Employer of Record (EOR)
A legal employer that hires a worker under a service arrangement with the company directing the worker's day-to-day business activities. Duties depend on local law and the service agreement.
Reference
Global employment glossary
Definitions used across Farlinko's country guides, calculators, and service pages. Each term is a starting point; local law and the facts of an engagement determine the final treatment.
Terminology
Employment models
Local entity
A company, branch, or other registered presence used to conduct business or employ workers in a jurisdiction.
Payroll outsourcing
A service in which a provider performs agreed payroll calculations, reporting, or filing work for employees of the client's own entity.
Professional Employer Organization (PEO)
A provider used in a co-employment arrangement in markets where that model is recognized. The client generally remains an employer.
Independent contractor
A person or business supplying services outside an employment relationship. Classification follows the working facts and local tests, not the contract label alone.
Staffing agency
A supplier that employs or engages workers and assigns them to clients, commonly under temporary-agency or labour-supply rules.
Co-employment
An arrangement, typical of some PEO models, in which the client and a provider share defined employer duties. Availability depends on local law.
Contractor of Record
A provider that contracts with an individual in its own name under a services arrangement. It is not a substitute for employment classification review.
Fixed-term employment
Employment that is agreed to end on a date or event. It remains employment; a project calendar does not by itself create contractor status.
Secondment
A temporary assignment of an existing employee to another organisation or location while the original employment often continues. It is a different structure from a new local EOR hire.
Posted worker
An employee sent to work temporarily in another country while remaining employed in the sending country, subject to posting, social-security, and immigration rules.
Terminology
Payroll and cost
Gross pay
Compensation before employee taxes, social contributions, and other authorized deductions.
Net pay
The amount paid to the employee after payroll deductions. It depends on employee-specific tax and contribution inputs.
Employer on-cost
Employer expenses added to gross pay, such as statutory contributions, insurance, payroll levies, required benefits, or statutory extra pay.
Withholding
An amount deducted from pay and remitted or reported by the employer, such as income tax or an employee social contribution.
Payroll cutoff
The deadline for approved employee changes to enter a payroll cycle.
Payroll register
The detailed payroll output showing gross pay, deductions, employer costs, and net pay for review and reconciliation.
Payslip
The employee statement explaining pay and deductions for a payroll period.
Shadow payroll
A payroll record used to calculate and report tax or social obligations in a location where the employee is not paid through the main local payroll.
Foreign exchange spread
The difference between the reference exchange rate and the rate used in a transaction. It should be separated from service fees when comparing providers.
Gross-to-net
The calculation from gross pay through deductions and employer costs to net pay and the amounts remitted to authorities.
Statutory bonus
Extra pay required by law, collective agreement, or both, such as a 13th-month payment in some countries. It is part of employment cost, not a discretionary gift.
THR
Tunjangan Hari Raya, Indonesiaβs mandatory religious-holiday allowance. Amount and timing follow current manpower rules and the employeeβs length of service.
Monthly salary credit
The Philippines SSS contribution base taken from a published table. It is often not equal to full gross pay, so contribution percentages should not be applied to uncapped salary.
Insured salary grade
A statutory wage bracket used instead of full gross pay, including Taiwan labour insurance, employment insurance, labor pension, and National Health Insurance.
Benefits in kind
Non-cash compensation such as housing, a car, or meal support. Tax and contribution treatment depends on local rules and the item.
Equity compensation
Share options, restricted stock, or similar awards connected to work. They can create withholding, reporting, or social-contribution questions in the work country.
EOR deposit
An amount some EOR arrangements hold against employment liabilities such as notice or severance. It should appear as a disclosed cash item, separate from the service fee.
Terminology
Employment terms
Collective agreement
An agreement that sets employment conditions for covered employers and workers, often by sector, occupation, establishment, or bargaining unit.
Probation
An initial employment period governed by local law, collective terms, and contract. It does not automatically remove employee protections.
Notice period
The required period between notice of termination and the employment end date, subject to law, contract, collective terms, and the reason for termination.
Severance
A payment associated with ending employment where required by law, collective agreement, contract, policy, or settlement.
Garden leave
A period during notice when the employee remains employed and paid but is instructed not to perform some or all duties, where permitted.
Payment in lieu of notice
A payment used instead of some or all working notice where the contract and local law permit it.
Accrued leave
Leave entitlement earned but not yet taken. Its carryover and treatment at exit depend on local rules and policy.
Working time
Rules on hours, rest, overtime, and record-keeping. They can apply even to salaried professional roles.
Overtime
Work beyond the applicable limit, often attracting extra pay or time off. Eligibility and rates follow law, contract, and any collective terms.
Works council
An employee representative body with information, consultation, or co-determination rights in some countries, especially in parts of Europe.
Redundancy
Termination connected with a reduced need for the role or a business change, where local law defines process, selection, and payments.
Minimum wage
The lowest pay a covered worker may receive, set by statute, award, collective agreement, or a combination, sometimes by age, region, or occupation.
Terminology
Risk and mobility
Permanent establishment
A taxable business presence that can arise from activities in a jurisdiction. Hiring through an EOR does not by itself eliminate this analysis.
Worker misclassification
Treatment of a worker under a legal category that does not match the actual relationship, potentially creating employment, tax, or contribution liabilities.
Right to work
The legal authorization that permits an individual to perform the proposed work in a location.
Work permit
An authorization tied to conditions such as the worker, sponsor, employer, role, location, or duration.
Social-security certificate
Evidence under an applicable coordination agreement that identifies which country's social-security system covers a cross-border worker.
Data processor
A party that processes personal data on another party's documented instructions under applicable privacy law.
Subprocessor
A further processor appointed by a data processor to perform part of the processing.
Intellectual-property assignment
Contract language transferring specified intellectual-property rights. Its scope and effectiveness depend on the work, documents, and governing law.
Visa sponsorship
A process in which a qualified sponsor supports a worker's authorization. An EOR may or may not be able to sponsor a given category; confirm before the offer.
Data transfer agreement
A contract used to move personal data across borders under applicable privacy law, often alongside a data-processing agreement.
Offboarding
The process of ending employment or an assignment, including notice, access removal, final pay, filings, and record handoff.