EOR glossary
Plain-English definitions of 36 terms you will meet when hiring abroad, from Employer of Record and PEO to gratuity, 13th-month pay and permanent establishment.
A to Z
A mandatory extra month's salary paid each year in several countries, including the Philippines, Mexico (as the aguinaldo) and Brazil (the 13th salary). Employers usually accrue it monthly so it does not arrive as a surprise. Philippines guide →
Checks on a candidate's identity, education, past employment and sometimes criminal record before they start. Rules on what you can check, and how, vary by country and by data protection law.
A provider that engages independent contractors on your behalf, handling contracts, invoicing and compliance checks so the relationship stays a genuine contract and is not treated as employment.
The total annual amount a company spends on an employee in India, including salary, allowances, bonuses and employer contributions such as Provident Fund and gratuity. It is always higher than take-home pay. India guide →
Laws that control how employers collect, store and share employee data, such as the GDPR in Europe and India's Digital Personal Data Protection (DPDP) Act. Your EOR processes employee data too, so its safeguards matter.
Everything an employer pays on top of gross salary: social security, health and pension contributions, payroll taxes and mandatory bonuses. It ranges from about 2% to over 65% of salary depending on the country. Employer cost by country →
A company that becomes the legal employer of your staff in another country. The EOR issues the employment contract, runs payroll, pays taxes and contributions and keeps you compliant, while you manage the person's day-to-day work. It lets you hire abroad without setting up a local entity. Employer of Record in India →
What the Employer of Record charges for its service, on top of salary and statutory costs. It can be a flat monthly fee per employee or a percentage of payroll. StratEdge Global charges a flat fee from $349 per employee, per month. EOR pricing →
The last payment to an employee who leaves, covering unpaid salary, accrued leave, bonuses and any severance. Many countries set strict deadlines; in India, wages due must be paid within two working days of the last day.
An employment contract with a set end date or a defined project. Most countries limit how long or how often fixed-term contracts can be renewed before the employee becomes permanent.
Running payroll for employees in several countries: calculating gross-to-net pay, withholding tax, paying contributions and filing reports under each country's rules and in each local currency.
A lump-sum payment in India for employees who leave after five years of service, or after one year for fixed-term staff under the Labour Codes. It is calculated as 15 days' wages for each year of service. India guide →
An employee's pay before income tax and employee contributions are deducted. Employer contributions are added on top of gross salary, not taken from it.
A self-employed person who provides services under a commercial contract, controls how the work is done and usually works for several clients. Treating an employee as a contractor creates misclassification risk.
A contract clause that transfers ownership of work an employee or contractor creates, such as code or designs, to your company. A good EOR contract assigns IP to you, the client.
The four codes on wages, industrial relations, social security and workplace safety that replaced 29 Indian labour laws on 21 November 2025. They changed salary structures, gratuity, overtime and exit rules. India guide →
A company registered in a country, such as a subsidiary or branch, that can employ staff directly. Setting one up means registrations, local directors, accounting and annual filings, which is why many companies use an EOR first. EOR vs entity in India →
An arrangement where a provider runs a defined function for you, such as payroll operations or IT support, and is responsible for the outcome, rather than supplying people you manage yourself. Managed services →
The lowest pay an employer may legally offer, set nationally, regionally or by skill level. Many countries update it every year, so EOR salaries need checking each January.
Treating someone who works like an employee as an independent contractor. If authorities reclassify the relationship, the company can owe back-dated taxes, social security, benefits and penalties.
An employee's take-home pay after income tax and employee contributions are deducted from gross salary.
The time an employer or employee must give before ending employment. It is set by law, contract or both, and in some countries can be paid in lieu.
The steps to bring a new employee in compliantly: contract, registrations with tax and social security authorities, payroll set-up, equipment and system access. A good EOR can complete it in days.
Rules requiring employers to share salary information, such as pay ranges in job adverts. The EU Pay Transparency Directive is being brought into national law, starting with countries such as Poland. Poland guide →
How often employees are paid, such as monthly, twice a month or weekly, and the deadlines for paying salaries and filing returns in each country.
A provider that shares employer responsibilities with a company through co-employment, common in the United States. Unlike an EOR, a PEO usually requires you to have your own legal entity in the country. EOR vs PEO vs staffing agency →
A taxable presence a foreign company can create in a country, for example when local staff regularly sign contracts on its behalf. PE can make the company liable for local corporate tax. Using an EOR and clear role design helps manage the risk.
An initial period of employment, often three to six months, during which notice is usually shorter. Maximum lengths are set by law in many countries.
India's mandatory retirement savings scheme. Employers and employees each contribute 12% of PF wages, with the mandatory wage ceiling raised to ₹25,000 a month from September 2026. India guide →
Adding skilled professionals to your team through a provider who employs them, while you direct their work. Also called staff augmentation. Resource augmentation →
Compensation owed to an employee whose job ends, often based on years of service. The formula and when it applies vary widely by country.
Benefits an employer must provide by law, such as paid leave, maternity leave, social insurance and mandatory bonuses. Supplementary benefits, such as private health cover, go beyond the legal minimum.
Deducting employee income tax from salary and paying it to the tax authority, known as TDS in India and PAYE in South Africa and the UK. The employer, or the EOR, is responsible for getting it right.
The full cost of an employee: gross salary, employer contributions, benefits, equipment and any EOR fee. Use it, not salary alone, to compare hiring options. Global hiring cost calculator →
Permission for a foreign national to work in a country. An EOR may be able to sponsor work permits in some countries, but rules and timelines vary.
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Social security contributions
Mandatory payments by employers and employees that fund pensions, health care, unemployment and disability benefits, such as PF and ESI in India or ZUS in Poland.