The employment relationship – that between employer and employee – is at the heart of capitalism and a core issue for public policy. Governments create rules, policies and institutions within which employees, their representatives, employers and their representatives, operate. The interest to governments when creating policy includes the form that bargaining takes, wage and employment levels, the nature and effects of contracting and the rights of workers – much of this boiling down to issues of power. In recent decades, major policy issues have included the federal Labor government’s Prices and Incomes Accords in the 1980s and 1990s, the Coalition government’s ‘WorkChoices’ legislation, the shift to enterprise bargaining, and developments in such areas as minimum wages and pay equity. In this chapter we outline the matters at stake, the players, the policy processes and some of the key issues.