Employer (Meaning and Explanation)

We explain what an employer is, what its functions and obligations are. Also, other related terms.

What is an employer?

Labor or employment relationships typically involve two entities: an employee, who is the one who works, and an employer, who is who the employee works for. In other words, an employer is that person, institution or organization that provides paid work to someone.

Employers are the initial part of the productive equation, since they are the ones who have a production plan (transforming raw materials into services or consumer goods) that requires labor to be fulfilled, that is, workers.

The employer can be a natural person, that is, an individual who requires the work of another, or a legal entity, such as a company or corporation, a non-profit organization or an institution of the State itself.

Thus, between employer and employee there is most of the time a contract, that is, a verbal or written agreement that dictates the conditions under which the work will be performed, in accordance with the laws that regulate work in the corresponding country. This means that both employee and employer must comply with the terms of the agreement or face certain types of sanctions.

Sometimes, the legal figure of the employer can become complicated, for example, when a company is developed in several companies. Therefore, it is usually distinguished between employer of law (the co-contractor) and the de facto employer (who directly receives the work).

Functions of an employer

Employers generally fulfill the following functions:

provide employment to their workers That is, they provide them with a paid occupation and a sense of usefulness as part of a productive project.
contribute to the generation of wealth in society to the extent that their activities provide employment and do not destroy it (the latter can also be lucrative, although negative for society as a whole).
Manage work implements and machinery and sometimes the physical place where the latter takes place. In this sense, they circulate significant sums of money in society.

Obligations of an employer

employer obligations — The employer must guarantee the maintenance of work items.

Commonly, the State and the law are responsible for regulating employment relationships and establishing obligations for the employer such as the following:

Honor the terms of the employment agreement which should never go against the provisions of the laws and the notions of human dignity.
Provide formal, quality employment, with fair remuneration and that contributes to the well-being of society as a whole, and not simply to individual enrichment.
Manage and coordinate the company's entities in a profitable and efficient manner such as the relationship with clients, the maintenance of work tools and the payment of rent for the premises, for example.
Exercise a position of authority and discipline within the company.
Allow the formation of union organizations or unions that look after the interests of their workers.
Promote growth dynamics for the company and for the workers, which have an impact on common improvement.

When we talk about employers, we often also refer to other similar or related terms, which are not exactly synonyms. Such as:

Businessman. An entrepreneur is a natural person who owns or is the owner of one or more companies. That is, a private organization that pursues a productive activity for profit. Although all business owners are employers, since all businesses require workers, not all employers are necessarily business owners. For example, a domestic worker has an employer, but the latter is not a company but a family.
Investor. An investor is a person (natural or legal) who buys shares in a company, that is, who invests money in it. It is synonymous, for practical purposes, with shareholder. Investors have a variable share of responsibility in the destiny of the company, but they are not the employers of those who work in it, since the company has its own legal status.
Capitalist. In economics, the term “capitalist” refers to the person who owns the capital, that is, the person who provides the money to finance a company. Typically, this is an investor or shareholder, and therefore is not a synonymous term with “employer.”