What does "in employment" mean?

A person is in employment if they are working for someone else, their employer. The employer controls what work they do and has various other rights and responsibilities.

Other categories by contrast are:

Self-employed people who work on their own account, look for work, negotiate their own terms and conditions with clients.

Retired people used to be in one of the above categories but no longer are. They may have income from a pension.

There are various categories for people who fall into none of the above but they tend to be country-specific.