to local, state and federal laws or union contracts. Benefits often include health insurance, 401(k) programs, personal time off, family medical leave, etc. The employer also holds the authority for any terminations or layoffs that occur in the workplace. In the United States, “at-will” employment means an employer can fire an employee without giving a cause as long as the reasoning is not discriminatory or otherwise illegal. Individual states may have specific rules about this process.

Employers are also typically responsible for hiring employees to work under contracts. A contract may be:

  • Verbal: The employer and the employee verbally agree to the employment terms.

  • Implied: The employer and the employee don’t verbally agree to terms, but they might suggest or infer employment terms without formalizing them in writing.

  • Written: An employer, human resources professional and the employee will all typically sign and date employment terms.

Employers may hire employees as non-exempt or exempt. A non-exempt employee is typically paid for each hour worked. If they work hours beyond their shift, they may earn overtime, which is typically 1.5 times their normal wage.  This typically includes professional roles, administrative positions, executive jobs, and computer or outside sales positions.

What is an employee?

An employee is a person who works for an organization or a company on a part-time or full-time basis and receives compensation for the services rendered in form of a salary. However, not every individual who offers his or her services to an organization or company gets compensation for the rendered services can be considered an employee.

An employee is hired for a specific job or just to provide labor and does his/her work in the service of another entity, mostly the employer. The main difference between an employee and a contractor is that the employer has control over the activities of the employee, but the contractor does his or her work independently. The employee has a specified salary or wage and is bound by an employment contract, whether written, express or implied.

The organization which has hired the services of the employee do control or if not, they possess the right to control the work which is done by the employee and how the work is done.

what is the difference between employee and employer
what is the difference between employee and employer

Difference between Employee and Employer


The objectives of an employer and those of an employee are different and necessary for the existence of that relationship. Employers aim to improve their productivity be it organizational or industrial. By hiring the services of the employee and assigning them to a role that suits the employee’s qualifications.

The employer targets to maximize the productivity of that specific area or to eliminate errors that lag the general productivity of the organization.

The employee, on the other hand, seeks the job and renders the services required by the organization in exchange for the compensation in form of salaries and periodical wages. This gives the employee the ability to support themselves financially. And also to enjoy other employment benefits as may be provided by the employer.

Cash Flow

Another difference between the employer and the employee is the direction of cash flow in the company or business. On the side of the employer, the salary is a deduction from the income of the company. This income could be from the proceeds of the business if it is an enterprise or from grants and sponsorship if it is a non-profit association. The employer gives out the cash. However, for the employee, the salary is an addition to their finances as they are the recipients of the cash given by the employer.

In terms of profits, the profits garnered by the particular enterprise eventually find their way to the employers account and the employee can only get a part of the proceeds through the salary or as a bonus if the organization has a policy of rewarding most industrious workers.

Level of Authority

The employer has more authority than the employee. In fact, the employer can and, in most cases, monitor and controls what the employee does, and sometimes even how they do it.  However, the employee does not have authority over the employer. The employer also has the authority of terminating the employment of the employer if justified by the company policy and the employment contract. 

Roles and Responsibilities

The role of the employer is to protect the health, welfare,

and safety of the employees and any other persons that may be affected by the activities of the business. The employer provides other benefits for the employee besides the salary.

This includes providing things like health covers which extend to the employees’ family if they are parents and giving them catered-for vacations to ensure they are satisfied. This also improves their productivity. They should provide a conducive and safe workplace for their employees and ensure they are paid in good time.

The employee has the responsibility, among others, of obeying a lawful and sensible order as stipulated in the contract of employment. He or she should serve the employer faithfully and uphold loyalty and diligence when carrying out his or her duties.

what is the difference between employee and employer
what is the difference between employee and employer

 Employee VC Employer

Role Works for an organization, company, or person and receives a specific payment in return. Hires employees to work for their company or organization and give them a salary in return for their services.
Goal The employee’s main goal is to grow professionally and support themselves and their family financially. The employer’s main goal is to maximize the productivity and efficiency of the organization with the help of their employees.
Cash Flow The employees receive a specific amount of salary in return for their services to the organization. Employers give out salaries to the employees, and it is seen as a form of deduction. He/ She receives compensation from the profit earned by the business.
Responsibility The employee’s leading responsibility is to do their job honestly by following all the rules, abide by the contract of employment that they signed at the beginning of their career, be loyal to their employer, and most importantly is to do their work with dignity and faith. The employer’s leading responsibility is to look after the safety, health, and welfare of the employees and to ensure that they are working in a healthy environment and that their needs are being met so that they can give a productive result.
Authority The level of authority of the employees is that they can only control the employees that work under them. The level of authority of the employees is that they have full control over all their employees.

What is the difference between an employee and a worker?

Employee and worker are actually the same meaning, pertains to someone working for someone else. But employee used across white collar segment jobs, where as worker used in blue-collar segment jobs.

Employee status

An employee is an individual who has entered into or works (or worked) under the terms of a contract of employment. To have employee status:

  • An individual must be obliged to do the work personally (rather than being able to send a substitute).
  • The employer needs to be obliged to provide the work and the employee is obliged to accept the work.
  • The employer needs to have some control over the way the employee carries out the work.
what is the difference between employee and employer
what is the difference between employee and employer

Worker status

Worker status is sometimes seen as a “half-way house” between employee and self-employed

status. Workers are entitled to fewer statutory rights than employees,

but do have some key legal rights, including:

  • Protection from discrimination.
  • Protection against unlawful deduction from wages.
  • Entitlement to the national minimum wage.
  • Self-employed status
  • The self-employed enjoy no statutory employment rights (although they may be protected by discrimination law).

What is difference between employee and employer with example?

We can take an example of a company, where the employer is the CEO or the owner of the company where as the employee are the workers.


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