Glossary
Global employment glossary
Plain-English definitions of the terms you'll meet when hiring through an Employer of Record, from general concepts to country-specific contributions and rules.
Concepts
General terms
- Employer of Record (EOR)
- A company that legally employs a worker in a country on behalf of another business, handling the contract, payroll, taxes and statutory benefits while the client directs the day-to-day work. Read more →
- PEO (Professional Employer Organization)
- A co-employment arrangement, common in the US, where the client usually needs its own local entity. Often confused with an EOR. Read more →
- Contractor of Record (COR)
- A service that engages independent contractors on a client's behalf and takes on some misclassification risk. It does not make the person an employee. Read more →
- Local entity
- A subsidiary or branch your company registers in a country, allowing it to employ staff directly. Read more →
- Owned entity vs partner
- Whether an EOR employs people through a company it owns in the country or through a local partner it subcontracts to. Ask every provider which applies in each country you hire in. Read more →
- Permanent establishment (PE)
- A taxable presence of a foreign company in a country, typically triggered by a fixed place of business or by people who habitually conclude contracts on its behalf. Read more →
- Misclassification
- Treating someone as an independent contractor when the relationship is legally employment, which can lead to back-dated contributions, penalties and employee claims. Read more →
- Statutory employer costs
- Mandatory payments on top of gross salary, such as employer social security, workplace insurance and payroll levies. Read more →
- Contribution ceiling
- The salary level above which some employer contributions stop. Ceilings make employer costs a smaller share of pay for senior salaries. Read more →
- 13th / 14th month salary
- Extra mandatory salary payments in some countries, such as Portugal's holiday and Christmas allowances or Brazil's 13th salary. Read more →
- Collective agreement
- A sector-level or company-level agreement between employers and unions that can set minimum pay and conditions above the statutory floor. Read more →
- Security deposit
- An upfront, usually refundable, amount an EOR holds to cover its liabilities, often one to two months of employment cost. Read more →
- FX margin
- The markup an EOR applies when converting your payment currency into the employee's local currency. It is rarely shown as a separate fee. Read more →
- Offboarding fee
- A one-off charge some EORs make when an employment ends or transfers to your own entity, on top of statutory notice and severance. Read more →
Country terms
Germany
- AÜG (Arbeitnehmerüberlassungsgesetz)
- Germany's Temporary Employment Act. EOR arrangements are usually treated as employee leasing: the provider needs a licence, the same worker can be placed with the same client for up to 18 consecutive months, and equal pay applies from the start unless a temporary-work collective agreement defers it. Read more →
Country terms
Netherlands
- Wtta
- The Dutch Act on the admission of placement of workers, which introduces a licensing regime from 2027 for companies that place workers with clients, including many EOR set-ups. Read more →
- Vakantiegeld (holiday allowance)
- A mandatory holiday allowance of at least 8% of wages, usually paid in May or June. Read more →
- Whk premium
- The return-to-work fund premium. Small employers pay their sector's rate: 0.94–1.25% for business services in 2026, but 6.63% for staffing agencies. Read more →
Country terms
France
- PASS (plafond annuel de la Sécurité sociale)
- France's annual social security ceiling, €48,060 in 2026. Many contributions are calculated in tranches above or below it. Read more →
- Agirc-Arrco
- France's mandatory complementary pension scheme for private-sector employees, paid on top of the basic state pension. Read more →
- Prévoyance cadres
- Mandatory provident (death and disability) cover for executives: employers must pay at least 1.50% of salary up to the PASS. Read more →
- Versement mobilité
- A transport levy paid by employers with 11 or more staff in areas that apply it. The Paris rate is 3.20%. Read more →
Country terms
Portugal
- TSU (Taxa Social Única)
- Portugal's single social security contribution, paid by employer and employee on gross pay. Read more →
Country terms
Poland
- ZUS
- Poland's Social Insurance Institution, which collects pension, disability, sickness and accident contributions. Read more →
- PPK (Pracownicze Plany Kapitałowe)
- Poland's employee capital plan. Employees are auto-enrolled and can opt out; employers pay a basic 1.5% of pay. Read more →
Country terms
Ireland
- PRSI
- Pay Related Social Insurance, Ireland's social insurance contribution paid by employers and employees. Read more →
Country terms
United Kingdom
- Employer NICs
- Employer National Insurance contributions, paid on earnings above a secondary threshold. Read more →
Country terms
Mexico
- IMSS
- The Mexican Social Security Institute, which collects health, disability, retirement and workplace-risk contributions. Read more →
- ISN (Impuesto sobre Nóminas)
- A state payroll tax set by each Mexican state. Mexico City's rate is 4% from 2025. Read more →
- Aguinaldo
- Mexico's mandatory Christmas bonus of at least 15 days' pay, paid before 20 December. Read more →
- REPSE
- Mexico's register of specialised service providers, required since the 2021 subcontracting reform for companies that supply specialised services. Read more →
- PTU
- Mandatory employee profit sharing in Mexico, generally 10% of taxable profit, paid each May. Read more →
Country terms
Brazil
- FGTS
- Brazil's severance fund. Employers deposit 8% of monthly pay into an account in the employee's name. Read more →
- RAT / FAP
- Brazil's workplace-risk contribution of 1%, 2% or 3% of payroll by activity risk, adjusted by the employer's accident factor (FAP). Read more →
Country terms
Philippines
- SSS, PhilHealth and Pag-IBIG
- The Philippines' three statutory contributions: social security (SSS), national health insurance (PhilHealth) and the housing fund (Pag-IBIG), each with a salary ceiling. Read more →
- 13th-month pay (Philippines)
- At least one twelfth of an employee's total basic salary for the year, paid on or before 24 December. Read more →
Country terms
Australia
- Superannuation guarantee
- Australia's mandatory employer retirement contribution, paid into the employee's super fund on top of salary, up to a maximum contribution base. Read more →
- Payroll tax (Australia)
- A state tax on an employer's total wages above a threshold. Rates and thresholds differ by state. Read more →
- Modern award
- An industry or occupation instrument that sets minimum pay, overtime, penalty rates and conditions for the employees it covers. Read more →
- National Employment Standards (NES)
- The minimum entitlements that apply to all employees in Australia's national workplace relations system, including leave, notice and redundancy. Read more →
- Labour hire licensing
- State schemes in Queensland, Victoria, South Australia and the ACT that require labour hire providers to hold a licence. EOR arrangements can fall within them. Read more →
Country terms
India
- EPF
- India's Employees' Provident Fund. The statutory employer contribution is 12% of basic pay, on a wage ceiling of ₹25,000 a month since 17 September 2026. Read more →
- Gratuity
- A lump sum of 15 days' wages per year of service, payable when employment ends after the qualifying period. Read more →
- ESI
- India's Employees' State Insurance, a health and cash-benefit scheme for lower-paid employees. Read more →