EU
Update on various employment-related EU Directives
Impact date: Ongoing A number of workplace-related EU Directives have now 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, traineeships, together with a Regulation on forced labour. A proposal to amend the European Works Council Directive also continues to make its way from through EU legislative procedure. Our three 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 has been published and is subject to ordinary legislative processes. A portion of the Omnibus Directive impacting the reporting timeline – referred to as the ‘Stop-the-Clock’ Directive – is now in force.
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.
EU AI Act
Impact date: The majority of the Act will start applying on 2 August 2026, but some took effect as early as February 2025, including obligations on providers and deployers regarding AI literacy 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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