Last updated: April 14, 2026
Compliance Stickiness
GemmWork DefinitionCompliance Stickiness (CS) is one of 6 variables in the GemmWork GEMM Scorecard. It measures the ease (or difficulty) of terminating an employment relationship, changing engagement structures, or exiting an EOR arrangement in a given country.
Scoring Levels
| Level | Countries | Exit cost per engineer (2 yrs service) | Characteristics |
|---|---|---|---|
| 🟢 Low | Mexico, Philippines | $18,000–$23,000 | Straightforward exit, manageable statutory obligations |
| 🟡 Medium | Colombia, India, Romania | $13,000–$18,000 | Structured process, real costs but predictable |
| 🔴 High | Brazil, France, Germany | $19,000–$45,000 | Labor court risk, high statutory severance, complex process |
Five Factors in CS Scoring
- Statutory severance obligations — How much must be paid upon termination?
- Notice period requirements — How long must notice be given?
- Labor court bias — Do courts systematically favor employees?
- EOR maximum-duration restrictions — Does local law limit EOR tenure? (Germany: AUG limits temporary work to 18 months)
- Misclassification penalty levels — How severe is retroactive reclassification?
Why CS Matters Before You Enter a Market
High CS countries are not necessarily bad hiring markets — Brazil and India have exceptional talent. But entering them without an exit plan is the defining mistake of the "Hotel California" problem. GemmWork recommends modeling exit costs before committing to any high-CS market.
In the GEMM Framework
CS is the GEMM variable most directly tied to Hotel California risk. It is calculated independently of PE Risk — a country can be low PE risk (Mexico 🟢) but still have meaningful exit costs due to statutory severance requirements.
Related Terms
- Hotel California (EOR)— The phenomenon where exiting an EOR arrangement triggers mandatory statutory sev...
- Employer of Record (EOR)— A third-party company that becomes the legal employer for workers in foreign cou...
- Cesantías (Colombia)— Colombia's mandatory severance fund: employers deposit 1 month's salary per year...
- FGTS (Brazil)— Brazil's mandatory severance guarantee fund: employers deposit 8% of monthly gro...
- EOR Breakeven Point— The headcount at which establishing a local entity becomes cheaper than paying o...
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Country data based on: August 2025.