Global payroll glossary

Payroll fundamentals

The base concepts every pay run rests on.

• PayrollPayroll is the process by which an employer calculates and pays employee compensation each cycle, working out gross wages, withholding income tax and social contributions, remitting them to the authorities, and paying the remaining net amount to the worker.
• Global payrollGlobal payroll is the process of calculating and paying workers across multiple countries in local currencies, whilst meeting each country's tax, social-security, and reporting rules.
• Multi-country payrollMulti-country payroll is the process of paying employees in two or more countries under a single framework, covering each jurisdiction's tax rules, contribution rates, currencies, and reporting obligations.
• Payroll cycleA payroll cycle is the recurring schedule on which a company pays its employees, such as weekly, biweekly, semi-monthly or monthly, determined by local labour law and employer policy.
• Gross-to-net payGross-to-net pay is the process of calculating an employee's take-home pay by subtracting income tax, social contributions, and other deductions from their gross (before-tax) salary.

Running payroll across countries

How multi-country payroll is operated and controlled.

• Global Payroll ProviderA global payroll provider is a service that calculates payroll, files taxes and pays salaries for employees across multiple countries, but does not become their legal employer, so the client must already hold its own registered entity in each country of operation.
• Fully Managed PayrollFully managed payroll is an operating model in which one vendor takes end-to-end responsibility for payroll calculation, statutory filing, compliance and payment across every country an employer operates in, giving the employer consolidated reporting and a single auditable invoice.
• Payroll ConsolidationPayroll consolidation is a multi-country operating model in which a single platform or provider processes, funds and reports payroll for all of a company's international employees through one unified workflow, replacing separate country-by-country runs managed by local vendors.
• Payroll FundingPayroll funding is the step where an employer sends a payroll provider or Employer of Record the full amount of a pay run in advance, covering net pay, employer taxes and statutory contributions, so the provider can disburse wages to employees on the agreed pay date.
• Payroll ReconciliationPayroll reconciliation is the check that confirms the tax withheld, contributions remitted and wages paid across every pay run in a period match the totals reported in the statutory filings sent to each country's tax authority, catching gaps before they become penalties.

Tax and withholding

What is deducted, contributed and filed each cycle.

• Payroll Tax WithholdingPayroll tax withholding is the process by which an employer calculates, deducts and remits the income tax and social security owed on an employee's pay to the local tax authorities, so the correct amounts reach the state rather than the worker's bank account.
• Payroll deductionsAmounts withheld from an employee's gross pay each pay period, covering mandatory statutory obligations such as income tax and social insurance, plus any voluntary amounts the employee has consented to.
• Employer social contributionsEmployer social contributions are mandatory payments a company makes on top of an employee's gross salary to fund state programmes such as pensions, healthcare, and unemployment insurance.
• Employer Burden RateEmployer burden rate is the extra cost a business carries on top of an employee's gross salary, expressed as a percentage: the statutory contributions, mandatory benefits and payroll taxes an employer must pay in addition to the wage itself.
• Tax RegistrationTax registration is the process of enrolling a business, or the employer of record acting for it, with a country's tax authority so it can legally withhold and remit payroll taxes and social contributions on behalf of its employees.
• Statutory Filing CalendarA statutory filing calendar is a country-by-country schedule of every payroll-related deadline an employer must meet, covering tax returns, social-contribution remittances, year-end reconciliations and employee reporting, so that nothing is filed late in any jurisdiction where the business employs people.

FX and currency

The exchange-rate layer beneath cross-border pay.

• Multi-Currency PayrollMulti-currency payroll is the ability of an EOR or global payroll platform to pay workers in their own local currencies across several countries within one payroll cycle, which also determines where currency conversion happens and who controls the exchange rate applied.
• FX markupAn FX markup is the margin a payroll provider adds above the mid-market exchange rate when converting your funding currency into your employees' local currencies, inflating the true cost of global employment.
• FX SpreadAn FX spread is the gap between the rate at which a currency is bought and the rate at which it is sold, and it represents the built-in cost of a currency conversion that a payroll provider can keep as margin when it converts your funding currency into local pay.
• Mid-market exchange rateThe mid-market exchange rate is the midpoint between the buy and sell prices of two currencies on global markets, and the fairest benchmark for any currency conversion.
• FX TransparencyFX transparency is the practice of a payroll or employer of record provider disclosing the exact margin it adds above the mid-market exchange rate, so a client can see the true cost of every currency conversion rather than having it hidden inside the quoted rate.
• Currency Conversion CostCurrency conversion cost is the total expense of turning a company's home-currency payroll funds into an employee's local currency, made up of any transfer fees, the exchange-rate spread and any provider markup, and it varies with how transparent the provider is.

How these terms relate

A single pay run moves through the same stages wherever it happens: inputs close at the cut-off date, gross-to-net turns gross salary into net salary after deductions, the employer funds the total, and money reaches workers over a payment rail. Do this in one country and it is domestic payroll; do it across many and multi-country payroll, consolidation and a single provider hold it together. Tax withholding, social contributions and the filing calendar keep each run lawful, whilst reconciliation catches errors before they become leakage. Currency is the hidden layer: paying in local currencies means an FX markup or spread on every conversion, measured against the mid-market rate. FX transparency is simply seeing that margin instead of paying it blind.

Related glossaries

• Employer of Record glossary
• Global HR compliance glossary
• HR data privacy glossary