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Methodology

How the Termination Cost Index is built, scored, and bounded. This is the published methodology for the 2026 edition.

What the index measures

The index ranks countries and territories by one quantity: the total statutory cost of ending an employment relationship, expressed in weeks of the employee’s salary. It adds two figures drawn directly from law: the minimum notice period an employer must give, and the minimum severance an employer must pay, for the redundancy dismissal of a standard full-time permanent employee. Rank 1 is the most expensive.

Both figures are already denominated in weeks of salary at the same tenure basis, so the index adds them rather than weighting them. That is a deliberate choice: any weighting would be an editorial judgment about whether a week of notice hurts more than a week of severance pay, and the index does not make one. Where we say “countries” for short, the set includes a number of territories and special administrative regions that set their own employment rules.

It measures statutory floors, not total cost. Collective agreements, enhanced contractual packages, protected-category rules, court awards for unfair dismissal, and the practical cost of the process itself all sit on top of the number shown here, and in many jurisdictions they are larger than the floor.

The metric

total_weeks = notice_weeks + severance_weeks
composite = percent_rank(total_weeks) Ă— 100

Notice and severance scale with length of service in most jurisdictions, so both are measured at a defined tenure basis: the value used is the average of the statutory amount due at 1, 5, and 10 years of service. This is the convention of the World Bank Employing Workers dataset, and values from other sources are aligned to it before they enter the index. A specific case with very short or very long service will differ from the figure shown, sometimes by a lot. In a country whose severance schedule is back-loaded, a ten-year employee can be worth several times the average.

The composite is the percent-rank of the total within the scored set, scaled to 0 to 100, where 100 is the highest total in the edition. It exists to make position legible at a glance. The weeks figure, not the composite, is the quantity to quote: the composite is relative to this edition’s set of countries, the weeks are not.

The two component percentiles shown in the table (notice and severance separately) are reported for context. They are not combined and they do not feed the composite.

Countries are ordered by total weeks, descending. Ties share a rank: countries with an identical total receive the same rank, and the next distinct total takes the next rank number (dense ranking). Because many countries share round statutory values, the last rank number is considerably smaller than the number of scored countries. The ranking is complete, not truncated.

Inclusion rule

A country is scored only if it has an approved, sourced value for both statutory notice and statutory severance. If either is missing, the country is excluded and listed by name along with which field it is missing. We do not estimate, interpolate, or use AI to fill gaps. This edition scores 197 countries and territories and excludes 53.

A statutory zero is a value, not a gap. Where the law genuinely sets no minimum notice or no minimum severance, the country is scored at zero for that component and stays in the ranking. Excluding those countries would quietly overstate the global picture.

A country is scored only if it has approved, non-null values for both statutory inputs (notice_weeks and severance_weeks). No gap-filling. Countries missing either field are recorded as excluded.

Data provenance

Every value comes from the same sourced-and-dated statutory dataset that powers our country pages and our Global Employer Burden Index. The great majority of values come from the World Bank Employing Workers dataset, with ILO EPLEX and national statutes supplying corrections and the long tail. This edition rests on 394 sourced statutory values across the two fields. Every row in the downloadable dataset carries its source and as-of date, so any number in the index can be traced back to where it came from.

SourceFields coveredValues
World Bank Employing Workersnotice weeks, severance weeks326
ILO EPLEXnotice weeks, severance weeks43
National statutes and government sourcesnotice weeks, severance weeks25

When more than one source carries the same figure, a fixed source-priority order decides which is used. A national statutory figure outranks a harmonised aggregator. Among the aggregators, the newer effective date wins.

On the World Bank data’s age:most notice and severance values come from the World Bank Employing Workers dataset, whose final vintage is May 2019. The Doing Business programme that produced it was discontinued in September 2021 and the data is preserved as a static archive. We use it because it remains the broadest notice and severance dataset collected under a single comparable methodology. Where we have verified that a law has changed since 2019, for example Egypt’s Labour Law 14/2025 and Indonesia’s Omnibus Law, the archive value is replaced with one sourced from the current national statute or ILO EPLEX, and the replacement is visible in the per-value source labels.

Source dates refer to when a figure was published or a law enacted, not to validity: long-standing labour codes remain in force as amended. Bolivia’s severance and notice, for instance, are set by the General Labour Law of 1942, as amended, and still the governing statute today.

Editions and versioning

The index is published in annual editions (2026is the current one). The weeks figures are absolute and comparable across editions. The composite is not: it is a percentile within an edition’s set of included countries, so the same raw total can produce a different composite once the set changes. Compare weeks between editions, and positions within one.

Corrections policy:when a sourcing error is found within an edition, we correct the underlying value, rebuild the edition, and note the correction in the affected value’s provenance. We do not leave known-wrong numbers standing until the next edition. The dataset’s generated_at timestamp reflects the most recent rebuild.

Limitations

  • Redundancy, not every exit route. The index prices a dismissal on economic or redundancy grounds. Dismissal for cause, resignation, mutual termination, and the end of a fixed term carry different entitlements, often much lower ones.
  • Statutory, not negotiated. The number is the legal floor. Collective agreements, enhanced contractual severance, and settlement practice routinely push the real figure well above it, and in several European markets the negotiated package is the norm rather than the exception.
  • Tenure basis. Notice and severance scale with service; the index uses the average of the amount due at 1, 5, and 10 years. A specific case with very short or very long service may differ substantially.
  • Money, not friction.Weeks of salary do not capture how hard a dismissal is to carry out: works-council consultation, labour authority approval, mandatory reinstatement remedies, and litigation risk are real costs the index does not price. Two countries at the same number of weeks can be very different places to run a redundancy. The dataset carries the OECD’s own employment-protection indicators, where they exist, as an independent cross-check.
  • Severance follows the statute’s label. Where a country channels end-of-service money through a deferred-compensation scheme rather than statutory severance, Italy’s TFR being the clearest example, it scores zero on severance, because the payment is accrued salary rather than a dismissal cost. The money is real, but it is not a statutory termination obligation.
  • Excluded, not estimated. Countries without a sourced value for both inputs are left out and listed by name, rather than scored on incomplete data.

Relationship to the Burden Index

Our Global Employer Burden Index scores the ongoing cost of employing someone and includes severance and notice as two of its three weighted pillars. This index isolates the exit: it uses the same two statutory inputs, at the same tenure basis, from the same fact store, but adds them into one absolute quantity instead of percent-ranking each pillar and weighting the result. A country can sit high on one index and low on the other: heavy ongoing social contributions with a cheap exit, or the reverse. For reference, the median scored country here owes 15.1 weeks of salary to end one employment relationship.

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