The vocabulary vendors use in payroll contracts

An informal US term for an independent contractor who receives IRS Form 1099-NEC instead of a W-2, and from whom no payroll tax is withheld.

A mandatory additional salary payment, equal to roughly one month's wages, required by law in many countries across Latin America, Asia, and Europe.

The process of enrolling employees in benefit programs, calculating employer contributions, and reporting to authorities, repeated for every country where staff are paid.

A pay schedule where employees are paid every two weeks, producing twenty-six pay periods in a calendar year.

Variable compensation where a worker earns a percentage or fixed amount tied to sales, revenue, or another measurable performance metric.

The process of onboarding, paying, and managing relationships with independent contractors, including compliance with local classification laws.

A third-party organization that becomes the legal employer of workers in countries where a company doesn't have a legal entity, handling employment contracts, payroll, and compliance.

The process of calculating an employee's take-home pay by subtracting taxes, deductions, and contributions from their gross salary.

Payroll processing for employees located in multiple countries, often consolidated through a single platform or provider.

The amount a worker actually receives after all taxes, social contributions, and other deductions have been subtracted from gross earnings.

Any payroll run made outside the standard recurring pay schedule, such as a bonus, final pay, error correction, or salary advance.

Adherence to local, national, and international laws governing employee compensation, including tax withholding, benefits, and reporting requirements.

The process of unifying payroll operations across multiple countries or entities into a single system.

A master record listing every employee's gross pay, deductions, tax withholdings, and net pay for a single pay period.

A fixed place of business that may create tax obligations for a company in a foreign country, often a concern when hiring internationally.

Amounts withheld from an employee's pay after income and payroll taxes are calculated, reducing net pay but not taxable income.

A co-employment arrangement where the PEO shares employer responsibilities with the client company, typically used for domestic employees.

Mandatory payments made by employers and/or employees to fund social security programs, including pension, healthcare, and unemployment insurance.

Mandatory employee benefits required by law in a specific country, such as health insurance, pension contributions, or paid leave.

Any compensation paid to employees beyond their regular base salary or wages, including bonuses, commissions, overtime, and severance.

A Canadian tax form summarizing employment income and statutory deductions paid to each employee in a calendar year, filed with the Canada Revenue Agency.

The net amount deposited into an employee's account after all taxes, social contributions, and other deductions are subtracted from gross pay.

A worker in the United States whose employer withholds income tax, Social Security, and Medicare from each paycheck and reports annual wages on a W-2 form.

The legal distinction between employees and independent contractors, which determines tax obligations, benefits eligibility, and labor law protections.