Employee and Employer Meaning: What are The Differences?

When managing a workplace, knowing the clear difference between employee and employer is crucial. Both roles depend on each other. One provides work and skills, while the other offers guidance, pay, and resources.

As an employer and worker in a company, you need to know that having a good understanding of what employee and employer mean can help to follow labour laws, maintain fairness, and create a healthy working environment.

What is an Employee?

Under Malaysia’s Employment Act 1955, an employee is a person hired by a company to perform tasks or services in exchange for wages or salary. Employees can work under different arrangements:

Full-time: Fixed monthly salary and benefits.
Part-time: Fewer hours, often paid hourly or daily.
Contract: Hired for a set duration or project.
Probationary: On trial before confirmation as a permanent staff.

Employees in Malaysia are entitled to rights such as timely salary payment, annual leave, sick leave, public holidays, and contributions to SOCSO, EPF, and EIS. They must also follow company rules and perform the duties assigned in their contract.

What is an Employer?

An employer is a person or organisation that hires individuals to work for them. Employers can be businesses, government agencies, or even individuals.

Employers have legal responsibilities such as preparing employment contracts, paying wages on time, and registering employees for statutory contributions (EPF, SOCSO, EIS). They must also provide a safe workplace, treat employees fairly, and follow labour laws when hiring or terminating staff.

Employee vs. Employer: Key Differences

Aspect	Employee	Employer
Role	Performs tasks assigned by the employer	Owns or manages the business and oversees operations
Authority	Follows company policies and instructions	Sets policies and makes decisions for the organisation
Income Flow	Receives wages or salary for work performed	Pays wages and benefits to employees
Accountability	Responsible for completing assigned tasks	Responsible for overall company performance and workforce welfare
Dependency	Depends on employer for income and resources	Depends on employees to achieve company goals

Types of Employment Relationships

In Malaysia, workplaces may include different types of employment arrangements:

Full-Time Employment: Long-term roles with fixed salaries and full benefits.
Part-Time Employment: Flexible hours, commonly in retail or F&B sectors.
Contract Employment: Hired for specific projects or fixed periods.
Freelancers/Independent Contractors: Provide services but are not considered employees under the law. There are no statutory benefits that apply.

Why It’s Important to Understand These Roles

As mentioned in the beginning, knowing the difference between employee and employer roles prevents legal issues and confusion. Misclassifying workers can lead to disputes over benefits, contributions, or tax obligations. Clear definitions also help structure workflows, set responsibilities, and maintain harmony in the workplace.

Employer vs Employee Responsibilities

To help you understand the differences of each responsibility, check this recap table below:

Employer Responsibilities	Employee Responsibilities
Pay wages accurately and on time	Perform job duties as required
Register staff for EPF, SOCSO, EIS	Follow company policies and attendance rules
Provide a safe work environment	Maintain professionalism and company reputation
Handle onboarding, evaluations, and termination fairly	Report issues or misconduct properly

FAQ

Who is considered an employee under the Employment Act 1955?

Any person earning up to RM2,000 a month or engaged in manual labour is covered under the Act, though many companies extend similar benefits to higher earners.

Can a director be considered an employee?

Yes, if the director has an employment contract and receives a salary for work performed.

What are an employer’s obligations to employees in Malaysia?

Employers must provide contracts, pay wages on time, and register for EPF, SOCSO, and EIS contributions.

What is the difference between an independent contractor and an employee?

Employees work under the employer’s control and are entitled to statutory benefits; contractors work independently and manage their own taxes and insurance.

Are part-time staff and interns considered employees?

Part-time staff are employees if they are on payroll and receive wages. Interns may or may not be employees, depending on their contract.

How can misclassifying employees impact an employer legally?

Misclassification can lead to penalties, unpaid contributions, and legal claims from workers seeking their rightful benefits.

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