HR glossary: definitions and terms, A to Z

A

Leave Absence management Absence management is the practice of tracking and handling all the time employees are away from work - annual leave, sick days, and other absence - so balances, approvals, and coverage stay accurate. Leave Annual leave carryover Leave carryover is the unused paid leave an employee is allowed to move into the next year, often capped at a set number of days or with an expiry date. HR basics ATS (Applicant Tracking System) An ATS (applicant tracking system) is software for managing hiring - posting jobs, collecting applications, and moving candidates through interview stages - and it is separate from core HR, which manages the people you already employ. HR basics ATS vs HRIS An ATS (applicant tracking system) manages hiring - job posts, applications, and interview stages - while an HRIS manages the people you already employ - records, leave, and compensation; they solve different problems and are often separate tools.

B

Leave Bank holiday A bank holiday is a public holiday on which banks and most businesses close; the term is used mainly in the UK and Ireland, and the days are set nationally or by region. Leave Bereavement leave (compassionate leave) Bereavement leave, also called compassionate leave, is time off granted after the death of a close family member, with the length and whether it is paid usually set by national law or company policy.

C

Pay Compensation history and effective dating Compensation history - sometimes called salary history - is the record of an employee's pay over time, and effective dating means each change is stored with the date it takes effect, so past and future salaries stay accurate. HR basics Core HR Core HR is the essential layer of HR software - employee records, leave and absence, compensation history, roles and permissions, and an audit trail - without add-ons like recruiting or payroll.

D

Compliance Data minimisation Data minimisation is the GDPR principle that a company should collect and keep only the personal data it actually needs for a stated purpose, and no more. Compliance Data Processing Agreement (DPA) A Data Processing Agreement (DPA) is the contract that sets out how a software vendor (the processor) may handle personal data on behalf of the customer (the controller), as GDPR requires. Compliance Data protection policy A data protection policy is a company's written document explaining how it collects, uses, stores, and protects personal data, including employee data, and is one of the practical documents GDPR expects a company to have. Compliance Data retention policy A data retention policy defines how long a company keeps each type of data and when it is deleted, balancing legal obligations to retain records against the duty not to keep personal data longer than needed.

E

HR basics Employee handbook An employee handbook is a written document that sets out a company's policies, expectations, and benefits - things like leave entitlement, working hours, code of conduct, and how to raise a grievance - in one place new and existing staff can refer to. HR basics Employee onboarding Employee onboarding is the process of bringing a new hire into a company - giving them access, accounts, and the information they need to start working productively. HR basics Employee self-service Employee self-service lets staff handle routine HR tasks themselves - request leave, update personal details, check balances - instead of emailing HR for each one. HR basics Employer of Record (EOR) An Employer of Record (EOR) is a third-party company that legally employs staff on a client's behalf in a country where the client has no local entity, handling local payroll, tax, and compliance. HR basics Employment status (employment type) Employment status, or employment type, is the category an employee falls into - such as full-time, part-time, contractor, or freelancer - which affects their entitlements, leave, and how they are managed. Compliance Encryption at rest Encryption at rest means sensitive data is stored in encrypted form on disk, so that someone with direct access to the database or its backups cannot read it without the decryption key. Compliance Equal opportunities policy An equal opportunities policy is a company's written commitment to treat job applicants and employees fairly regardless of characteristics like age, gender, race, disability, or religion, and to make decisions on merit rather than bias. Compliance EU data residency EU data residency means personal data is stored and processed on servers inside the European Union, which simplifies GDPR compliance and avoids cross-border transfer complications.

F

HR basics Fixed-term contract A fixed-term contract is an employment agreement with a set end date or a defined event that ends it, such as covering a colleague's parental leave or completing a project, as opposed to an open-ended permanent contract. Pricing Flat-rate HR pricing Flat-rate HR pricing charges one price per company, usually by plan or size band, so hiring inside the plan does not change the bill. HR basics FTE (full-time equivalent) Full-time equivalent (FTE) is a way of counting staff by total working hours rather than headcount, where one FTE equals one full-time employee and two half-time employees also add up to one FTE.

G

Leave Garden leave Garden leave is a period, usually during a notice period, when an employee is told to stay away from work while still employed and paid, keeping them out of the business but not yet free to join a competitor. Compliance GDPR for HR GDPR for HR means handling employee personal data - contracts, salaries, performance notes - under the EU data-protection rules: a lawful basis, data minimisation, security, and employee rights like access and erasure. Pay Gross vs net salary Gross salary is an employee's full pay before any deductions; net salary (take-home pay) is what they actually receive after income tax and social contributions are subtracted.

H

HR basics HCM (Human Capital Management) HCM (human capital management) is a category of enterprise HR software - an HCM system bundles core HR with payroll, recruiting, performance, learning, and workforce planning - built for large companies rather than SMBs. HR basics Headcount Headcount is the total number of people a company employs, counted as individuals, and is the figure most HR tools and HR pricing are based on. Leave Holiday entitlement Holiday entitlement is the total amount of paid annual leave an employee is owed in a leave year - the statutory legal minimum plus any additional days the employer offers by contract. HR basics HR audit log An HR audit log is a tamper-resistant record of who changed what and when across the system - edits to records, salaries, and leave approvals - used for accountability and compliance. HR basics HR software HR software is any application built to manage employee-related tasks - records, leave, payroll, recruiting, or performance - ranging from a single-purpose tool to a full HCM suite. HR basics HRIS (Human Resources Information System) An HRIS is the central software a company uses to store and manage employee data - records, leave, compensation, and roles - in one place instead of scattered spreadsheets. HR basics HRMS (Human Resource Management System) HRMS (human resource management system) is a term for HR software that combines core employee records with day-to-day workflows like leave approvals and reporting, often used interchangeably with HRIS, with HCM sitting above both as the enterprise tier.

I

Pricing Implementation fee (setup fee) An implementation fee - sometimes quoted as an implementation cost or setup cost - is a one-off charge some HR vendors apply at the start of a contract to cover setup, data import, configuration, or onboarding, separate from the recurring subscription.

K

Compliance Kurzarbeit (short-time work) Kurzarbeit is a German short-time work scheme where employers reduce staff hours during a downturn instead of laying them off, and the state tops up part of the lost pay - similar schemes exist in other EU countries under different names.

L

Leave Leave accrual Leave accrual is the way paid time off builds up over the year, usually a set number of days or hours added each month rather than granted all at once. Leave Leave balance A leave balance is how much paid time off an employee has left at a given moment, after their accruals, carryover, and every request they have taken are added up. Leave Leave ledger A leave ledger is the running, line-by-line record of every leave transaction for an employee - each accrual, request, approval, carryover, and adjustment - that explains how their current balance was reached. Leave Leave policy A leave policy is the set of rules a company defines for time off - how much annual and sick leave employees get, how it accrues, how much carries over, and who approves requests. Leave Leave year A leave year is the fixed 12-month period an employer uses to grant and reset annual leave - often the calendar year, the anniversary of each employee's start date, or a company-wide date such as 1 April.

M

Pay Minimum wage Minimum wage is the lowest hourly or monthly pay an employer may legally pay an employee, set by national or, in some countries, regional law, and it varies widely across the EU and beyond.

N

Leave Notice period A notice period is the length of time an employee or employer must give before ending an employment contract, running from the resignation or dismissal date to the employee's last working day.

O

HR basics Offboarding Offboarding is the process of removing a departing employee from a company - revoking access, closing accounts, settling final leave, and keeping the right records for compliance. HR basics Org chart (organisational chart) An organisational chart (org chart) is a visual map of who reports to whom in a company, showing managers, teams, and reporting lines.

P

Leave Parental leave Parental leave is time off granted to employees to care for a child - covering maternity, paternity, adoption, and shared parental leave depending on the country - with entitlement and pay set mostly by national law. Pay Payroll Payroll is the process of calculating and paying employee wages - gross-to-net pay, tax and social-contribution deductions, and disbursement - usually run on a fixed monthly or weekly cycle. Pay Payslip (pay stub) A payslip, also called a pay stub, is the document an employee receives each pay run showing gross pay, itemised deductions, and net pay, along with the period it covers. HR basics People operations (People Ops) People operations (People Ops) is a modern term for the HR function, framing it around enabling employees and running smooth day-to-day processes rather than only administration and compliance. Pricing PEPM vs PEPP PEPM (per-employee-per-month) bills a flat monthly fee for every employee, while PEPP (per-employee-per-pay-period) bills per employee each time payroll runs, so the total varies with how often you pay staff. Pricing Per-employee pricing (PEPM) Per-employee-per-month (PEPM) pricing charges for HR software by headcount, so the bill rises every time you hire and add-on modules are often charged on top. Leave Pro-rata holiday entitlement Pro-rata holiday is the share of annual leave a part-time employee or a mid-year joiner earns, calculated in proportion to the time or hours they work. Leave Probation period A probation period is an initial stretch of employment, commonly one to six months, during which either side can end the contract on shorter notice while the fit is assessed. Leave PTO (paid time off) Paid time off (PTO) is leave an employee can take while still being paid - commonly annual or holiday leave and sometimes sick days - tracked as a balance the employee draws down. Leave Public holidays Public holidays are nationally or regionally mandated non-working days, and they differ by country, which makes a shared absence calendar harder to manage for cross-border teams.

R

Compliance Right to be forgotten (right to erasure) The right to be forgotten, or right to erasure, is a GDPR right that lets a person ask for their personal data to be deleted when there is no lawful reason to keep it.

S

Leave Sabbatical leave Sabbatical leave is an extended, agreed period away from work, typically weeks or months, granted after a set number of years of service and usually unpaid or partly paid. Pay Salary benchmarking Salary benchmarking is comparing what a company pays for a role against market data for similar roles, to check whether pay is competitive and consistent. Leave Sick leave tracking Sick leave tracking records absence due to illness separately from annual leave, so balances, patterns, and any statutory sick-pay rules are handled correctly. Leave Statutory annual leave Statutory annual leave is the minimum paid holiday an employer must give by law; under the EU Working Time Directive that minimum is four weeks, which is 20 days for a five-day week, and many countries set more. Compliance Subprocessor A subprocessor is a third-party service a software vendor uses to deliver its product - hosting, email, error monitoring - and under GDPR each one handling personal data needs its own data-processing terms.

T

Leave Time off in lieu (TOIL) Time off in lieu (TOIL) is paid time off given to an employee for extra hours worked, instead of paying overtime. Pricing Total cost of ownership (TCO) Total cost of ownership (TCO) for HR software is the full multi-year cost of a tool - subscription, per-employee scaling, setup or implementation fees, paid add-ons, and admin time - rather than the sticker price alone. Leave Types of leave Types of leave are the categories of time off a company recognises - such as annual leave, sick leave, parental leave, and unpaid leave - each with its own rules for entitlement and approval.

U

Leave Unpaid leave Unpaid leave is time off work agreed with the employer during which the employee is not paid and does not usually draw down their paid-leave balance, while the employment relationship continues.