Global employment glossary
The vocabulary of hiring across borders, defined in plain English. Every term here comes up in real conversations with providers, advisers, candidates and finance teams. Where a country guide shows a term in action, we link to it.
A
Allowances
Fixed amounts paid on top of base salary for a named purpose: housing, transport, meals, remote work or cost of living. Some are required by law or collective agreement, others are custom. Tax treatment varies by country and type: tax free in one market, taxable in the next.
B
Benefits in kind
Non cash benefits an employee receives because of the job: a company car, private health cover, subsidised meals, equipment used personally. Most countries treat them as taxable income, valued by a set method, and reported through payroll. Ignore them and the payslip is wrong.
BPO and hybrid BPO
Business process outsourcing is contracting a provider to run a whole function, such as support or finance, with its own staff and management. Hybrid BPO sits between that and direct employment: the provider employs and hosts the team, you manage the work. See managed teams.
C
Co-employment
An arrangement where two organisations are both employers of the same person, typically a client company and a PEO. One handles payroll, benefits and HR administration, the other directs the work. It needs you to have an entity in the country, so it does not travel well.
Collective bargaining agreement
A contract between employers and a union that sets pay scales, hours, leave, allowances and dismissal rules for a sector or company. In many countries a sector agreement applies automatically, whether or not you signed it, and overrides your own contracts. See: Italy, Argentina.
D
Data residency
A requirement that certain data be stored or processed within a specific country or region. It matters twice in global hiring: employee records may have to stay in country, and an employee with access to regulated data may only be allowed to sit in certain locations.
Digital nomad visa
A residence permit that lets a person live in a country while working remotely for an employer elsewhere. It solves the person's immigration status. It does not settle where they are taxed, where contributions are due, or whether their presence creates obligations for you. See: Portugal.
E
Employer of record (EOR)
A provider that legally employs a person on your behalf in a country where you have no entity. It holds the contract, runs payroll, pays contributions and carries the compliance obligations. You choose the person and direct the work. See Dryft EOR and the EOR vs PEO vs entity explainer.
Employer on-cost
Everything an employer pays for a hire beyond gross salary: social security contributions, payroll taxes, mandatory insurance, statutory bonuses and required benefits. Usually expressed as a percentage of salary, it varies enormously by country. Every country guide itemises it.
Entity
A legal company you own in a country: a subsidiary or branch, registered for tax, social security and employment. It lets you employ directly and sign contracts locally. It also brings accounts, filings, directors and audits. Whether to set one up is the central expansion question. See: China.
EOR to entity transition
The planned move of employees from an EOR's contract to your own new entity, once a country team is large enough to justify it. Done properly it lands on a payroll boundary, preserves seniority and accrued leave, and moves benefits without a gap. No lock in, no exit fee.
Expatriate, local national and third country national
Who is employed where. An expatriate is sent from the home country to work abroad, often on home terms. A local national is hired in the country of work. A third country national is neither: employed by a company from one country, working in another, citizen of a third.
G
Garden leave
A period during notice when the employee stays employed and paid but is told not to work or contact clients and colleagues. It keeps a departing person bound by their duties while their knowledge goes stale. Some countries limit or do not recognise it.
GDPR
The European Union's General Data Protection Regulation, governing how personal data about people in the EU is collected, used, stored and moved. It covers employee data as much as customer data. Employing in Europe means a lawful basis, a transfer mechanism for data leaving the region, and documented processing.
Global mobility
The discipline of moving employees across borders: assignments, relocations, secondments, remote work requests, and the immigration, tax, payroll and social security consequences of each. In a small company it is a part time job. In a large one it is a team and a policy.
Gross vs net salary
Gross is salary before employee tax and contributions are deducted. Net is what lands in the bank account. Employers budget on gross plus on-cost; candidates think in net. The gap differs by country, so a generous gross offer in one market is ordinary in another. Say which you are quoting.
I
Immigration compliance
Making sure every person you employ has the legal right to work there, on the right permit, for the right employer, in the right role. It covers right to work checks, permit renewals and record keeping. Penalties fall on the employer. See: United Arab Emirates.
Independent contractor
A self employed person or company providing services under a commercial agreement rather than an employment contract. They control how and when they work, use their own tools, carry their own risk and serve several clients. If that is not true in practice, the label fails. See misclassification.
Invention assignment
A contract clause under which inventions an employee creates at work belong to the employer. In many countries the default rule gives the employer the invention but requires extra compensation for the inventor, or gives the employee rights the clause cannot remove. A US clause rarely works unchanged.
IP assignment
The transfer of ownership of work product, such as code, designs and writing, from creator to employer. In some legal systems this happens automatically for employees. In many others copyright stays with the creator until assigned in writing. Your contract needs the wording the local system expects.
J
Just cause
A serious reason, recognised by law, that lets an employer dismiss without notice or severance: gross misconduct, theft, violence, repeated unjustified absence. The list is narrow, the employer must prove it, and poor performance rarely qualifies. See: Mexico, Colombia.
L
Labor leasing licence (employee leasing)
In some countries, supplying an employee to work under another company's direction is regulated as labour leasing or employee leasing, and the supplier needs a licence. This affects how an EOR can operate there and sometimes how long an assignment can run. Ask your provider where it applies.
M
Misclassification
Treating someone as an independent contractor when the substance of the relationship is employment. Authorities look at control, integration, exclusivity and commercial risk, not the contract title. The consequences are retrospective: back contributions, back tax, penalties and the leave, notice and severance the person should have had.
Moral rights
An author's personal rights in their work, separate from ownership: to be named as author and to object to distortion. In many countries they cannot be assigned, only waived, and in some not even waived. Your IP clause should address them. See: United Kingdom.
N
Non-compete and non-solicit
A non-compete restricts a former employee from working for competitors for a period after leaving. A non-solicit restricts them from approaching your clients or staff. Enforceability varies: some countries require you to pay during the restriction, others cap its length or will not enforce it. See: Netherlands.
Notice period
The time between one party announcing the end of employment and the employment actually ending. Statutory minimums usually grow with service, collective agreements often extend them, and contracts can add more. Employer notice is often longer. See: Netherlands, Germany.
O
Off-cycle payment
A payment made outside the regular payroll run: a signing bonus, a correction, a final settlement on termination. Each has to be taxed and reported correctly, and in some countries a termination payment must be made within a fixed window. Providers usually charge for them.
Offshore, nearshore and onshore
Where work sits relative to you. Offshore is a distant, lower cost country with little time zone overlap. Nearshore is a nearby country with overlapping hours: Mexico for a US company, Poland for a German one. Onshore is home. None of them says anything about the employment model.
Overtime premium
The extra rate paid for hours beyond the standard day or week, as a multiple of the normal rate. Most countries set minimum premiums, cap total hours, and pay more for nights, weekends and public holidays. Exemptions for senior staff are narrower than employers assume. See: Brazil.
P
Parental leave
Time off around the birth or adoption of a child: maternity, paternity and shared leave. Countries differ on duration, who pays (the employer, a social fund, or both), job protection, and whether leave can be shared. Employer funded schemes affect your on-cost. See: Canada.
Payroll cycle
How often employees are paid and on what dates. Monthly is the norm in most of the world, with semi monthly, biweekly and weekly cycles in some markets. The cycle is often set by law, not preference, and it fixes cut off dates and a new hire's first pay.
Payroll tax
A tax levied on the employer, calculated on wages paid, separate from income tax withheld from employees and from social security contributions. Some countries have none, some levy it regionally, some fold it into a single contribution. It belongs in every cost model.
Pension auto-enrolment
A system where the employer must enrol eligible employees into a workplace pension automatically and contribute to it, with the employee able to opt out. The employer has to set up a scheme, assess eligibility and re-enrol people periodically. See: United Kingdom, Poland.
Permanent establishment (PE)
A tax concept: enough presence in a country that your company becomes liable for corporate tax there, even without an entity. A fixed place of business creates it. So can a person who habitually concludes contracts for you. A remote engineer rarely creates PE; a salesperson closing deals often does.
Private medical insurance
Employer provided health cover on top of the public system. In some countries it is a legal requirement, in others a market expectation, in a few an unusual perk. Whether it is taxable, and whether dependants are covered, differ by market. An EOR typically offers a local plan.
Probation
An initial period during which either side can end employment with shorter notice and, in many countries, without the usual dismissal protections. Most countries cap its length, some require it in writing, and some restrict extending it. See: Germany, France.
Professional employer organization (PEO)
A provider that co-employs your staff with you, running payroll, benefits and HR administration under its own registrations while you remain an employer. Because it needs you to have an entity in the country, it is not a route into a new market. "International PEO" without an entity is an EOR.
Public holidays
Days set by national, regional or local government on which employees are usually entitled to a paid day off, or a premium if they work. The number and dates vary by country and sometimes by region within one. See: Japan, Colombia.
R
Redundancy
Ending employment because the role is no longer needed, not because of anything the employee did. Most countries require a genuine business reason, fair selection, consultation (sometimes with a works council or union), notice and severance. Collective redundancies above a threshold trigger extra procedures.
Remote work compliance
The obligations that arise when an employee works from a country other than the one their contract is in: tax residence, social security, employment law, immigration and data protection. A few weeks abroad is usually manageable. A permanent move is a new employment relationship.
Right to work
An employee's legal permission to be employed in a specific country, through citizenship, residence, or a permit tied to the employer or role. Employers must verify it before the start date, keep evidence, and re-check when a permit expires. Ask about status before you offer.
S
Secondment
A temporary transfer of an employee to another organisation or location while the original employment continues, for example from parent to subsidiary. Across borders it raises payroll, tax, social security and immigration questions, and the longer it lasts, the more it looks like local employment.
Severance
A payment due when employment ends for a reason other than the employee's own serious misconduct or resignation. It is usually calculated from service and salary, set by law or collective agreement, and sometimes topped up by contract. In some countries it shapes hiring decisions. See: Mexico, India.
Shadow payroll
A payroll run in the host country that reports an assignee's income and calculates the tax and contributions due there, without actually paying the person, who is still paid from home. It meets local reporting and withholding obligations for expatriates. A compliance tool, not a pay mechanism.
Social security contributions
Mandatory payments by employer and employee into public systems for pensions, healthcare, unemployment, disability and work accidents. The employer share is usually the largest part of on-cost and varies enormously. Ceilings, exemptions and multiple funds make it country specific. See: France, China.
Split payroll
Paying one employee partly through payroll in one country and partly in another, typically for an assignee who keeps home country benefits while abroad. It manages tax, pension continuity and currency exposure, and needs two payrolls coordinated so total tax and contributions are right in both.
Statutory employee
A person the law treats as an employee for some or all purposes regardless of how the contract describes them. Several countries define categories of economically dependent workers who get employment protections while invoicing as contractors. If your contractor fits one, contributions and protections apply regardless of intent.
Statutory leave
The paid time off the law requires: annual leave, public holidays, sick leave, parental leave and, in some countries, leave for marriage, bereavement or study. It is a floor; agreements and contracts add to it. Untaken leave is often a liability paid out on exit.
T
Tax equalization
A policy under which an expatriate pays no more and no less tax than they would have paid at home, with the employer absorbing any excess host country tax. It removes tax as a factor in where people agree to go. It costs money and needs specialist calculation.
Thirteenth and fourteenth month salary
An extra month of pay, or two, required by law or collective agreement in a number of countries, usually paid at year end or split across the year. It is not a discretionary bonus. It is deferred salary, and it belongs in the cost model from day one. See: Philippines, Italy.
Total cost of employment
Gross salary plus employer on-cost, provider fees, equipment, added benefits and allowances. It is the number to compare countries and hiring models on, because salary alone can rank markets in the wrong order. The cost calculator builds it for you.
Transfer of undertakings (TUPE)
Rules that protect employees when a business, or part of one, moves from one employer to another. Employment transfers automatically on existing terms, with continuity of service, and transfer related dismissals are restricted. The acronym is British; similar rules exist across Europe. See: United Kingdom.
U
Unfair dismissal
A dismissal that is unlawful because the reason was not one the law accepts, or because the employer did not follow a fair process, even with notice given. Remedies range from compensation to reinstatement. Process matters as much as the reason. See: Australia, United Kingdom.
V
Visa sponsorship
An employer's formal role in obtaining a work visa for a foreign employee: vouching for the job, meeting eligibility conditions, and taking on reporting duties for the permit's life. Usually only a registered local employer can sponsor, so sponsorship through an EOR depends on its own status there.
W
Withholding tax
Income tax the employer deducts from an employee's pay and remits to the tax authority on their behalf, so the employee receives net pay. Nearly every country requires it, with year end reconciliation. Getting it right is one of the core jobs of global payroll.
Work permit
Official authorisation for a foreign national to take employment in a country, usually tied to a specific employer, role and duration, often issued with a residence visa. It takes time, documents and sometimes a labour market test. See: Singapore, United Arab Emirates.
Working time directive
The European Union framework setting minimum rules on maximum weekly hours, rest, breaks, night work and paid annual leave, implemented through each member state's own law. Individual opt outs exist in some places and not others. Check local rules before agreeing hours or on call.
Works council
An elected body of employees, separate from a union, with legal rights to be informed and consulted, and in some countries to co-decide, on hours, dismissals, restructuring and monitoring. Above a headcount threshold, employees can demand one. Decisions that ignore it can be unwound. See: Germany, Netherlands.
This glossary is general information, not legal, tax or immigration advice. Definitions describe how terms are commonly used; the precise rules differ by country and change regularly. Confirm the position with a qualified adviser before acting. Last reviewed September 2026.
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