EU
Update on various employment-related EU Directives
Impact date: Ongoing A number of workplace-related EU Directives have passed their local implementation deadline or have recently been finalized by the EU and await Member State implementation. These include Directives on adequate minimum wages, transparent and predictable working conditions, work-life balance, gender diversity in the boardroom, whistleblowing, corporate sustainability reporting, pay transparency, platform workers, AI and corporate sustainability due diligence, together with a Regulation on forced labor. A revised European Works Council Directive has also been approved. There are also proposed Directives on fair telework and the right to disconnect, and on improving working conditions for trainees. Our two briefings (see links) provide a summary of the Directives and the Regulation.
The Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive are subject to revision, with the aim of reducing reporting burdens on businesses. A so-called draft “Omnibus” Directive contains the changes. A portion of the Omnibus Directive impacting the reporting timeline - referred to as the ‘Stop-the-Clock' Directive - is now in force and the EU has informally agreed other changes which await formal adoption imminently.
Employer implications/action needed All employers operating in the EU (and, for some Directives, certain non-EU businesses) should expect to make some changes to their current arrangements to take account of the requirements of the Directives as each is transposed into national law.
Employer risk A risk of financial and other sanctions, and reputational harm, if employers do not comply with amended workplace legislation.
Links The Global Employment Law Update includes our EU Directives Tracker: European Works Council Directive
EU AI Act
Impact date: Some elements took effect as early as February 2025, including obligations on providers and deployers regarding AI literacy. An August 2026 implementation for other measures is subject to revision. A Digital Omnibus on AI, announced in November 2025, proposes a revised implementation timeline for high-risk AI systems. The changes would extend the deadline (for some, to 2 December 2027 and for other high-risk systems to 2 August 2028).
The proposal also includes a flexibility mechanism allowing the Commission to decide at any time that sufficient guidance and harmonized standards are in place. Once such a decision is adopted, the obligations would apply within six months. This mechanism is intended to keep companies progressing and employers should therefore not suspend ongoing compliance efforts. This proposal must be approved by the Council and the European Parliament. The AI Act adopts a risk-based approach to the use of Artificial Intelligence (AI).
AI in the employment context is deemed high risk if it is used in the following cases:
- Recruitment or selection of candidates
- Evaluating candidates
- Hiring, promotion and termination decisions
- Task allocation based on individual behavior, or personal traits or characteristics
- Performance management
In such cases, increased governance is applied, meaning that those within the scope of the Act (which includes a wide scope of providers and deployers/users and will, in some cases, include those based outside the EU) who are using AI for such activities must comply with a higher set of requirements. This includes robust principles around data governance, technical documentation and record-keeping, transparency and human oversight.
All employees and operators of AI systems must have a sufficient level of AI literacy among their staff from February 2025. This includes understanding the technical aspects, ethical considerations, and practical applications of AI systems.
Employer implications/action needed Employers should ensure that its workforce is trained to ensure a sufficient level of AI literacy. In addition, practical steps for employers should include ensuring that policies and procedures are in place to reinforce the ethical use of AI and the procedures for compliance, establishing AI governance processes, assessing and updating procurement processes to ensure that any AI systems acquired comply with the AI Act's standards, conducting risk assessments to identify and evaluate the AI systems used, and regularly monitoring AI systems for compliance.
Employer risk Sanctions for non-compliance will be substantial, with fines of up to 7% of the global annual turnover for violations of banned AI applications, up to 3% for violations of other obligations and up to 1.5% for supplying incorrect information.
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