Workforce Glossary
Plain-English definitions for workforce, global hiring, and AI-workforce terms, written for the buyer, not the compliance team.
employment
- Employer of Record (EOR)An Employer of Record is a third-party organization that legally employs workers on behalf of another company in a country where that company has no local entit…
- Professional Employer Organization (PEO)A PEO co-employs workers alongside the client under a US-specific arrangement, sharing HR, benefits, and payroll administration. Unlike an EOR, a PEO requires t…
compliance
- Agent of Record (AOR)An Agent of Record contracts and pays independent contractors on a company's behalf, absorbing misclassification and compliance risk. Unlike an EOR (which emplo…
- Worker MisclassificationWorker misclassification is treating a person who legally qualifies as an employee as an independent contractor. Penalties include back taxes, unpaid benefits, …
- Contractor ManagementContractor management is the process of onboarding, contracting, paying, and compliance-monitoring independent contractors across jurisdictions. Done well, it p…
expansion
- Permanent Establishment (PE)Permanent Establishment is a tax-law concept under which a foreign company's activity in a country becomes sufficient to trigger local corporate tax obligations…
- Entity SetupEntity setup is incorporating a legal subsidiary in a foreign country to employ workers directly, sign local contracts, and operate as a resident business. Typi…
payroll
- Global PayrollGlobal payroll is the consolidated administration of employee pay, tax withholding, and statutory contributions across multiple countries. It requires local ent…
- 13th-Month Pay13th-month pay is a statutory bonus equal to one month's salary, mandated in many Latin American, European, and Asian countries. In some jurisdictions it is pai…
- Employer Social ContributionsEmployer social contributions are the mandatory taxes and benefit contributions an employer must pay on top of an employee's gross salary, funding social securi…
staffing
- Nearshore StaffingNearshore staffing is hiring talent in a country geographically close to the client's headquarters, typically within 1–3 hours of time-zone overlap. For US comp…
- Offshore StaffingOffshore staffing is hiring in a country with substantial time-zone offset from the client, typically 8+ hours. Offshore optimizes for cost and 24-hour coverage…
- Managed Service Provider (MSP)In contingent workforce contexts, an MSP is a company that manages a client's contingent labor program end-to-end: sourcing suppliers, managing the VMS, ensurin…
- Vendor Management System (VMS)A VMS is software used to manage the end-to-end lifecycle of contingent workers and staffing suppliers: requisitions, candidate submission, timekeeping, invoici…
- Staff AugmentationStaff augmentation is engaging external professionals to work under the client's direction and inside the client's team, typically on hourly or monthly rates. T…
- Statement of Work (SOW)An SOW is an outcome-based engagement where the vendor is responsible for delivering a defined scope, deliverables, milestones, and acceptance criteria for a fi…
- Recruitment Process Outsourcing (RPO)RPO is outsourcing all or part of a company's recruiting function to an external provider that acts as an extension of the internal talent team. RPO models rang…
- Workforce OrchestrationWorkforce orchestration is coordinating multiple workforce models, employees, contractors, staffing suppliers, EOR/AOR, outsourced teams, AI agents, under a sin…
ai
- AI WorkforceAI Workforce refers to a hybrid operating model where humans and AI agents share operational work: humans handle judgment, escalation, and relationship work whi…
- AI TransformationAI Transformation is the systematic redesign of a company's operations, workforce, and processes to embed AI as a core capability. It combines workforce redesig…