Glossary

Global employment,
in plain English.

Clear definitions of the Employer of Record, payroll, benefits and compliance terms you meet when you hire abroad. No jargon, sources cited.

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165 terms

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13th month salaryA mandatory extra payment, equal to roughly one month's wages, that employers in many countries must pay employees each year on top of their regular salary.

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AB5 (California Assembly Bill 5)AB5 is a California law, in force since 2020, that made the ABC test the default rule for deciding whether a worker is an employee or an independent contractor across most of the state's labour, wage and unemployment provisions.
ABC testThe ABC test is a worker-classification standard that treats a worker as an employee unless the hiring business proves all three conditions: the worker is free from its control, performs work outside its usual business, and runs an independent trade of the same kind.
Administrative Services OrganizationAn Administrative Services Organization (ASO) is an HR outsourcing provider that runs payroll, benefits and HR administration for a client that stays the sole legal employer, with no co-employment and no transfer of employer liability.
Agent of Record (AOR)An Agent of Record (AOR) is a third party that contracts, classifies and pays independent contractors on your behalf, keeping the engagement compliant without converting the worker into an employee.
AguinaldoAguinaldo is a mandatory year-end cash bonus paid to employees in Mexico and several other Latin American countries, equivalent to at least 15 days of salary under Mexican law.
Annual leaveAnnual leave is the paid time off employees are legally entitled to take each year, separate from sick leave. Statutory minimums vary widely by country, from 20 days in the EU to no federal floor in the US.
At-Will EmploymentAt-will employment is a United States doctrine under which either the employer or the employee may end the working relationship at any time, for any lawful reason or no reason, without advance notice or severance, unless a contract or specific law says otherwise.
ATO Employee vs. Contractor Test (Australia)The ATO employee vs contractor test is the Australian Taxation Office's multi-factor framework for deciding whether a worker is an employee or an independent contractor, weighing control over the work, the right to subcontract, who supplies tools, and whether the worker carries genuine financial risk.
Audit ReadinessAudit readiness in global payroll is the state in which a company can produce, within a defined response window, complete and accurate payroll records, tax remittance proof, worker classification documents and currency conversion records for any jurisdiction and any past pay period under review.
Audit TrailAn audit trail is the organised body of documentation, contracts, questionnaires, invoices and written reasoning, that a business keeps to show its worker classification and payroll decisions were made in good faith and can be reconstructed if a tax or labour authority reviews them.

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Umbrella CompanyAn umbrella company is an intermediary that employs contractors and pays them through payroll on behalf of recruitment agencies or end clients, most commonly in the UK, acting as the legal employer for tax purposes while the contractor works on assignments the client directs.

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Vendor FragmentationVendor fragmentation is the state in which a company runs payroll across several countries through separate, unconnected local providers, each with its own data format, reporting cadence and compliance posture, producing inconsistent data, duplicated effort and higher risk at the global level.

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Glossary

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