Lewis Silkin – Employment law across the globe: what’s happened and what’s coming up?

This document was prepared for our 2024 Managing an International Workforce conference on 20th June 2024.

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2024 is the year of elections. Polls are happening – or have happened – everywhere from India, Mexico and South Africa to the EU, the UK, the USA and (as a result of President Macron’s surprising decision) France. More elections take place this year than in any previous year in history. In fact, almost half of the adult population of the globe will be voting – in elections that will no doubt shape the employment law landscape as well as the political and economic agenda.

People are heading to the ballot box amid ongoing conflict. We opened last year’s conference discussing the war in Ukraine. That conflict has continued into this year, and on top of it we now have a new war between Israel and Hamas. The situation in Gaza has divided opinion not just on US college campuses but across the globe. Debate has spilled into social media platforms and internal workplace chat channels, presenting new questions for employers about how to manage free speech at work.

This all comes at a time when many employers are still trying to define their new normal working arrangements in the wake of the pandemic. It’s clear that employees continue to want remote working options but – for many employers – this has been a year of drawing up new lines and expectations around office attendance requirements. While some employers hit the headlines for insisting that everyone should be in the office 5 days a week, most are grappling with some sort of hybrid model – and how to encourage or enforce that.

Another legacy of the pandemic is, of course, the rise in the number of employees working remotely from overseas locations. Last year, we discussed how many local employers had gradually become international employers with an expanding number of employees working occasionally or regularly from other countries, and the challenges of regulating that. This year, we are looking at global mobility from the perspective of managing talent shortages. A whole host of factors – including Brexit, an ageing workforce and general skills shortages – are combining to create fierce competition for good people. As countries pursue their own differing tax and immigration strategies, how can international employers think strategically about global mobility when it comes to attracting and retaining talent?

Against all of that background, employment law across the globe continues to evolve. Here are some of the highlights from the last 12 months.

Wages

First, a look at the ongoing cost of living crisis. The latest OECD statistics show that inflation remains stable at 5.7% but has actually risen year-on-year in the G20 to an all-time high of 6.9%. For employers, ongoing inflation means ongoing upwards pressure on wages. For legislators and policy-makers in countries with minimum wages, inflation also means huge hikes in the minimum wage. We saw this in the UK in April this year when our minimum wage went up by 10% to £11.44, and other countries have had similar experiences. In Spain, for example, the statutory minimum wage has increased by 54% in the last six years.

This brings us to the Adequate Minimum Wages Directive, which must be implemented in all EU member states by 15 November 2024. Although the Directive stops short of requiring countries to introduce a minimum wage, member states with a statutory minimum wage must introduce processes to ensure it is “adequate”. The Directive is particularly significant due to the importance it gives to collective bargaining on wage-setting. Where fewer than 80% of workers are covered by collective bargaining, which is the case in most member states, there is a requirement for member states to establish an action plan to increase this percentage jointly with social partners. This is one of several recent employment Directives in which collective bargaining and trade unions play a central role. It’s interesting to wonder if this is any way reflective of the fact that the UK is no longer sitting at the EU table seeking to rein in collective tendencies.

In the US, the Department of Labour has introduced a new rule extending mandatory overtime pay. The salary threshold at which the rule applies will increase from USD 35,568 to USD 43,888 in July and USD 58,656 in January 2025. From 2027, the threshold will automatically increase every three years.

France has published legislation to strengthen employees’ rights to profit sharing. It aims to facilitate the widespread use of value-sharing schemes, simplify their implementation and develop employee share ownership. By June 2024, larger companies already subject to profit-sharing obligations and with at least one trade union representative will have to negotiate to define what constitutes an exceptional increase in profits and how this will be shared with staff. From 1 January 2025, smaller companies will have to implement profit-sharing.

The challenge of maintaining employees’ purchasing power in the face of high inflation has led employers in some countries, including Argentina and Venezuela, towards wage “dollarisation” – where employees are paid in US dollars instead of in local currency to try and maintain purchasing power.

Pay equity and transparency

EU member states have until 7 June 2026 to implement the EU Pay Transparency Directive and given there are – at most – just two pay cycles between now and implementation, employers need to start getting ready. Meanwhile, many EU countries are pushing ahead with their own local initiatives, including Ireland where the threshold for gender pay gap reporting has now dropped to include organisations with more than 150 employees (down from 250). In the UK, the Labour Party has committed to extend pay reporting obligations to ethnicity and disability if it comes to power next month and introduce positive requirements for employers to take action to tackle high gender pay gaps.

The US was the home of pay equity and pay reporting initiatives before the UK and EU started playing catch up, and it continues to see fresh developments. New York State’s new pay transparency law came into force in September 2023 requiring employers with four or more employees to provide a salary range and a job description for all advertised jobs, promotions and transfer opportunities. Washington DC is amending its pay equity laws later this month to require employers to provide expected salary ranges in job postings. Illinois looks set to become the next major US state to adopt similar measures – from 1 January 2025, employers with 15 or more employees will be required to disclose pay scales and benefits in job postings. Employers in British Columbia, Canada must also include pay in job advertisements and will need to start publishing gender pay gap reports from November this year, with the largest employers going first and any organisation employing more than 50 people joining them by 2026.

Brazil is also introducing twice-yearly gender pay gap reporting for companies with 100 or more workers. The Ministry of Labour is compiling the reports and employers must then publish those reports on their websites. There are tough new sanctions for employers who do not comply, including fines.

In Australia, in February 2024 the Workplace Gender Equality Agency started publishing gender pay gaps for private sector employers with 100 or more employees. The agency has been collecting gender pay gap data for years but previously only published aggregated figures. This is the first time the agency has published individual employer gender pay gaps and it will be doing so yearly from now on.

Finally, on the slightly different topic of executive pay, South Africa has introduced a new law requiring listed companies to report on the pay gap between the top 5% highest paid employees and the bottom 5% lowest paid employees.

Non-competes

Non-competes continue to be a focus in what might be called the “common law world”, although interestingly not in countries with civil law systems.

In the US, the Federal Trade Commission voted in April 2024 to introduce an almost complete US-wide ban on non-compete clauses, with just a limited exception allowing for existing non-competes to remain enforceable for individuals earning over approximately USD 150,000 a year. The ban is scheduled to come into effect on 4 September 204, by which point businesses must notify employees who are subject to an existing non-compete that the non-compete clause can no longer be enforced against them. As was widely predicted, the FTC’s decision was immediately subject to numerous legal challenges, with lawsuits arguing that the FTC does not have the statutory authority to issue this rule. It’s now a nail-biting wait to see what happens, although commentators are generally agreed that there is a significant chance of the rule being enjoined before 4 September. Employers need to be keeping a very close eye on developments.

Of course, non-compete bans are already in place in parts of the US. In September 2023, California expanded its existing ban, and increased an employee’s ability to recover legal fees for successfully challenging a non-compete. Washington also amended and expanded its ban on non-competes, including by widening the scope of what is defined as a non-compete to include non-dealing and non-solicitation clauses – these are now also prohibited unless minimum salary threshold and notice requirements are satisfied. More than 20 US states now bar certain types of non-compete clauses, in addition to the common law restrictions on such clauses which require that they must not go further than necessary to protect important business interests.

However, the UK’s proposals to limit the duration of non-competes to three months appear to have died a quiet death. No legislative action was taken by the outgoing government before Parliament was dissolved, and the topic has not featured in the current election campaign. The Conservative Party’s election manifesto was totally silent on this topic, and the Labour Party does not seem to have adopted any policy position on it.

In Singapore, guidelines on the use of non-competes are being finalised and are expected to be issued in the second half of 2024. The Minister of Manpower has said that these guidelines are intended to shape norms and educate employers. As the intention is for these to be issued by way of guidelines, they will not have the statutory force of law but will nonetheless give authorities a certain degree of power to penalise non-compliance.

Diversity, equity and inclusion

The deadline for EU member states to implement the Women on Boards Directive expires at the end of this year. At this point every large, listed company in the EU must adopt a target of having at least 40% of its non-executive director positions or 33% of all its board positions held by women by 30 June 2026.

Sexual harassment remains a major topic of concern across the globe. In December 2023, Australia brought in landmark legislation imposing a positive duty upon employers to prevent sexual harassment at work. Employers must take proactive measures to stop their employees from engaging in discriminatory and harassing conduct under this new law which is intended to mark a shift away from redress towards prevention. The UK is following suit by enacting a similar positive duty to prevent sexual harassment which comes into full effect from October 2024. The Labour Party has committed to go even further if it wins the upcoming election, for example by extending this duty to cover harassment by third parties.

The EU has published a new directive on combatting violence against women. The new rules aim to prevent attacks against women and protect them if they are victims of criminal violence, including cyber harassment. Member states have until June 2027 to implement the new laws.

Singapore is sending strong signals that there is no place for workplace discrimination with its new, tougher, Workplace Fairness Legislation, expected to be enacted later this year. This aims to eradicate discrimination at all stages of employment and will require employers to adopt robust procedures and policies for avoiding discrimination and handling complaints. This is a significant shift away from the approach the city state has taken in the past where protection from workplace discrimination was not contained in any statute.

In Europe, we are still seeing cases about whether employers can require Muslim women to remove their headscarves at work. This issue has now cropped up in Sweden, where the labour court has ruled that a so-called “neutrality policy” banning any religious symbols – including headscarves – could be a lawful means of reducing the risk of violence and threats against employees in their work environment. This is consistent with a number of ECJ cases ruling that headscarf bans may be lawful, in contrast to the position in the UK where the courts tend to take a very different stance on this issue.

In a landmark decision last summer, the US Supreme Court ruled against affirmative action in college admission programmes. The Court divided along ideological lines to rule (by a majority) that using race as a factor in college admissions is unconstitutional, toppling decades of established practices across educational institutions in the US and delivering a long-fought-for victory for conservative Americans who have opposed affirmative action programmes. This has put a new spotlight on the potential risks associated with employer DEI programmes. DEI will almost certainly become more of a battleground in the presidential elections, with Republicans vowing to withhold government funding from employers with DEI programmes, and to go further in reversing surviving affirmative action laws.

In April 2024, the government of Hong Kong announced that it would stop requiring transgender people to undergo full sex reassignment surgery before they can change the gender markers on their ID cards. Spain has a new law that requires companies to adopt measures to achieve real and effective equality for LGBTI people – including an action protocol for dealing with harassment or violence against LGBTI people. Measures must be agreed through collective bargaining or consultation with employee representatives.

In Mexico, the Senate continues to move forward with its plans to legislate for an age quota. The idea is to encourage companies with more than 20 employees to hire people aged over 60, with a new rule that the over 60s must make up 5% of the workforce.

South Africa has passed a new Hate Crimes Act, which criminalises hate speech on various grounds, and which widens the scope for employers to discipline employees about off-duty misconduct such as social media posts that could constitute hate speech.

In Nigeria, the Senate has resolved to abolish the longstanding practice of stipulating maximum ages for graduate or middle management jobs as a precondition for employment. It has been common practice for Nigerian employers to state that candidates would not be hired if over a certain age (usually set very young) leading to concerns about significant numbers of employees being deemed unemployable. The Senate is now calling on government agencies to do more to stamp out this practice.

Family, caregiver and sickness rights

In the EU, member states were supposed to have implemented the Work Life Balance Directive by August 2022, and – though many were late – they have now all finally done so. Across the EU, minimum standards have therefore been set for paternity leave (fathers must be entitled to at least ten working days of paid paternity leave around the time of birth of the child), parental leave (each parent is entitled to at least four months of parental leave, of which two months are paid for and are non-transferable), carers’ leave (workers providing personal care or support to a relative or person living in the same household have the right to at least five working days of carers’ leave per year), force majeure leave (allowing workers time off for urgent family reasons such as illness or accident) and flexible working arrangements (all working parents with children of up to eight years old and all carers have the right to request flexible working arrangements for caring purposes). The UK also introduced unpaid carer’s leave from April this year and made paternity leave more flexible.

Additionally, in Denmark, from May 2024, parents of twins are entitled to an additional 13 weeks of paid parental leave to be taken within 12 months of birth or adoption. In Sweden, from July 2024, the number of so-called ‘double days’ (meaning days where both parents can take parental leave) will increase from 30 to 60 days and can be taken during the child’s first 15 months. The ability of a parent to transfer part of their parental allowance to someone other than a parent will also be introduced.

Outside Europe, in Singapore, from January 2024, paternity leave entitlement doubled from two to four weeks and unpaid infant care leave doubled from six to 12 days for parents of children under two. Australia is increasing paid parental leave from 20 weeks to 22 weeks from July this year and will be boosting it to 26 weeks by 2026. Last year, Australia raised flexible unpaid parental leave from 30 to 100 days.

In South Africa, parts of the law were held to be constitutionally invalid on the basis that they discriminated between mothers and fathers and between one set of parents and another depending on whether their children were, for example, adopted or not. The government will have two years to remedy this. The High Court ordered that, pending any legislative amendment, all parents are entitled to four months’ parental leave, which they can share between themselves. This has not yet, however, been confirmed by the constitutional court so employers do not need to change their policies just yet – but need to keep this under close review.

In California, employers are now required to provide up to five days of unpaid leave to an employee following a reproductive loss event which includes a miscarriage, failed surrogacy, stillbirth, unsuccessful assisted reproduction, or failed adoption. In France, from July 2023, a new law protects employees who have suffered a miscarriage from dismissal. In April 2024, Belgium introduced a new law preventing employers from dismissing employees for taking time off to undergo fertility treatment.

In Colombia, from July 2023, employers must have a breastfeeding room and allow paid breastfeeding breaks until a child is two years’ old. Spain also changed its laws on this topic last month to ensure that employees have the right to accumulate breastfeeding leave without the need for this to be covered by a collective agreement or individually negotiated with the employer. by individual negotiation.

We’ve also seen developments in relation to domestic violence leave with varying practices of countries granting five or 10 days’ entitlement. Slovenia and Ireland both now grant five day’s paid leave and Northern Ireland is set to introduce a 10-day entitlement.

In South Korea, the Supreme Court ruled that an employer lacked just cause to dismiss an employee who had refused unfair work instructions on account of her parenting needs. This is the first Supreme Court decision of this kind requiring employers to consider childcare needs.

In the US, in Illinois, from January 2024, an employee can earn up to 40 hours of paid time off per year for any reason. Employees earn one hour of paid leave for every 40 hours they work. The developments in Illinois prompted changes in the city of Chicago where, from July 2024, employees will be able to earn one hour of paid leave (that can be used for any reason) and one hour of paid sick leave for every 35 hours worked – capped at 40 hours per year for each type. Also from January 2024, in California, minimum paid sick leave went up to 40 hours or five days per year, whichever is greater (up from 24 hours/three days).

In Ireland, January 2024 saw significant increases to statutory paid sick leave entitlement put in motion, increasing from three to five days per year. It will go up again to seven days per year in 2025 and eventually to 10 days in 2026.

Meanwhile, France introduced a new law in April 2024 which means that employees who are on sick leave continue to accrue paid annual leave (previously this only applied where the sick leave was work-related). Employees on sick leave will now earn two days’ paid holiday per month, up to a maximum of 24 days per year. The new legislation may apply retroactively to periods of sick leave from December 2009, but is subject to several conditions. This brings France in line with the requirements of European Court of Justice caselaw.

Working hours, flexible and remote working and right to disconnect

A right to disconnect has become an increasingly hot topic over the last few years, driven by the significant number of employees working remotely. Several countries have introduced a new right to disconnect in the last year and if the Labour Party wins the UK general election it looks like the UK will be joining them.

Australia has new legislation coming into force this year allowing employees to refuse to monitor, read or respond to work-related contact outside of working hours – unless the refusal is unreasonable. The Fair Work Commission will enforce this, using its powers to order employees to stop disconnecting unreasonably and to prevent employers from taking action against employees who exercise the right. There will be criminal penalties for employers who breach right to disconnect orders.

In Slovenia a new law requires employers to ensure the right to disconnect during rest periods or other justified absence from work and, by November 2024, they will need to amend collective bargaining agreements as necessary to provide for this right. Luxembourg also has new legislation in force which, in the event of a breach, may render employers liable for fines. The Netherlands parliament is currently considering a bill which would require employers to discuss employee out-of-hours availability as part of health & safety policies.

Bucking the trend is France which, given it is hosting the Olympic Games this summer, has relaxed the Sunday rest rule between 15 June and 30 September 2024, subject to the employee’s written agreement.

Belgium has extended the usage of so-called “flexi-job” contracts into new sectors. Flexi-jobs are for people who already work elsewhere or who have retired. Individuals can work “on the side” and earn money on favourable terms, and employers gain flexibility in meeting staffing needs.

In the EU, the ECJ ruled that domestic legislation requiring part-time employees to work an extra number of hours equal to that required of full-time employees in order to obtain paid overtime at more favourable rates is contrary to EU law and considered less favourable treatment of part-time employees. UK legislation, by contrast, explicitly permits this practice.

One consequence of the considerable increase in remote working is the growing legislation designed to safeguard remote workers. New health and safety laws for remote working were introduced by Mexico last year, requiring employers to have a ‘telework’ policy in place and ensure employees are operating in safe conditions. Meanwhile, Poland introduced a brand-new section of the Polish Labour Code requiring employers to document remote work properly, provide and maintain equipment, and reimburse any running costs. Remote workstations should have been adapted to new health and safety requirements by May this year.

The value of remote working was also recognised by the Austrian Supreme Court which ruled that reducing the ability to work from home needs to be considered when deciding if a job transfer results in a deterioration of overall working conditions and therefore require Works Council approval.

The UK introduced changes to flexible working in April 2024 including granting employees a new “day one” right to make a request, requiring responses within two months (rather than three) and requiring employers to consult the employee before saying no. Ireland introduced a right for all employees to request remote work arrangements. A new Code of Practice provides guidance to employers on how to manage requests and what should be considered.

Singapore has issued tripartite guidelines on flexible work which set out the process for making flexible working requests, how employers are obliged to consider those requests and how employers must communicate their decisions. The guidelines will come into effect on 1 December 2024.

Some jurisdictions have seen legislation that would have supported increased remote working either fail to progress or come to an end. In the Netherlands, the aptly named ‘work where you want’ bill, which would have seen requests to work from home treated in the same way as other flexible working requests, was rejected. In Italy a pandemic-inspired right to remote work for parents of children under 14 and certain vulnerable workers expired on 31 March 2024.

There has also been movement in respect of social security for employees who work remotely from abroad. A number of EU member states have committed to a new Framework Agreement, which means that, upon request, frontier workers can remote work from their state of residence for up to 50% of their total working time, without any change in the applicable social security legislation.

EU members are continuing to take a strict approach to recording daily hours worked following the 2019 ECJ decision in CCOO V Deutsche Bank. Denmark followed in the footsteps of Germany by introducing new legislation which requires employers to have an objective, reliable and accessible system for recording daily working hours by July 2024. There are exemptions for ‘self-organisers’ (such as managers) but this status must be confirmed in employment contracts to apply. In Slovenia, employers are now required to record working time. The opposite is true in the UK where the start of the year saw legislation confirming that employers do not need to record daily working hours for working time purposes.

Several countries in the Americas have also reduced maximum working hours to facilitate work-life balance. In Colombia, from July 2024, the maximum weekly working hours will be reduced to 46 hours in line with plans to reduce the limit every year to reach 42 hours by 2026. Chile has also adopted a similar approach, introducing legislation last year which will reduce the work week from 45 to 40 hours by 2028. Likewise in Mexico, Congress is expected to hold a final vote on a bill which would reduce weekly working hours from 48 to 40.

Privacy and Data Protection

Last summer, some three years after the Schrems II decision which invalidated the Privacy Shield between the EU and the US, the issue of data adequacy between the EU and US was finally resolved when the European Commission adopted its adequacy decision on the EU-US Data Privacy Framework (DPF). Transfers to US companies signed up to the DPF will now be considered ‘adequate’ for data transfers outside of the EEA, providing legal certainty for many companies. The UK extension to the EU-US DPF is also in force for data transfers from the UK to the US, however the US-Swiss DPF Principles cannot be used until Switzerland’s recognition of adequacy for the US-Swiss DPF enters into force.

2024 has seen jurisdictions in all corners of the globe consider and in many cases enact significant new data privacy legislation. In India the Digital Personal Data Protection Act 2023 was approved in August 2023 and – although it is not yet in force – this is the first comprehensive regulatory framework for privacy in the world’s most populous country. From an employment law perspective, collection of personal data for employment purposes is considered legitimate and cross-border transfers of personal data are permitted but under stringent regulations. Structurally it is similar to the GDPR, although the scope of elements such as grounds for processing are more limited so localised compliance will be important.

Similarly, in September 2023, Saudi Arabia also introduced its first privacy law. This aligns with the GDPR, and covers any data held by employers regarding their employees and extends to data which is transferred outside of the country.

Australia and Switzerland both progressed extensive reviews of their existing privacy frameworks. In September last year, the Australian government endorsed most of the recommendations of a major review into its privacy laws and is now expected to develop legislative proposals. And in Switzerland, a new Data Protection Act came into force in September 2023. Some of the notable changes include the need to keep a register of processing activities and stronger regulatory powers. The progress on federal privacy legislation in the US, however, has been less successful, with the American Data Privacy and Protection Act stalling in Congress and attention turning to AI and data protection for children instead.

Workplace monitoring was a focus in a number of jurisdictions. In France, the data protection agency announced that, unless there is a special justification, the general tracking of workers via geolocation is an infringement of employee privacy rights and that in most cases continuous video surveillance in the workplace will be disproportionate. This came after the regulator issued a series of fines, including a EUR 32m fine against Amazon in December 2023 for an excessively intrusive monitoring system. The Supreme Court in South Korea also ruled against workplace monitoring when it held that employees were justified in covering security cameras that had been installed without proper consultation or proper procedures.

Back in the UK, the ICO published new guidance on monitoring in the workplace and on biometric recognition systems, on the same day that it ordered an employer to stop using facial recognition technology to monitor attendance of employees.

ESG

While ESG was originally a concept used by investors to assess sustainability, it now encompasses a wide range of company actions under the broad umbrella of doing business responsibly. Legislation relevant to the workplace is being targeted at this area, especially within the EU, where two directives are putting ESG issues firmly in the spotlight.

The first is the Corporate Sustainability Reporting Directive (CSRD), which EU members must implement by 6 July 2024. Various jurisdictions have already done so – including the Czech Republic, France, Finland, Hungary and Romania – and many others are at the draft law stage. The CSRD builds on the framework of the EU Non-Financial Reporting Directive, which established a minimum level of sustainability reporting obligations for certain companies. Under the CSRD, reporting obligations are extended to many large and listed companies, including those based outside the EU which have activities within the EU. The new social reporting requirements will require employers to report on working conditions, diversity, equal treatment and child and forced labour and the first reports are due next year. This will mean a significant expansion on reporting obligations, and brings up questions around diversity data collection, in particular in jurisdictions where this is counter-cultural or even poses legal issues. In the UK, the Labour party has – as we’ve already mentioned – promised to increase the amount of diversity reporting by introducing disability and ethnicity pay gap reporting.

The second is the Corporate Sustainability Due Diligence Directive, which the Council of the EU adopted on 24 May 2024. Once it has completed the legislative process and been published in the Official Journal, member states will have two years to transpose the directive into national law. It will require EU and non-EU companies meeting certain criteria to carry out human rights and environmental due diligence across their operations, subsidiaries and value chains; to implement a transition plan towards limiting global warming to 1.5 degrees Celsius; and have an effective policy in place to ensure that directors’ bonuses are linked to the company’s transition plan.

In the meantime, some countries have passed or are considering passing their own supply chain due diligence legislation. From January 2024, companies that have at least 1,000 employees in Germany must comply with the Supply Chain Act, which requires companies to assess their supply chain’s compliance with human rights and environmental standards. In Canada a new law relating to modern slavery came into force in January 2024, requiring companies and certain government institutions to review and assess working conditions in their extended supply chains.

In the Netherlands, from July 2024, employers with more than 100 employees are obliged to report CO2 emissions from work-related travel and commuting.

Whistleblowing also falls within the ESG arena. Within the EU, the Whistleblowing Directive provides protection for individuals who blow the whistle about infringements of certain EU laws, including in the areas of public procurement, financial services, money laundering, product safety, environmental protection and data privacy. Companies with 50-249 employees were required to establish internal reporting channels by 17 December 2023. Poland has still not implemented the directive, although this is expected to be imminent. Poland’s legislators have been grappling with how to define whistleblowing. A recent draft version of the law would have protected people who blow the whistle about employment law violations, but this was then deleted following lobbying by business associations. The issue remains open.

Meanwhile, in the Netherlands, from February 2024, whistleblowers have been eligible for free legal aid or mediation. The scheme, which will run for four years, has been designed to improve the ability of whistleblowers to enforce their legal protection.

Artificial Intelligence (AI) in the workplace

On 21 May 2024, the Council of the EU Parliament adopted the EU AI Act, opening the door to what has been described as the world’s “first comprehensive legal framework on AI”. Once it has been signed by the presidents of the EU Parliament and the Council of the EU, it will enter into force 20 days after publication in the EU Official Journal, with the implementation staggered (largely) over the next two years. The Act will have extra territorial reach, applying to employers located in the EU that use AI systems, but also applying to those located in non-EU member states where the output of that system is used in the EU. The Act takes a risk based approach, determined by the use of the AI system. The Act will prohibit certain practices that pose an unacceptable level of risk, and sets out clear requirements for other AI systems that have potentially harmful outcomes. Many of the core uses of AI in the workplace – such as tools used in recruitment or performance management processes – will fall into the high risk category. This will trigger a range of obligations such as ensuring adequate oversight the AI system, informing workers’ representatives about the proposed use and ensuring data is relevant and representative.

In South Korea, a comprehensive AI Act is progressing through the legislative process and is expected to take effect in the first half of this year. Canada is also progressing standalone AI legislation via the Artificial Intelligence and Data Act (“AIDA”). As is the case under the EU AI Act, AIDA identifies “employment related determinations” as high-risk and therefore triggering certain compliance mechanisms. And in India the government has indicated that it is developing a draft regulation for artificial intelligence which is anticipated to be released in summer 2024.

In contrast, the UK is continuing with its light touch approach, for now. In February 2024, the government published its response to the AI White Paper, under which existing regulators should enforce the five AI principles (safety, security, robustness, transparency and explainability) but are not yet legally obliged to do so. In follow up to this, key sectoral regulators (including the ICO and the EHRC) have now published their strategic responses to the White Paper. Whilst there are no firm proposals yet, future AI specific legislation remains a possibility: the White Paper indicated that there might be need for legislation in certain areas (such as the allocation of liability) in the future, and the TUC’s Artificial Intelligence (Regulation and Employment Rights) Bill points to the appetite for employment specific AI legislation.

More closely targeted at the use of AI in the workplace, in March 2024, the UK Department for Science, Innovation and Technology published guidance for procuring and deploying AI responsibly in the HR and recruitment sector. This sets out assurance mechanisms – such as audits and performance testing – for both the procurement and deployment stages.

Australia announced in January that it was considering introducing AI specific legislation. The current approach, combining voluntary codes and existing legislation, is not considered to be sufficient to address the risk presented by the technology.

In the US, the White House issued an Executive Order on AI Safety and Security with some new compliance requirements and priorities for future legislation and policy. In May, the Equal Employment Opportunity Commission (the body which is responsible for enforcing federal discrimination laws) published guidance on the use of AI in employee selection procedures. Numerous AI regulatory bills have been introduced in the House and Senate, but none currently appear likely to pass – though several senators are pushing for the creation of a new agency to oversee AI and big tech. In terms of individual states, Colorado has passed a bill that echoes the risk-based structure of the EU AI Act and requires developers and deployers of high-risk systems to take reasonable care to prevent algorithmic discrimination. If this becomes law, it will mark the first regulation of high-risk systems at a state level.

Platform workers

The trend towards increased protection of platform workers has continued this year, as concerns persist in some quarters about the unpredictable work patterns and unclear employment status of individuals who work in the gig economy.

Most significantly for the EU, the Platform Workers Directive has finally been passed. EU members will be required to create a legal presumption that platform workers are in an employment relationship if certain conditions are satisfied – but, in a crucial last minute compromise, the exact conditions, and rules for rebutting that presumption, are to be left up to each member state. Workers will get the right to information about automated monitoring and decision making and certain impactful decisions will need to be taken by a human being. Worker representatives will take on a new role by participating in reviews – held every two years – of how automated decision-making is affecting individuals. This will involve a shift in approach for many platforms and continues the trend of EU legislation pushing collective rights.

In the UK, the Labour Party has promised to make reform of employment status a key priority if it wins the upcoming election, consulting on the creation of a single status of “worker” and extending “day one” employment rights to everyone meeting that description.

There have been further moves to protect platform workers elsewhere. There is new law in Croatia which regulates platform work and sets out when a worker will be in an employment relationship, based on a non-exhaustive list of factors. The US has introduced new federal rules for assessing employment status, removing a rule on independent contractor status and reverting to a test based assessment of relevant factors (although State laws may still use more stringent tests). A recent ruling in Hong Kong found that platform workers for a food and parcel delivery platform company were in an employment relationship. There are also proposals in Hong Kong to make it easier to show four weeks of continuous employment for the purposes of employment status, by allowing hours to be aggregated over a four-week period instead of requiring a minimum of 18 hours each week. In the Netherlands a court decision that an individual can still be an employee even if they can be replaced to do the work means that it is no longer possible to use the model agreement “free replacement” to avoid employment status. In contrast, the UK Supreme Court has ruled that Deliveroo food delivery riders are not in an employment relationship for the purposes of trade union rights and confirmed that a genuine right of substitution prevents worker status.

In February this year, China published new guidelines to better protect platform workers’ interests, building on regulations published in 2021 on minimum wages and social security access. These guidelines cover minimum wages and working time. They also deal with transparency of terms, algorithms, consultation, and dispute resolution.

Restructuring and redundancy

Legislative change in some jurisdictions will have significant consequences for employers planning restructuring or redundancy exercises.

Norway has introduced a duty to offer redundant employees any suitable alternative employment within other Norwegian entities in the same corporate group (not just their employing entity), as well as extending the preferential right to re-employment to any new position in the entire group.

In the UK, the right to priority for redeployment opportunities has been extended to pregnant employees and returners from family leave. The protection will generally last for 18 months from birth/adoption and will need to be an additional consideration for UK employers undergoing a restructuring or redundancy exercise. If the Labour Party wins the UK general election, it has suggested that it might go further and prevent the dismissal of maternity returners for 6 months after their return from maternity leave other than in specific circumstances.

Meanwhile, the European Court of Justice has clarified in a Spanish case that collective consultation must take place as soon as a business contemplates redundancies exceeding the collective consultation threshold (which is 10, in Spain) even if measures are then taken to bring the number of redundancies below the threshold.

For employers considering implementing changes to employees’ contractual terms by way of “fire and rehire”, the UK is introducing a new statutory Code of Practice in July 2024 emphasising that this strategy should be considered only as a last resort. If the Labour Party wins the next election, it has said it would strengthen individuals’ rights on termination, by introducing “day 1” unfair dismissal rights and adding further restrictions on “fire and re-hire”. It has also indicated it will reverse the Woolworths decision on collective redundancies and require employers to add up the number of proposed redundancies across all their sites in working out whether they are over the consultation threshold.

Trade union and collective rights

In the EU, the European Commission has published significant proposed reforms to the European Works Council (EWC) Directive. The changes would strengthen the influence of EWCs and potentially increase the number of requests for EWCs to be established. The proposed reforms include shortening the timeframe for the establishment of EWCs and improving EWCs’ and their members’ ability to enforce their legal rights.

As well as the pronounced trend at EU level, we continue to see a trend of individual countries legislating for greater collective rights and trade union powers. In France, the courts have confirmed that staff representatives must benefit all employees based in France, even if they are employed by a foreign company. China has new legislation setting out trade unions’ duties in dealing with disputes, requiring them to play a more active role in resolution.

In Germany, there is a proposed new law to regulate the pay of Works Councils’ members at times when they are released from work duty, reducing the risk of incorrect payment. In South Korea, a bill has been passed, subject to presidential assent, which would expand the scope of businesses’ collective bargaining obligations and also likely result in a significant reduction in the damages awarded against individual workers involved in illicit strikes.

In a move against the grain, New Zealand’s new coalition government has repealed the Fair Pay Agreements Act, which had only come into effect on 20 December 2023, and introduced a new industry-level bargaining model whereby employers and unions within a sector can bargain for a Fair Pay Agreement. This is in line with a proposal in the UK whereby the Labour Party has committed to introduce Fair Pay Agreements if it wins the next election – albeit initially confined to the adult social care sector – along with other trade union rights including a new right for trade unions to access workplaces to recruit and organise.

Retirement and pensions

The ageing of the working population is a global trend and is dramatic in many parts of the world. Countries from Australia to Argentina are increasing their state pension ages, with one of the most controversial (at least in terms of public protest) examples being France, where the state pension age is rising to 64 in 2027. In Singapore, the retirement age is also increasing to 64 (from 63) in 2026 and the re-employment age (the age until when employers are required to offer re-employment rather than dismissing employees who have reached retirement age) is going up to 69.

Various countries have been overhauling their state pensions frameworks in light of changing demographics. Ireland is introducing a new flexible pension model which allows work up to age 70 in return for a higher pension, and a new pension automatic enrolment scheme. The Netherlands is modernising its pension system by replacing defined benefit schemes with defined contribution schemes, and is making the contribution system age independent which will make it easier for older workers to change jobs. Brazil is requiring more years of social security contributions for certain groups before pension can be claimed and phasing out the ability to retire based on length of service, while also increasing state pension ages. The UAE has introduced a new pension law for UAE nationals newly joining the workforce which includes mandatory registration, new definitions of pensionable salary, and a contribution rate of 26%.

Holidays

In the UK, it has now been confirmed via legislation that employers must pay “normal” pay for at least four weeks of holiday. Four weeks of holiday can also be carried forward if employers don’t provide workers with a reasonable opportunity to take leave or warn that they risk losing their annual leave entitlement by the end of the holiday year. This position is reflected across the EU with the Supreme Courts in both Austria and the Netherlands holding that annual leave does not expire or lapse under the statutory limitation period if the employer hasn’t asked the employee to take leave or informed them of the expiry of the limitation period. Accordingly, many employers are now deciding to issue ‘use it or lose it’ comms to their EU based workforces.

There have also been changes to public holidays in different jurisdictions. Whilst Hong Kong and Moldova have added another statutory holiday day, Slovakia and Ukraine have reduced the number of public holidays by one day.

And finally, in France, a new law published in April 2024 allows employees to donate part of their paid time off (days of rest and paid leave), in monetised form, to charities, foundations and other non-profit organisations that meet specific criteria.

Related Item(s): Employment, International Overview

Author(s)/Speaker(s): Colin Leckey, Hannah Price, Tarun Tawakley,