Employment Law Alert International – April 2025

EU

AI Act – AI systems presenting an unacceptable risk. Effective from 1 August 2024, this EU regulation establishes a structured legislative framework, to be phased in over two years.

From 2 February 2025, AI systems presenting an unacceptable risk, i.e. those uses which are contrary to the fundamental values of the European Union, are now prohibited.

The prohibition notably applies to the following uses:

• social rating technologies;
• technologies that exploit vulnerabilities due to a person's age, disability or specific social or economic situation;
• subliminal techniques, below the threshold of a person's awareness, or techniques that are deliberately manipulative or deceptive;
• biometric identification used by law enforcement agencies remotely, in real time and in places accessible to the public;
• the creation or development of facial recognition databases through the non-targeted collection of images from the internet or through video surveillance;
• predictive policing targeting individuals;
• the categorisation of individuals based on sensitive biometric data (race, political opinions, religion, etc.); and
• recognition of emotions in the workplace and in establishments.

Therefore, from 2 August 2025, failure to comply with these prohibitions may lead to an administrative fine of up to €35 million (or 7% of annual global revenue).

Further insight on the EU AI Act available here.

England

Court of Appeal hands down judgment in the long-standing case of Higgs v Farmor’s School and others, finding that the dismissal of a school counsellor for Facebook posts constituted unlawful direct discrimination on the ground of religion or belief. The Court of Appeal held that the Claimant’s dismissal was not objectively justified and accordingly constituted unlawful discrimination: “dismissal was unquestionably a disproportionate response”. Some points of interest from this key decision are available here.

Read our recent Employment Law Alerts covering other recent cases and developments in the UK.

France

French Ombudsman recommendations for internal investigations. On 5 February 2025 the French Ombudsman (Défenseur des Droits) published guidelines directed at employers conducting internal investigations and further provided 49 recommendations on how to lead satisfactory investigations.

French High Court decision on organisational moral harassment in the workplace. The French High Court (Cour de cassation) has upheld the convictions of former France Télécom top executives for organisational moral harassment. This decision confirms that the implementation of company-wide policies may be taken into account to characterise organisational moral harassment, which may lead to convictions for senior management.

AI in the workplace: obligation to consult with the Works Council before deploying AI within the company. In an ordinance dated 14 February 2025 (n° 24/01457), the Nanterre tribunal upheld a Works Council's request to suspend the deployment of new IT applications implementing AI processes until such time as the Works Council had been consulted.

Please contact our French team for further details on any of the above.

Germany

Target bonuses – potential impact of delayed setting of performance targets. A recent Federal Labour court decision has confirmed that employers may be liable for damages if they fail to set performance targets in a timely manner. Employers are advised to establish clear and transparent regulations for variable compensation. Read more from our team.

Statutory notice periods for external managing directors. There has been a difference of opinion between the Federal Court of Justice(BGH) and the Federal Labour Court (BAG) concerning the applicable regulation and length of notice periods for managing directors. Until this is clarified, employers should take this into account regarding contractual documentation in separation situations. Further insight is available here.

Challenges for a new Government. On 23 February 2025, Germany elected a new Bundestag. The new government, once formed, will face a number of employment law challenges this year. Particularly, several EU directives have been pending implementation for some time, such as:

• The draft Employee Data Protection Act. The regulations on employee data protection are spread across various laws and European regulations. The ECJ declared that a central provision on data processing in the employment relationship is in breach of European law, offering an incentive for the German government to consolidate the provisions into a single uniform law. However, the draft Employee Data Protection Act from October 2024 will not pass into law in its current form due to the recent federal elections in Germany. Therefore, the new government faces the challenge of implementing the ECJ's requirements.
• Reforms to the Working Time Act. The draft bill presented by the former government will not be implemented in its current form. As labour courts will continue to insist on reform to the Working Time Act, the new government will be forced to continue introducing new regulation.
• The implementation of the Pay Transparency Directive (which is not yet delayed) falls within the legislative period of the new government providing an ongoing challenge to be faced.

We provide an overview on planned draft laws yet to be implemented and offer a forecast regarding their adoption in 2025 as well as an outlook on the changes already adopted for this year.

AI Act. The gradual entry into force of the AI Act, as a result of the controversial negotiations, has begun. The AI Act is based on a product safety and risk-based approach. One of the main objectives of the AI Act is to protect fundamental rights and safety, while promoting innovation and providing legal certainty. The AI Act makes employers responsible for the use of AI systems in the workplace. The first step is to provide employees who are involved in the operation and use of AI systems with a sufficient level of expertise in dealing with the systems. For employers, this means mandatory AI training in the company, as well as extended training for employees who come into contact with high-risk AI. Further information on our new Employment AI website.

Please contact our German team for further details on any of the above.

Hong Kong

Statutory Minimum Wage increasing to $42.10 from May. Effective from 1 May 2025, the prevailing statutory minimum wage in Hong Kong will increase from HK$40 to HK$42.10, which applies to all employees in Hong Kong (subject to certain exceptions). The monthly monetary cap on the requirement of employers recording the total number of hours worked by employees will also be revised to HK$17,200 per month.

The Mandatory Provident Fund (MPF) offsetting arrangement will be abolished from 1 May 2025. This major change will affect the way employers manage statutory severance payments and long service payments. Specifically, employers will no longer be able to offset the post-transition portion of statutory severance payments or statutory long service payments with the accrued benefits from their mandatory MPF contributions. However, the pre-transition portion remains unaffected and can still be offset by the accrued benefits derived from employer’s MPF contributions. Employers may apply for disbursements from a government subsidy scheme to recoup the cost of post-transition statutory severance or long service payments.

New diversity requirement for Hong Kong listed companies from July. On 1 July 2025, new requirements concerning board and workforce diversity for Hong Kong listed companies will take effect, which will include (amongst others) a new compulsory requirement for issuers at the Hong Kong Stock Exchange to have in place a workforce diversity policy and to disclose this in their Corporate Governance Report, alongside a mandatory requirement to disclose their annual review on the implementation of the board diversity policy, upgraded from a code of practice.

Please contact our Hong Kong team for further detail.

Italy

Social security contribution discounts for working mothers. The 2025 Budget Law provides a new measure for a partial social security contribution exemption for employed or self-employed mothers (excluding domestic workers) with two or more children, until the youngest child turns ten. This new measure will apply if:

• the mother’s annual income does not exceed €40,000, and
• they are hired both on an open-ended or fixed-term basis.

Mothers already benefiting from the exemption under the 2024 Budget Law will not be entitled to the exemption for 2025 and 2026. The government still has to approve a decree to better explain how all these measures will be applied.

Resignation from the employment relationship for unjustified absence. The Italian Ministry of Labour recently issued new guidelines providing operational guidance to address cases of employees’ unjustified absence. According to guidelines (i) resignations take effect after fifteen calendar days of unjustified absence or (if longer) the different period provided for by the NCBA applied to the employment relationship and (ii) the termination of the employment relationship due to "de facto resignation" is down to the employer’s discretion and does not automatically result from the employee’s unjustified absence.

Please contact our Italian team for further details on any of the above.

Netherlands

Updates from 2024 Q4:

Pseudo self-employment. From a civil law perspective, an important legislative proposal, the Assessment of Employment Relationships and Legal Presumption (Clarification) Act (VBAR) has recently been adjusted on minor points to accommodate received criticism. On 27 March 2025, it was announced that the legislative proposal would be further amended to accommodate for a recent ruling by the Supreme Court in the Uber-case. In a surprising turn of events, a legislative initiative was presented on 3 April 2025. Thus far, it is not yet clear how this initiative may impact the legislative proposal for the VBAR, but we are closely monitoring this process and will update if and when relevant developments occur. From a tax perspective, on 1 January 2025, the Dutch Tax Authorities have lifted the enforcement moratorium on pseudo self-employment. Should employers make use of the services of self-employed persons (and have not taken risk-mitigating steps yet), then please contact our team in the Netherlands for assistance.

Pay Transparency Directive. On 26 March 2025 a legislative proposal implementing the Pay Transparency Directive into Dutch law was published for consultation. The Dutch legislative proposal for implementation of the pay transparency directive appears to be a ‘clean’ implementation (i.e., not imposing any further obligations than absolutely necessary on the basis of the Directive). The proposal is currently under consultation until 7 May 2025 after which it will still have to be presented to the House of Representatives. Further rules on the transparency obligation will be laid down in an administrative order.

Mandatory code of conduct. From 17 February 2025 until 23 March 2025, a legislative proposal on the introduction of a mandatory code of conduct to combat undesirable behaviour in the workplace was under consultation. The legislative proposal is yet to be presented to the House of Representatives. If adopted, employers (with ten or more employees) would become obligated to have a code of conduct aimed at preventing (and limiting) undesirable behaviour in the workplace. Please note that a contemplated decision to implement, amend or retract the code of conduct would fall under the works council’s right of consent. The envisaged date for entry into force is currently set at 1 July 2026. Thus far, no transitional law has been included. In practice, this would mean that if the legislation enters into force on 1 July 2026, employers would have to have a code of conduct in place from that date onwards.

Proposed admission system the posting of workers. On 15 April 2025, the House of Representatives will vote on the legislative proposal for an admission system for the posting of workers. If adopted by the House of Representatives (and, subsequently, the Senate), from the date of entry into force, temporary employment agencies would only be allowed to post workers if they are authorised to do so by the Ministry of Social Affairs and Employment. Companies that do lend personnel, but not as their core business, could ask the ministry for a dispensation. We are closely monitoring this topic and will update if and when relevant developments occur.

Please contact our team in the Netherlands for any further detail.

Singapore

Employment Act to be reviewed in the latter half of 2025 considering changes to annual leave entitlements and enhancing worker protections. Singapore’s Minister of Manpower announced on 6 March 2025 that a review of the Employment Act will take place in the latter half of 2025, in conjunction with the Ministry’s tripartite partners – the National Trades Union Congress and the Singapore National Employers Federation. The review will consider various suggestions previously raised by Members of Parliament, and aims to balance between safeguarding worker protections while maintaining flexibility for businesses. It is anticipated that the review may consider increasing the minimum statutory annual leave entitlement of seven days to enhance protection for lower-income workers, and also clarify ambiguities in existing provisions governing the transfer of employees from one entity to another.

Substantial changes to work permit framework will take effect on 1 July 2025, removing the maximum period of employment and raising the maximum employment age. From 1 July 2025, the maximum period of employment which a Work Permit holder can work in Singapore will be removed, which currently ranges from 14 to 22 years, depending on the skill level, sector, and country of origin. Additionally, the maximum age which Work Permit holders can work until will be raised from 60 to 63, in line with the local retirement age. These changes provide firms with the flexibility to retain more experienced and skilled workers who are still able to contribute significantly to Singapore’s workforce.

Eligible Singapore citizens facing involuntary unemployment can apply for temporary financial support under the SkillsFuture Jobseeker Support Scheme. From mid-April 2025, eligible Singapore citizens facing involuntary unemployment (e.g. due to retrenchment, cessation of business, etc.) can apply for temporary financial support under the SkillsFuture Jobseeker Support (JS) Scheme. To qualify, applicants would need to demonstrate, among other things, that they are actively seeking a job, such as submitting job applications, attending career coaching or participating in training courses that will help secure employment. The JS scheme aims to ease the pressure on these individuals in rushing into a new, potentially ill-fitting job; and support them in finding a job that makes better use of their skills and experience. Eligible individuals will receive up to $6,000 over six months, although the monthly payouts will cease once the individual successfully secures a new job. Jobseekers can tap into the JS scheme along with other social assistance schemes and SkillsFuture training allowances if they are in need of greater financial support.

Please contact our team in Singapore for any further detail.

Spain

Reform of the Labour Social Jurisdiction Act. Aiming to enhance the efficiency of the Public Judiciary, on 2 January 2025, a new Organic Law 1/2025 brought about reforms to the Labour Social Jurisdiction Act (LRJS) and amendments to the Income Tax Act (IRPF) concerning severance payments and reference to administrative conciliations for the purposes of dismissals and personal income tax. Key highlights of these changes are:

• Evidence presentation: Documentary or expert evidence must be presented 10 days before the trial. However, exceptions to this rule are set out below i.e. where evidence can be provided at a later date. (NB the opposing party is given the opportunity to oppose the admission of extemporaneous evidence in the trial itself):
  • They refer to events that occurred after the filing of the lawsuit.
  • There are new events or new information.
  • The party justifies that it was impossible to obtain the evidence previously.
• Severance payments agreed prior to court hearing (i.e. before an administrative body): Confirmed that these are exempt from personal income tax up to €180,000.
• Oral judgments: Possibility of issuing oral judgments to speed up court proceedings.
• Conciliation procedure: Separate preliminary hearings can be held to expedite settlements.
• Access to Supreme Court: New criterion of objective appeal for cases of great legal and social importance.
• The provision regarding terminations based on retaliation for requesting work schedule adaptations was mistakenly removed but has now been reinstated in the Spanish Workers’ Statute. The "technical error" in the Parity Law has been corrected, and the objective or automatic nullity of dismissals resulting from such requests is once again in effect.
• Article 50 of the Workers' Statute (Constructive Dismissal) is amended in respect of where termination of the employment contract is due to non-payment or delay of wages (providing more clarity), with the right to the compensation specified for unfair dismissal. From now on, the contract may be terminated at the request of the worker when the delay in the payment of wages exceeds 15 days, or there is an accumulated non-payment of three monthly payments over the course of a year, or when there is a delay in the payment of wages for six months, even if not consecutive.
• Article 75 LRJS: Fine for Breaching Good Faith: The minimum fine imposed on parties who breach the principle of good faith during legal proceedings has been increased from €180 to €600. The maximum fine remains unchanged at €6,000, or one third of the amount in dispute, whatever is the smaller amount.

Further detail is available here.

Partial, flexible and active retirement reforms. On 23 December 2024 the reform of the General Social Security Law (LGSS) and the Workers’ Statute (ET) on partial, flexible and active retirement was announced. These reforms aim to improve the compatibility of retirement pensions with work, offering more flexible and varied options for retirees. A summary of the reforms are available here.

For further information on the above, please see our January Employment Flash or contact our Spanish team.