Duhaime's Law Dictionary


Employee Definition:

A person who has agreed by contract to perform specified services for another, the employer, in exchange for money.

Related Terms: Employment, Employer, Independent Contractor, Personal Services Contract, Supervisor, Employment at Will, Probationary Employee

Formerly known to the common law as servant; as in a master-servant relationship.

Derived from the French word employé as is the word employer is derived from its French counterpart employeur.

A significant concept in law as often determinative as to the individual's rights to claim compensation for unjust dismissal, or workmen's compensation benefits or taxation consequences that might flow if, in the alternative, the job was that of an independent contractor.

In Walton, Justice Fitzgerald of the Texas Court of Appeals, sitting at Houston, suggested that the test in determining whether or not an individual is an employee is if that individual

"... may be dismissed only for cause and, thus, has a property interest in his employment...." 

In United Brotherhood, then-British Columbia Supreme Court judge Beverly McLachlin (later chief justice of the Supreme Court of Canada), used these words:

"Employee may designate someone who at the time in question is actually performing services for the employer. But its natural meaning goes beyond that....

"It is understood to mean some permanent employment or position.

"The word may be more extensive than clerk or officer, and may signify any one in place, or having charge or using a function, as well as one in office."

An employee benefits from a contract with another, the employer, for whom he or she has agreed to perform certain tasks, the venue, time and task specifications of which are set by the employer, in exchange for which the employer gives the employee money (also known as wages or salary).

The status of employee is often determinative of tax status as employment income is generally taken as straight income paid to the individual. Those who wish to represent to the tax authority that their services were not those of an employee but, rather, of an independent contractor, would benefit from a different treatment of their income for tax purposes, generally able to reduce their taxable income by any business-related expenses.

Agents are also distinguished from employees. An employee is an agent of the employer but not all agents of the employer are necessarily employees. For example, an employer might hire a law firm to pursue debt claim. That lawyer remains an agent of the employer but at no time is an employee.

Thus, in Carter v Great West, Justice Walsh of the Alberta Supreme Court wrote:

"It may be true in a broad sense to say that one who is employed is an employee and it would certainly sound funny to refer to a bank president as an employee of his bank. While, however, it is strictly correct to say that everyone who is an employee is employed by another I do not think it is equally true to say that everyone who is employed by another is his employee.

"For instance, a solicitor who is engaged by a client to do certain work for him is employed by him for that purpose, as is a doctor who gives his professional skill to a patient, but no one would think of referring to either of these professional men as an employee of his client or his patient."

It is of the nature of an employee-employer relationship that the employee does not control the specifications of their work and tasks - the employer does - and that the employer supplies all tools and materials required to complete the tasks.  During the work period, the employer directs the employee as to what to do and how to do it. An employer exercises "fundamental control over the work" (see Bank of Nova Scotia, ¶68).

An employee also benefits from substantial statutory or common law rights as to entitlement to notice of termination or, in lieu of notice, severance pay.

A plethora of statutes now exist in most jurisdictions which provide a wide variety of protection to employees but with each statute limiting the extent of its reach by defining the word employee in particular fashion. When the United States Supreme Court wrestled with the word employee in 1940, it noted that:

"... employee ... is not a word of art. It takes color from its surroundings, and frequently is carefully defined by the statute where it appears."

Most statutory definitions reflect the common law standard. For example, the English Employers' Liability (Compulsory Insurance) Act of 1969:

"For the purposes of this Act the term employee means an individual who has entered into or works under a contract of service or apprenticeship with an employer whether by way of manual labour, clerical work or otherwise, whether such contract is expressed or implied, oral or in writing."

In Canada, from Ontario employment standards legislation:

"Employee includes a person, including an officer of a corporation, who performs work for an employer for wages (or) a person who supplies services to an employer for wages...."

Alberta's Employment Standards Code:

"Employee means an individual employed to do work who receives or is entitled to wages...."

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