An employment contract or contract of employment is a kind of contract used in labour law to attribute rights and responsibilities between parties to a bargain. The contract is between an "employee" and an "employer". It has arisen out of the old master-servant law, used before the 20th century.
A contract of employment is usually defined to mean the same as a "contract of service". A contract of service has historically been distinguished from a contract for the supply of services, the expression altered to imply the dividing line between a person who is "employed" and someone who is "self-employed". The purpose of the dividing line is to attribute rights to some kinds of people who work for others. This could be the right to a minimum wage, holiday pay, sick leave, fair dismissal, a written statement of the contract, the right to organise in a union, and so on. The assumption is that genuinely self-employed people should be able to look after their own affairs, and therefore work they do for others should not carry with it an obligation to look after these rights.
Following the unification of the city-states in Assyria and Sumer by Sargon of Akkad into a single empire ruled from his home city circa 2334 BC, common Mesopotamian standards for length, area, volume, weight, and time used by artisan guilds in each city was promulgated by Naram-Sin of Akkad (c. 2254-2218 BC), Sargon's grandson, including those of shekels. Codex Hammurabi Law 234 (c. 1755-1750 BC) stipulated a 2-shekel prevailing wage for each 60-gur (300-bushel) vessel constructed in an employment contract between a shipbuilder and a ship-owner. Law 275 stipulated a ferry rate of 3-gerah per day on a charterparty between a ship charterer and a ship-owner. Law 276 stipulated a 21⁄2-gerah per day freight rate on a charterparty, while Law 277 stipulated a 1⁄6-shekel per day freight rate for a 60-gur vessel.
The terminology is complicated by the use of many other sorts of contracts involving one person doing work for another. Instead of being considered an "employee", the individual could be considered a "worker" (which could mean less employment legislation protection) or as having an "employment relationship" (which could mean protection somewhere in between) or a "professional" or a "dependent entrepreneur", and so on. Different countries will take more or less sophisticated, or complicated approaches to the question.
Anarcho-syndicalists and other socialists who criticise wage slavery, e.g. David Ellerman and Carole Pateman, posit that the employment contract is a legal fiction in that it recognises human beings juridically as mere tools or inputs by abdicating responsibility and self-determination, which the critics argue are inalienable. As Ellerman points out, "[t]he employee is legally transformed from being a co-responsible partner to being only an input supplier sharing no legal responsibility for either the input liabilities [costs] or the produced outputs [revenue, profits] of the employer's business." Such contracts are inherently invalid "since the person remain[s] a de facto fully capacitated adult person with only the contractual role of a non-person" as it is impossible to physically transfer self-determination. As Pateman argues:
The contractarian argument is unassailable all the time it is accepted that abilities can 'acquire' an external relation to an individual, and can be treated as if they were property. To treat abilities in this manner is also implicitly to accept that the 'exchange' between employer and worker is like any other exchange of material property . . . The answer to the question of how property in the person can be contracted out is that no such procedure is possible. Labour power, capacities or services, cannot be separated from the person of the worker like pieces of property.
According to some law scholars, generally, the contract of employment denotes a relationship of economic dependence and social subordination. In the words of the controversial labour lawyer Sir Otto Kahn-Freund,
"the relation between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of power. In its inception it is an act of submission, in its operation it is a condition of subordination, however much the submission and the subordination may be concealed by the indispensable figment of the legal mind known as the 'contract of employment'. The main object of labour law has been, and... will always be a countervailing force to counteract the inequality of bargaining power which is inherent and must be inherent in the employment relationship."
234. If a shipbuilder builds ... as a present [compensation].
§234. If a boatman build ... silver as his wage.
275. If anyone hires a ... day as rent therefor.
§275. If a man hire ... its hire per day.