For what purpose can legal entities and establishments be utilized?

Legal entities and establishments are primarily utilized for grouping multiple work assignments for regulatory reporting. This reflects the structure within which organizations operate, ensuring compliance with various laws and regulations that govern labor, employment, taxation, and more.

When organizations are required to report on their workforce and business operations, having legal entities and establishments helps define the scope of the reporting. Each legal entity typically corresponds to a separate legal framework, which may impact how data is collected, managed, and reported to regulatory agencies. Such classifications are necessary for accurately adhering to different legal requirements, which can vary by region or type of business activity.

While it is true that legal entities can be involved in employee benefits packages, separate organizational units, and tax filing, these functions are generally subsidiary to their primary purpose of structuring the organization for proper reporting and compliance. For example, legal entities might be used in the context of tax filing to a certain extent, but the essential reason for their existence in HR systems lies in reporting relationships and regulatory compliance.