What is an Employee?

An employee is an individual who works for a company or organization in exchange for compensation, under an employment contract that sets out subordination, schedule, and mutual obligations. It is the central figure of the formal employment relationship and differs from an independent contractor in the level of dependence and the rights the law grants.

Key takeaways

• An employee works under an employment contract with subordination to the employer, unlike a contractor, who operates independently.
• The employer covers benefits, social-security contributions, and payroll taxes on the employee's pay.
• There are several types of employee: full-time, part-time, temporary, and hourly.
• Misclassifying an employee as a contractor triggers fines, back payments, and legal risk.
• A global payroll platform lets companies hire employees abroad without a local entity.

Employee roles and responsibilities

Employees are hired to fill specific roles that vary by industry, position, and company needs. Common areas include:

• Operations: keeping the day-to-day business running.
• Customer service: interacting directly with customers.
• Finance: accounting, budgeting, and analysis.
• Human resources: recruitment, onboarding, benefits, and policies.
• Marketing: promoting products and services.
• Management: overseeing and coordinating other employees.

Types of employee

• Full-time: a full working week with access to all benefits.
• Part-time: fewer hours, with benefits pro-rated under local law.
• Temporary or fixed-term: hired for a set period or project.
• Hourly: paid according to hours actually worked.

Employee vs independent contractor

The difference between an employee and a contractor is what most often confuses companies hiring globally, and getting it wrong is a leading cause of labor fines:

See also the contractor and employer glossary entries.

Rights and obligations of an employee

Though they vary by country, a formal employee is usually entitled to an agreed salary, weekly rest, paid leave, social-security contributions, and protection against unfair dismissal. In turn, they are expected to work their hours, follow reasonable instructions, respect confidentiality, and perform their duties diligently.

How to pay employees in other countries

Hiring an employee abroad normally requires a local entity to run payroll, contributions, and taxes. A global payroll and payments platform removes that: it manages local compliance and pays each person into an account they control, so a company can employ abroad compliantly and quickly.

Frequently asked questions

What is the difference between an employee and a contractor?

An employee works under subordination with employer-funded benefits; a contractor operates independently and handles their own taxes and tools.

What rights does an employee have?

Depending on the country: agreed pay, rest, paid leave, social security, and protection from unfair dismissal.

Who pays an employee's taxes?

The employer withholds and remits taxes and social-security contributions on the employee's payroll.

Ontop is a global payroll and payments platform that lets companies hire and pay teams in 150+ countries and pays each employee into an account they control.