Composite Keys & References

[OuTCasT]

I have 2 tables, eg. EarningDescript ions and EmployeeDetails with 1 column in each to simplify the question. EarningsLineNo in EarningsDescrip tions and EmployeeCode in EmployeeDetails .

i created another table that references 2 columns in that table to the 2 columns in the other 2 tables as such :

 
Create table Earnings
(
EarningLineNo int references EarningDescriptions(EarningLineNo) not null,
EmployeeCode nvarchar(50) references EmployeeDetails(EmployeeCode) not null,
EarningAmount decimal not null,
Primary key (EarningLineNo, EmployeeCode)
)

I used a composite key because the EarningLineNo and EmployeeCode in the new table will be used over and over again. but the same combination wld not be for instance. 1-1. 2-3 etc

I would like to knw what the referencing to the other columns is actually for and if its necessary or not ?
Is it for saving purposes or maybe making sure information is similar in the columns in both tables....

[debasisdas]

that is used to maintain referential integrity.