Compliance & Legal

Glossary: Remote Work and Compliance

June 7, 2022

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5min

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A1
Asynchronous collaboration
Business traveler
Certificate of Coverage (CoC)
Co-employment
Dependant Agent Permanent Establishment (DAPE)
Direct employment
Distributed team
Duty of care
Employer of Record (EoR)
Employee leasing
Hybrid working model
Permanent Establishment
Fixed place of business Permanent Establishment (FPOB)
Home office
OECD MTC
Office-first working model
Matrix structure
Professional Employment Organization (PEO)
IR35
Third party benefits
Tax treaty
Tax year
Remote-first working model
Risk Assessment
Workation
WorkGlobal
WorkDirect
Service Permanent Establishment
Umbrella company
Virtual assignment

A1: A1 is a document issued by the authorities of a country to prove that an employee is still covered under its social insurance scheme even while abroad. This document is valid throughout the EU/EEA countries and Switzerland.

Asynchronous collaboration: It is a model of work where people collaborate on projects or ideas at different times, not in real-time.

Business traveler: Business travelers are employees that often travel for work or business purposes, as opposed to other types of travel, such as for leisure purposes or regularly commuting between one’s home and workplace.

Certificate of Coverage (CoC): The Certificate of Coverage (CoC) is a document issued by the authorities of a country to prove that an employee is still covered under its social insurance scheme even while abroad. The concept is similar to the A1 certificate for EU/EEA countries, but in this case, the CoC can be issued for all countries around the world as long as there is a Social Security Treaty between countries.

Co-employment: It is a contractual relationship between two companies that have rights and obligations as employers, one maintaining responsibilities for the worker’s job duties and day-to-day functions while the co-employer manages personnel related functions as payroll.

Dependant Agent Permanent Establishment (DAPE): The Dependant Agent Permanent Establishment, It is a way of creating a Permanent Establishment (PE) by an individual that negotiates or closes contracts on behalf of an enterprise habitually in a third country, i.e. when the representative signs contracts from time to time in a country where the company is not located, the circumstances may give rise to a permanent establishment.

Direct employment: Direct employment is a situation where a company employs directly rather than relying on sub-contractors, self-employed operatives or EoRs.

Distributed team: It is a work model that consists of employees working together but physically located away from one another.

Duty of care: A legal obligation that makes employers liable for the safety, health and wellbeing of their employees by protecting them from undue risks and by ensuring employees have a safe place to work, regardless of whether that is on-site or working remotely like for instance, providing an ergonomic workspace. The duty of care can be found in many countries’ labour regulations such as the British Health and Safety at Work – Act 1974 or Law 31/1995 in Spain as well as in international frameworks such as the Occupational Safety and Health Convention, 1981.

Employer of Record (EoR): An EoR is a third-party service that takes on a significant amount of the work involved in global employment. An EOR however, does not recruit, but gets involved in the process once the company has selected a candidate.

Employee leasing: A dual agreement between companies that consist of an employee working for a company but receiving the salary from another company who also handles the HR administration.

Hybrid working model: A company strategy that makes both working from the office and working remotely possible, by allowing employees to combine both models.

Permanent Establishment: is a dependent branch of a company under the same name without being a separate company in the legal sense. The existence of a PE leads especially to tax implications, meaning that local tax authorities obtain the right to tax profits of this branch. As a result, companies try to avoid the establishment of PE abroad. The existence of a PE is established by triggering certain criteria, set by local authorities which differ from country to country. Anyhow, most countries stick to the regulatory framework of the OECD treaty regarding PE.

Fixed place of business Permanent Establishment (FPOB): The fixed place of business Permanent Establishment is quite a common kind of PE that is created when there is a fixed place of business through which the business of an enterprise is wholly or partly carried on in a country according to the OECD Model Tax Convention.

Home office: A home office is a space designated in a person’s residence for official business purposes, this space is not at the disposal of the employer.

OECD MTC: The OECD Model Tax Convention is a model for countries concluding bilateral tax conventions that plays a crucial role in removing tax-related barriers to cross-border trade and investment. It is the basis for negotiation and application of bilateral tax treaties between countries, designed to assist business while helping to prevent tax evasion and avoidance. The OECD Model also provides a means for settling on a uniform basis the most common problems that arise in the field of international double taxation.

Office-first working model: A company strategy that makes working from the office the primary option for most employees.

Matrix structure: A company structure where teams report to multiple leaders in order to boost innovation. Hence, employees work across teams and projects as well as within their own department or function.

Professional Employment Organization (PEO): A Professional Employment Organization (PEO) is a company that allows an enterprise to hire employees in a foreign market without the need of setting up a local entity. The concept is similar to the EoR one. However, a PEO is a service firm that generally offers a more comprehensive range of HR services.

IR35: This is a British rule introduced in 2000, created with the aim to address tax avoidance by individuals working in the role of an employee through an intermediary, such as an EoR. Working in this capacity is sometimes referred to as a “disguised employee” and enables individuals to avoid tax and national insurance contributions which HMRC intends to recover. You may be affected by these rules if you are a worker who provides their services through their intermediary, a client who receives services from a worker through their intermediary or an agency providing workers’ services through their intermediary.

Third party benefits: They are a type of benefits that are provided to an employee by someone other than their employer. Viewed from the provider’s perspective, they are benefits provided to employees of another employer, that may work for the provider. An example of this would be the relationship between the employee, the legal employer (EoR) and the company that receive the services of the employee and want to provide this worker with any kind of benefits (car, VSOP…).

Tax treaty: A tax treaty is a binding agreement between two countries signed to tackle the most common problems that arise in the field of international double taxation.

Tax year: A tax year is the 12-month calendar year covered by a tax return. It is also relevant to assess the tax residence of an employee. The start and end dates vary depending on the country.

Remote-first working model: A company strategy that makes remote work the primary option for most employees.

Risk Assessment: It is an analysis of the risks that the employee request entails when asking to work from another country that is performed by our WorkFlex services, by assessing all potential exposures and qualifying the risk of low, moderate or high.

Workation: This is the combination of work and vacation. It is a benefit that companies can grant to their employees in order to give them flexibility and boost employees’ well-being.

WorkGlobal: It is a service provided by WorkMotion that consists of an EOR platform that enables the company to employ local workers within a third country without opening a legal entity in the country and ensures all processes are in line with the laws of over 160 countries.

WorkDirect: It is a service provided by WorkMotion that offers a solution where unlike EoR, the company is the employer but without creating a local entity. The company is registered as a foreign company and hires in accordance with local laws, under their own local employment contracts. With WorkDirect, companies can start legally onboarding international talent, while avoiding the costs of starting a local subsidiary. It can only be used by EU companies for now.

Service Permanent Establishment: The Service Permanent Establishment (PE) is a type of PE that is created when a non-resident provides services in the source country beyond a certain period of time. This concept is not included in all tax treaties although by 2020 it has started to be a widely spread concept in some of the EU member states.

Umbrella company: An umbrella company is a type of corporation that acts as an employer to fixed-term contractors, usually through an employment agency.

Virtual assignment: Virtual assignments are tasks that imply focusing on work for a specific location. A virtual assignee is performing remotely the same services as an assignee based in the host location.