Labour can be defined from many different points of view as:

• one of the factors of production;
• a human activity carried out to earn money;
• all manual and intellectual activities used in production;
• a specific kind of good.

Labour can be bought and sold on the labour market which is where the demand for labour meets supply. Labour is offered by households – labourers sell their labour as a factor of production and ask wages for it while firms represent labour demand and offer wages.

All contracts of employment are governed by the Labour Code, a nationwide set of directions obligatory for both employers and employees. It governs such items as employment start, duration and end, time for work and leisure, wages and sick pay, working conditions and job disputes.

Employees´ pay as a work reward has different forms. It can be based on payment by result which is called wage(s). A salary is pay dependent on working time, usually agreed as a monthly fixed remuneration. Teachers, doctors and officers are paid under this scheme. A bonus is remuneration for extra work, good results or higher profit share.

Employment pay system consists of

• basic rate scheme which is job-based, each job is described from the aspect of education and skills
• incentive scheme which includes bonuses, commissions on sales, profit share, etc.
• additional payments under the non-contributory pension scheme or fringe benefits such as cars, life insurance and/or sick pay.

Gross pay is made up by basic pay, incentive money and additional payments as mentioned above. Net pay is gross pay minus health insurance contributions, income tax and payments into the state pension scheme.

Nominal salary or wages is money income regardless of inflation and price changes, in other words, it is the amount of money received as a salary or business profit. Real salary or wages is monetary income in relation to inflation and price changes and represents the actual amount of money that can be spent.

All employees shall have a written statement of employment called a Contract of Employment. It includes some obligatory parts such as the job title, the place of work, the rate of pay (or reference to other documents, e.g. Collective Agreement), probationary period, working hours or whether the contract is fixed-term or open-ended. The contract can be changed upon agreement between both parties, i.e. employer and employee.

All the parts described above refer to employees and their remuneration while entrepreneurs depend on their economic results. Although their profits are not guaranteed the deductions for health and social insurance must be strictly adhered to.