The legal foundation of the employment relationship is the contract of employment. While the terms and conditions may be dictated in whole or in part by statute, it remains a contract in substance, subject to the general law of contracts. Nonetheless, courts recognize that employment contracts have many characteristics that set them apart from ordinary commercial contracts.
In particular, given the imbalance of power usually existing between the parties (employer and employee) the terms of the employment contract rarely result from an exercise of free and equal bargaining power. This power imbalance has led courts to describe employees as a vulnerable group, particularly in light of the far-reaching effects of changing a person's employment status.