Sweeping legislative changes are transforming the world of work in numerous jurisdictions. In-House Perspective reports on what counsel need to know.

From pay transparency and AI governance to ‘gig worker’ rights and new wellbeing obligations, employment law is being rewritten across multiple jurisdictions. For multinational companies, it’s no longer simply about compliance, but about how to run a coherent workforce strategy in a world where there’s greater demand for openness, documentation and accountability from employers. For in-house lawyers, that means the centre of gravity is shifting from reactive legal advice to an active redesign of how employers hire, manage and pay people.

Employment law rarely moves in a single global wave. It tends to change on a country-by-country and issue-by-issue basis, often shaped by local politics and economic pressures. Yet the pattern that began emerging in 2025 and has continued into 2026 is strikingly consistent. Across Europe, Asia Pacific, Latin America and parts of North America, lawmakers are demanding fairer pay systems, greater scrutiny of technology at work, stronger protections for non-traditional workers and more formal safeguards around working conditions, dismissal and employee voices.

Transparency on pay

One of the clearest signs of that shift is pay transparency. The EU’s Pay Transparency Directive, which Member States were meant to have transposed by 7 June 2026, is reshaping the way employers think about remuneration. The headline obligations are well-known and include salary information in recruitment and restrictions on asking candidates about pay history. They also include rights for employees to request information on remuneration and reporting frameworks that can trigger deeper scrutiny where gender pay gaps remain unexplained.

But the more fundamental significance is that pay is becoming a governance issue rather than a matter of managerial discretion. Employers will increasingly be expected not only to pay fairly, but to prove that their pay systems are structured, defensible and capable of withstanding challenge. The direction of travel is already unmistakable and general counsel need to take note. Björn Gaul, Co-Chair of the IBA Employment and Industrial Relations Law Committee, says however that the piecemeal approach to implementation is creating headaches.

‘The biggest problem is that this directive has to be implemented at a national level in June but in Europe only a handful of countries have it in place,’ he says. ‘Companies are working with the directive and trying to find a common sense way to work it out in different countries. What companies are doing is trying to find the best way of meeting this obligation.’

Mikko Kontturi, an Officer of the IBA Employment and Industrial Relations Law Committee, says that in Finland where he’s based, pay transparency is a ‘hot potato from an HR department perspective,’ not least because implementation of the bill has been delayed on several occasions. He adds that the government is also grappling with domestic legislation aimed at strengthening the hand of employers rather than employees.

‘The legislation being prepared and still in the pipeline is some of the most ambitious we’ve seen in Finland in decades,’ says Kontturi, who’s Managing Partner at Aurora Law. ‘It’s a really interesting time.’ He explains that, usually, it’s quite difficult to dismiss employees in Finland but the government wishes to change that. ‘There’s an amendment to the Employment Contracts Act, which has been effective since January, that has the goal of lowering the threshold for dismissal,’ says Kontturi.

Silvia Tozzoli, also an Officer of the IBA Employment and Industrial Relations Law Committee, says that almost the opposite is true in Italy, where the Constitutional Court – which exists to ensure that legislation complies with the country’s constitution – is tending to favour employees over employers.

‘In Italy we’ve had some changes that have had quite a bit of impact that’s under the radar – one is the space the constitutional court has built in the last couple of years to keep previous protections against discrimination,’ says Tozzoli, who’s a partner at Cappelli Riolo Calderaro Crisostomo Del Din & Partners. ‘There was previously a law that said if a company was found to be at fault in a dismissal the remedy would be reinstatement, but in 2012 and 2015 there were new laws that limited the space for reinstatement. The constitutional court has opened this up and is making it more convenient again for employees to go to court to challenge dismissal.’

The AI conundrum

AI is also having an impact on employment. For years, companies could treat recruitment software, productivity tools and automated screening systems as technical products owned by HR or IT, but that assumption is becoming untenable. Regulators are increasingly treating employers as accountable users of AI systems, with the EU’s AI Act introducing a legislative framework in this regard.

With technology now routinely being used for hiring, promotion, discipline and workforce management decisions, employment teams need to not only understand employment law but be able to explain how AI-generated decisions have been made. For Gaul, who’s a partner at CMS in Cologne, this is something many organisations are playing catch-up on.

‘If you look back three years, everyone said “we have to have a lock on AI because it will come in very soon” but no one was really working with it,’ he says. ‘Now there’s no company that’s not using AI, but organisations don’t need to only implement AI for day-to-day use – they need to test and plan which AI they will need to use in the future too.’

Antonio Luigi Vicoli, a partner with Baker McKenzie in Milan, says the point of the EU AI Act, which applies to European companies as well as multinationals that do business there, is to ‘provide a sound legal framework that enables investment and innovation in the development and use of safe and trustworthy AI systems’. However, he says that as AI can be used to make decisions about people’s employment status, in some cases without their explicit knowledge, the technology ‘brings with it many ethical and regulatory considerations for employers’.

‘Both providers and deployers are required under the Act to ensure a sufficient level of AI literacy among any of their staff using the relevant AI system or anyone using it on their behalf,’ Vicoli says. ‘Although this will be contextual, broadly employers will need to ensure that anyone using AI systems within their operation is trained on the relevant system and aware of the opportunities and risks of AI and the possible harm it can cause. This will be an ongoing responsibility from recruitment onwards with records kept of completion of training in order to demonstrate compliance.’

Vicoli says that, given the heavy reliance of AI systems on processing personal data, there are many points of overlap between the Act and the EU General Data Protection Regulation (GDPR). ‘The data protection principles will be relevant throughout the lifecycle of the AI system,’ he says, and these include obligations on the lawful processing of data and purpose limitation, for example. ‘Carrying out a data protection impact assessment will almost certainly be required and GDPR provisions around automated decision-making and rights to require human intervention or challenge a decision are likely to apply,’ he says.

Vicoli describes the potential for discrimination risks as a result of AI systems as ever- present. ‘Although there are obligations on providers to take steps to mitigate these when developing an AI system, employers will need to be alert to the bias and fairness issues and how those with protected characteristics could be adversely impacted,’ he says.

Employers must also be aware of the way in which employees can use AI to bring forward grievances, using programmes to produce their own legal letters rather than seeking out professional advice first. The result is ‘lengthy, highly legalistic complaints which may look impressive but can include irrelevant, duplicated or inaccurate content,’ says Michael Burns, a partner at Addleshaw Goddard in the UK.

‘This creates challenges for HR teams,’ he says. ‘Even where claims lack merit, each point still needs to be considered and addressed, increasing time and cost. AI-generated grievances can also entrench positions and make early resolution more difficult,’ he says. This is particularly relevant where AI-generated content creates ‘unrealistic expectations about the strength or value of a case,’ adds Burns.

Such claims appear to be arising predominately in the UK market, at least at the moment, with Tozzoli noting that they’re yet to be found in Italy at all, for example. However, there’s evidence that the phenomenon is appearing in other jurisdictions, creating new legal issues as it goes. Lauren Salt, an Officer on the IBA Employment and Industrial Relations Law Committee, says that businesses operating in South Africa – where she’s based – are finding themselves dealing with both complaints and suggested remedies that don’t mesh with the country’s legal system.

‘AI is drawing from multi-jurisdictional knowledge and coming up with all these great ideas that are not yet great ideas in South Africa,’ says Salt, who’s an executive in the employment practice at ENS. ‘We’re seeing a lot of grievances that would fit with the UK’s legal system, but not with South Africa’s.’

‘There’s no fee to refer cases here [which makes them simple to file] and we’ve got a fairly stringent discrimination regime that means everything has to be investigated,’ says Salt. ‘All the claims being filed are very serious sounding but as soon as you scratch the surface they are not particularly well formulated and not based on fact. Often AI is recommending that employees go down external channels rather than internal ones so people are not keeping their grievances in-house but rather going wherever AI is telling them to go.’

Salt adds that her organisation is presently involved in a significant amount of training to manage such claims and the panic they might cause. ‘They don’t have merit but are extremely well constructed and have to be checked,’ she says.

The UK picture

The definition of a safe and fair workplace is widening. Around the world, lawmakers are revisiting the concepts of working time, flexible work, harassment protections, consultation duties, minimum standards and psychosocial risk. In the UK, the government has introduced a raft of measures aimed at enhancing worker rights, starting with a simplification of the rules governing industrial action. In April, further changes, including the removal of the three-day waiting period for statutory sick pay and the introduction of stronger whistleblower protections for workers who report sexual harassment, went into effect.

However, while most of the changes are fairly self-explanatory, there are specific complexities that organisations need to be aware of, says Ed Mills, an Officer of the IBA Employment and Industrial Relations Law Committee. ‘The most significant changes included in the Employment Rights Act are those to unfair dismissal,’ he says. ‘There are two things – the two-years’ service requirement [to bring a claim] is being reduced to six months, and the cap has come off the compensation paid as part of a dismissal.’

‘At the moment,’ says Mills, a partner at Travers Smith in London, ‘businesses know they can dismiss someone and as long as it’s not unfair the amount of compensation they have to pay is capped at 12 months’ salary. From January [2027] there will no longer be a cap.’

Mills says that all businesses, including international companies that have operations in the UK – and particularly those with highly paid senior staff – will need to be very careful when they’re looking to get rid of them because they will be asked for larger settlement sums. ‘We’re starting to advise our clients on what a broadly fair dismissal looks like,’ says Mills. ‘At the moment, if you’re the chief financial officer you’ll tend to have some fairly informal discussions before reaching a decision [on severance]. From January onwards there will need to be more of a process leading up to a termination. Lots of businesses are interested in this.’

The end of the global people policy

Perhaps the most important lesson for large employers amid all the change is that the various reforms being enacted aren’t converging into a neat global code but rather are fragmenting into national and regional regimes that share themes but differ in detail, timing and enforcement. The EU may set the direction on transparency, platform work and AI, but its Member States are transposing those rules unevenly. For legal departments, the implication is clear: the old ambition of a single global people policy with light local variation is becoming harder to sustain. What’s emerging instead is a model of global principles supported by local architecture, regional governance and constant recalibration.

As a result, in-house lawyers are having to map workforce risk jurisdiction-by-jurisdiction. The paradox here is that one of their greatest risks – AI – is also emerging as one of their best tools. The trick is knowing when to employ it, and when to seek external advice. And while AI is ‘the first substitute’ that can provide a broad overview of employment laws, the next step should always be to seek specialist advice on how the nuances work in each individual state.