Global employment terminology.
Clear, legally grounded definitions for international hiring, statutory compliance, and tax terms.
Employer of Record (EOR)
An Employer of Record (EOR) serves as the registered legal employer for personnel in a target country. The EOR handles local payroll tax withholding, statutory benefits, social security remittances, and compliant termination, while the client organization retains full operational direction of day-to-day work.
Professional Employer Organization (PEO)
A PEO enters into a co-employment arrangement with a client company that owns a registered local entity. The PEO administers group healthcare, payroll filing, and workers' compensation under shared liability frameworks (predominantly in the US).
Permanent Establishment (PE)
Permanent Establishment (PE) arises under international tax treaties when a non-resident enterprise maintains a fixed place of business or dependent agents who routinely negotiate and conclude contracts in a foreign country. Using an EOR for non-commercial support roles helps mitigate PE risk.
AÜG License (Arbeitnehmerüberlassungsgesetz)
Under German law, any organization that employs workers to lease them out to client companies must hold an official AÜG license. Under Section 1(1b) AÜG, leased assignments are capped at a maximum of 18 consecutive months with the same client.
Independent Contractor Misclassification
Misclassification occurs when a company treats a worker as a contractor for tax and contract purposes despite exercising significant behavioral control, demanding exclusivity, and integrating them into core operations.