Guide

Understanding OECD Employment Protection Scores

Key Takeaway

The OECD EPL score is a 0–6 index measuring the legal difficulty of dismissing workers, higher scores mean stronger protections for employees, not necessarily better outcomes for all parties.

What Is the OECD EPL Database?

The OECD Employment Protection Legislation (EPL) database is a systematic measure of the rules governing how and when employers can dismiss workers across member and partner economies. The OECD has been collecting these indicators since the early 1990s, making it one of the most consistent cross-national datasets on labour market regulation available.

Employment protection laws vary enormously by country. In some countries, dismissing a permanent employee requires months of notice, substantial severance pay, and approval from labour authorities. In others, at-will employment means a worker can be let go with little notice and minimal compensation. The EPL database translates these legal differences into comparable numeric scores.

The 0–6 Scale Explained

All EPL indicators use a scale from 0 to 6, where:

  • 0 indicates no legal restrictions, the most flexible labour market regime
  • 6 indicates the maximum legal protection, the most restrictive regime

Scores are derived from detailed information on legal provisions: notice periods (in weeks), severance pay (in months of wages), procedural steps required before dismissal, grounds required for fair dismissal, and reinstatement rights. The OECD converts these specific legal rules into sub-indices, which are then aggregated into pillar scores and an overall index.

No country scores 0 on every dimension, even the least regulated economies have some procedural requirements. Equally, no country reaches 6 across the board; the highest overall scores in the dataset sit around 3.5.

The Three Pillars

The overall EPL score is built from three distinct pillars, each measuring a different aspect of employment protection:

Pillar 1: Protection of Regular Employment

This pillar covers the rules for dismissing a permanent employee on an individual basis. It includes:

  • Procedural requirements (written notice, notification of authorities, opportunity for the employee to respond)
  • Notice periods at 9 months, 4 years, and 20 years of tenure
  • Severance pay at 9 months, 4 years, and 20 years of tenure
  • Difficulty of dismissal (grounds required, reinstatement if unfair, compensation if unfair)
  • Length of probationary period

Regular employment protection is the pillar most directly relevant to decisions about hiring permanent staff.

Pillar 2: Regulation of Temporary Employment

This pillar captures restrictions on fixed-term and temporary agency work. It measures:

  • Valid reasons for using fixed-term contracts (whether employers must justify their use)
  • Maximum number of contract renewals
  • Maximum cumulative duration of fixed-term arrangements
  • Restrictions on temporary agency work (types of work allowed, maximum duration)

Countries with strict temporary employment rules, like France and Spain historically, limit employers from using revolving short-term contracts as a way to avoid permanent employment obligations.

Pillar 3: Specific Requirements for Collective Dismissals

This pillar applies when an employer dismisses a large number of workers simultaneously, such as during a restructuring or plant closure. It covers:

  • The threshold number of workers that triggers collective dismissal procedures
  • Additional notification requirements (works councils, labour authorities)
  • Additional delays beyond standard individual notice periods
  • Other obligations (social plans, outplacement services)

Collective dismissal rules matter most to large employers and multinational companies planning workforce reductions.

How the Overall Score Is Computed

The OECD overall EPL score is a weighted average of the three pillars. The weighting scheme gives greater emphasis to regular employment protection (pillar 1) and somewhat less to collective dismissals (pillar 3). The exact weighting is documented in the OECD methodology paper and has remained broadly consistent across updates, allowing for historical comparisons.

Where this plays out today

Across the 72 countries PlainEmploy currently tracks on this index, Indonesia scores highest at 4.08/6, the median is 2.32/6, and Costa Rica scores lowest at 0.85/6, see the full OECD overall ranking for where every reporting country falls between them. These figures are pulled live from the same dataset every other PlainEmploy page uses, so they move if the OECD publishes a revision.

When comparing countries, it is often more useful to examine individual pillar scores than the overall index. A country might have moderate overall protection but very high temporary contract restrictions and very low regular employment protection, a pattern with very different implications for workers and employers than the aggregate number suggests.

Coverage and Limitations

The OECD EPL pillar described in this guide covers 72 countries, with the most recent data from 2019. PlainEmploy combines this with two other sources, ILO EPLex (95 countries) and World Bank B-READY (101 countries) - for a total coverage of 145 unique countries. Several important limitations apply to the OECD EPL data specifically:

  • Law vs enforcement: The EPL database scores what the law says, not how it is enforced. Countries with strong laws but weak enforcement mechanisms may have lower effective protection than their score suggests.
  • Informal economy excluded: Workers in informal or unregistered employment, a significant share of the workforce in many developing economies, are not covered by these laws.
  • Collective bargaining not captured: Sector-level agreements negotiated between unions and employer associations can significantly modify employment conditions but are not reflected in EPL scores.
  • Data lag: Legal changes enacted after 2019 are not reflected. Countries that have reformed their labour laws in recent years may have different current scores.

How to Use This Data

The EPL scores are most useful as a starting point for understanding the regulatory environment in a target country. Before making hiring or expansion decisions, consult local legal counsel to understand current law, enforcement patterns, and any sector-specific collective agreements that may apply to your workforce.

Country Rankings Compare all 145 countries across 7 ranking metrics France High-protection market, view scores United States Low-protection benchmark, view scores

Frequently Asked Questions

What does an OECD EPL score of 6 mean?

A score of 6 represents the maximum level of employment protection in the OECD methodology. Countries scoring near 6 impose very strict rules on dismissals, including long notice periods, high severance requirements, and significant procedural hurdles before an employer can terminate a worker. Portugal (overall 3.18) and France (overall 2.82) are among the highest-scoring OECD members.

Why does the OECD measure employment protection separately for regular and temporary workers?

Regular and temporary employment contracts are governed by different legal frameworks in most countries. Protections for permanent (regular) employees typically involve notice periods and severance linked to tenure. Temporary contracts are regulated separately, often through caps on contract duration and restrictions on renewal, because relaxing these rules is a common way governments introduce labour market flexibility without changing permanent employment law.

How often is the OECD EPL database updated?

The OECD updates the EPL database periodically as countries reform their labour laws. The most recent data available through PlainEmploy covers 2019. Updates are not released annually for every country; they depend on when legislative changes occur and when the OECD completes its assessment. Always check the OECD website for the latest revisions.

Does a high EPL score mean workers are better off?

Not necessarily. High EPL scores reflect legal protections on paper, but the database does not measure enforcement quality, coverage of informal workers, or how frequently courts uphold dismissal rules in practice. Some economists also argue that very high employment protection can reduce hiring by making employers reluctant to take on permanent staff. The OECD presents EPL as a descriptive measure, not a policy recommendation.

Which countries are included in the PlainEmploy database?

PlainEmploy covers 145 unique countries across three datasets: 72 in the OECD EPL database (all 38 OECD member states plus selected partners), 95 in the ILO EPLex termination-rules database, and 101 in the World Bank B-READY 2025 labor regulation report. The OECD pillar-level coverage on this guide page is for the 72 OECD countries, see /about for the full data-source coverage map.

Source: ILO EPLex 2020

Source: World Bank B-READY 2025

Source: OECD EPL 2019

PlainEmploy is rendered directly from the OECD Employment Protection Legislation indicators, the ILO EPLex database, and the World Bank B-READY labor pillar, no number is typed in by an editor. See our editorial standards & corrections policy, the methodology behind these numbers, or report a data error. Data current as of 2026-07-06.