"person to whom money is paid," 1758, from pay (v.) + -ee.
Entries linking to payee
pay v.
c. 1200, paien, "to appease, pacify, satisfy, be to the liking of," from Old French paier "to pay, pay up" (12c., Modern French payer), from Latin pacare "to please, pacify, satisfy" (in Medieval Latin especially "satisfy a creditor"), literally "make peaceful," from pax (genitive pacis) "peace" (see peace).
The meaning "to give what is due for goods or services" arose in Medieval Latin and was attested in English by early 13c.; the sense of "please, pacify" died out in English by 1500. Figurative sense of "suffer, endure" (a punishment, etc.) is first recorded late 14c. Meaning "to give or render" with little or no sense of obligation (pay attention, pay respects, pay a compliment) is by 1580s. Meaning "be remunerative, be profitable, yield a suitable return or reward" is by 1812. Related: Paid; paying. To pay up was originally (mid-15c.) "make up the difference between two sums of money;" the sense of "pay fully or promptly" is by 1911. Pay television is attested by 1957.
-ee
word-forming element in legal English (and in imitation of it), representing the Anglo-French -é ending of past participles used as nouns (compare -y (3)). As these sometimes were coupled with agent nouns in -or, the two suffixes came to be used as a pair to denote the initiator and the recipient of an action.
Not to be confused with the French -ée that is a feminine noun ending (as in fiancée), which is from Latin -ata.