GemmWork Glossary

A fixed place of business in a foreign country that subjects a company to local corporate taxation. The central compliance risk in global remote hiring.

The OECD threshold after which a worker's presence in a country triggers potential PE and tax residency obligations. Applies on a rolling 12-month basis — not a calendar year.

The highest-risk GEMM mode: a fully embedded independent contractor with strategic decision-making authority. PE Risk: 🔴 High. Misclassification Risk: 🔴 High.

The OECD rule that protects companies from PE obligations when worker presence stays below 183 days in any 12-month rolling period — and below 50% of working time at a fixed location.

A person who habitually concludes contracts on behalf of a foreign company — creating Permanent Establishment immediately, without the 183-day threshold applying.

A third-party company that becomes the legal employer for workers in foreign countries — handling payroll, taxes, compliance, and PE risk elimination — while the hiring company retains operational control.

The legal risk that a contractor relationship is reclassified as employment by local authorities, triggering retroactive tax, severance, and benefit obligations.

The headcount at which establishing a local entity becomes cheaper than paying ongoing EOR fees — typically 15–25 employees in the same country.

A GemmWork scoring variable measuring how difficult and expensive it is to terminate employment or exit an EOR arrangement in a given country. The primary driver of Hotel California risk.

The phenomenon where exiting an EOR arrangement triggers mandatory statutory severance that can reach $13,000–$45,000 per engineer — coined by GemmWork to describe the structural difficulty of leaving once employment obligations have accumulated.

GemmWork's proprietary 4×4 matrix mapping 16 global employment modes across 4 engagement structures and 4 integration depths, evaluated on 6 risk and cost variables.

The lowest-risk GEMM mode: full-time strategic employment via Employer of Record. PE Risk: 🟢 Low. GemmWork's default recommendation for most international hiring scenarios.

Engaging a senior expert on a part-time retainer basis, serving multiple clients simultaneously. Corresponds to GEMM-09 through GEMM-12. Lower PE risk than contractor arrangements due to genuine multi-client independence.

A GemmWork scoring variable measuring alignment between a country's talent and US business culture across 4 dimensions: English proficiency, timezone overlap, business culture, and US client track record.

Colombia's mandatory severance fund: employers deposit 1 month's salary per year of service into a government-designated fund, which earns 12% annual interest and is released upon termination.

Brazil's mandatory severance guarantee fund: employers deposit 8% of monthly gross salary, and owe an additional 40% penalty on the entire accumulated balance upon without-cause termination.

Brazil's Consolidação das Leis do Trabalho — the comprehensive labor code that governs all employment in Brazil and is the primary reason Brazil scores 🔴 High on Compliance Stickiness.