The Glossary
Employment
Employment is defined as an agreement, either verbal or written, between an employer and an employee, characterized by the following:
Labor
The employee is required to carry out work, regardless of its scope or duration.
Exclusivity
The employee must personally perform the work and cannot assign someone else to do it without the employer's consent.
Wages/ salary
The employer must provide wages in the form of money and/or benefits, such as housing or school fees.
Authority
There exists an authority relationship between the employer and the employee, where the employer can oversee the work, issue instructions, hold the employee accountable, and terminate the agreement.
Most countries, including EU member states, adhere to these criteria. However, it is essential to note that other countries may require the contract to be documented in writing and may prioritize the written contract over the actual circumstances.
By operation of law: without any option!
In most countries, if the relationship displays these conditions, it is deemed employment by law, regardless of any contrary written agreements between the parties.
On the other hand, if any of these conditions are missing, it cannot be categorized as employment, even if both parties claim it is.
Whether the relationship can be defined as employment must be determined on the basis of national legislation of the countries involved. In case of a difference of opinion between those countries about the capacity in which someone is working, the qualification given by the social security authority of the host country (possibly after discussion with Tax Administration) shall be decisive.
Caution
By operation of law: without any option!
In most countries, if the relationship displays these conditions, it is deemed employment by law, regardless of any contrary written agreements between the parties.
On the other hand, if any of these conditions are missing, it cannot be categorized as employment, even if both parties claim it is.
Be cautious with non-employment work relationships!
Aside from employment, there exist other types of working relationships. One can also engage with a freelancer, an independent contractor, or a vendor.
At times, it can be challenging in practice to determine the mutual expectations between parties and categorize their relationship. Is it considered as employment, service provision, (sub)contracting, or a purchase? This may happen, especially in cases where there are no clear contracts or when circumstances change unexpectedly.
Distinguishing between employment relationships and other work arrangements, such as contracting work and service provision, is essential. After all, employment
follows labor law rules that do not cover contracting and service provision. We suggest seeking advice from a specialist. Internationally, these arrangements can lead to significant complications.
Employer's Responsibilities
If there is an employment agreement in place, the employer must provide the employee with detailed information about various aspects of the job, including job description, compensation, working hours, notice period, sick leave policy, and the applicability of a collective labor agreement (CLA) or company pension plan.
Under European Law, which is applicable to EU member states, employers operating within the EU territory are required to inform their employees in writing about the terms of the employment contract.
Moreover, when an employee is assigned to work in another EU member state for over a month, the employer must provide the following details:
An assignment letter, appointment letter, or a written document outlining key aspects of the assignment, such as parties involved, work location, salary, etc. This document should be provided to the assignee before departure from the home country;
The duration of the assignment;
The currency for salary payment;
Relevant social security arrangements during the assignment;
Provisions for the assignee's return to the home country, if applicable.
Furthermore, the assignment terms must comply with the Labor Law(s) that govern the assignment.
For guidance on how to determine which Labor Law regime(s) apply, please consult the relevant section under Labor Law