Difference between an Employee and an Employer

In commerce and entrepreneurship, the terms employee and employer are often used. Both terms are involved in ‘exchange of services’ and ‘payment’ which are crucial to business.

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.

Employer

The employer is the organization or company which puts to work, employs or hires the services of the employee. The employer can also be an individual, a small business, a government entity, an agency, a professional services firm, a store, an institution or a non-profit association. The employer has the mandate of compensating the services rendered by the employee in a way which is agreed upon by both parties in the employment contract or as per the organization’s policy. These ways include a salary, an hourly, daily or weekly wage and other employment benefits as legally outlined by the local laws and provided by the employer.

In a workplace which is represented by a union, the employer bears the obligation of paying as per the union-negotiated contract. The employer has the power of terminating the employment of a worker if the employee fails to meet the standards expected at the time of employment or if he or she breaks some rules as set by the employer.

Common Features

Mutual Dependence

The employer and the employee both depend on each other for achieving a set target and therefore both mutually gain something from each other.

This is an important factor which enables sustainability. The employers depend on the employees to perform specific tasks and in so doing help them in achieving their business goals and ensure the business runs smoothly.

On the other hand, the employee depends on the employer to pay him or her the agreed salary or wages and thereby enable them to financially support themselves and possibly their families. In case one of the parties feels that they are not getting enough on their end of the bargain, the relationship is likely to be terminated if negotiations fail. The employer might decide to fire the employee if they are dissatisfied or otherwise the employee can just resign or quit their job.

Bonding

The relationship that exists between the employer and the employee is a relationship that must be developed over time. This development requires the input of both parties, that is, the employer and the employee. The employer can play their part of establishing and developing a relationship with their employees by showing interest in their life away from work, asking the employees about their families and learning about what their interests are.

Employees can contribute by being more open to their employers and talking about themselves and their lives away from work comfortably. These relationships are important to the success of the business since a strong relationship makes the workers satisfied and consequently increases productivity.

Restrictions

For a sustainable relationship, there needs to be established lines that should not be crossed and beyond which a relationship stops being beneficial to a business anymore, sometimes even toxic. These restrictions and limits exist in every company setup although the type of relationship which is considered healthy may vary from company to company.

In general, romantic relationships between the employer and the employee are unhealthy in most companies. The employee should also be careful not to develop a relationship with the employer which is closer than the relationship between the employer and the other employees as this may raise favoritism concerns and other unfairness issues in the workplace.

Both the employer and the employee share the responsibility of making sure that their relationship does not cross the restrictions of professionalism and those of the company standards.

Difference between Employee and Employer

Goal

The objectives of an employer and those of an employee are different and necessary for the existence of that relationship. The employers aim to improve their productivity be it organizational or industrial. By hiring the services of the employee and assigning them to a role which suits the employee’s qualifications, the employer targets to maximize the productivity of that specific area or to eliminate errors which 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.

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 must responsibly do whatever is under their power and ability to achieve this. The employer provides other benefits for the employee besides the salary in order to take care of this. 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. Employees are also required not to misuse any confidential information they acquire from the employer during the time of service.

Level of Authority

The employer has more authority than the employee. In fact, the employer can and, in most cases, does monitor and control what the employee does, and sometimes even how they do it. Employees carry out roles which have been assigned by the employer and reports to the employer. However, the employee does not have authority over the employer. Their authority can only be exercised with lower level employees. The employer also has the authority of terminating the employment of the employer if justified by the company policy and the employment contract. 

Table 1: Summary of the differences between an employer and an employee.

It is now easier to tell apart these two commonly used terms after understanding these few differences in terms of the goals of each of the parties, the cash flow, their roles and responsibilities and their different levels of authority.