Understanding employee definition is one of the basic principles of human resources. Understanding employee definition also mitigates the risks associated with treating a bona fide employee like an independent contractor or vendor.
Employee Definition - the quick version
An employee is a person who does work for a company and has recognized duties and rights. An employee is protected by various employment legislation. This provides an incentive to employers to treat an employee in an acceptable manner according to the courts. An employee can sue the employer if they feel they have not been treated according to the rules laid out by employment legislation.
Employee Definition - The longer version
The definition of employee is an individual hired for a wage, salary, fee or payment to perform work for an employer. It's important to determine if that person working for your company is an employee. It affects the answers to the following questions. In each case, if the answer is yes, the individual is an employee.
- Is tax collected at source?
- Does the individual benefit from substantial statutory or common law rights?
- Can the individual sue the company for side stepping regulations outlined in employment law?
- Is the company responsible for worker's compensation premiums and work accidents?
- Is the individual paid by payroll vs accounts payable?
- Does the individual have a status? Full-time, part-time, temporary, regular, exempt, non-exempt?
- Is the company on the hook for the individual's quality of work and cost of errors or omissions?
- Does the company control the manner in which work is performed?
- Does the company have to supply the tools required for the individual to perform their work?