The economic and social relationship between the buyers and sellers of labour. The term is used widely in the management and social sciences; it covers a broad range of relationships and is not restricted to a situation in which there is a formal contract of employment. It is legitimate therefore to refer to the employment relationship between self-employed workers and those who use their labour. The employment relationship has a number of dimensions. First, while it is in the first instance an economic exchange it can also form the basis of a social relationship, in which worker and employer accept mutual obligations and commitment (see mutual gains and paternalism). Second, it is both a market relationship, in which labour power or the capacity to work is exchanged for wages, and a work relationship, in which the employer uses that capacity in the process of production. Third, the employment relationship is indeterminate in the sense that the employer buys the worker's capacity to work but has no guarantee that the capacity will be used to perform productive labour. For this reason, employers must manage labour and either control or secure the cooperation of workers to ensure that labour power is transformed into useful work. Fourth, the employment relationship is often regarded as a relationship of subordination, as workers accept the authority and control of the employer within the employing organization. Fifth and finally, worker and employer bring different interests to the employment relationship, which in some cases provide for cooperation; for example, workers want secure, well-paid employment and employers want high performance and this can result in a productivity coalition. In other cases, however, these competing interests lead to conflict, as when workers strike over the price of labour or engage in restriction of output because they value free time and autonomy and resent management control.
Subjects: Human Resource Management.