Employment Law Alert International – July 2025

England

Supreme Court holds that the terms "man", "woman" and "sex" in the EA 2010 refer to biological sex

In a landmark judgment, the Supreme Court has unanimously ruled that the terms "man", "woman" and "sex" under the Equality Act 2010 refer to biological sex. A Gender Recognition Certificate issued under the Gender Recognition Act 2004 (GRA 2004) does not change a person's sex for the purposes of the EA 2010. Following the decision, the EHRC has published an interim update on the practical implications of the decision considering workplaces and public services. Of particular note, in workplaces it is compulsory to provide sufficient single-sex toilets, as well as sufficient single-sex changing and washing facilities. The EHRC launched a two-week consultation mid-May to understand the practical implications of the judgment. An updated Code of Practice to "provide further clarity" is awaited.(For Women Scotland Ltd (Appellant) v The Scottish Ministers (Respondent))

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

France

Broader framework for class action in French Employment law

On 2 May 2025, a new law introducing various provisions for implementing European Union law (also known as "DDADUE law") was published, expanding the scope for class action (Article 16).

Class action, in the framework of French Employment law, was previously limited to combating discrimination and protecting personal data. The reform now allows a class action suit to address any breach by an employer of its legal or contractual obligations, such as breaches related to working time, health and safety, or salary rules.

A key procedural safeguard introduced by the law is the mandatory internal resolution phase. Before initiating legal action, a formal request must be addressed to the employer. The employer is then required to inform the Works Council (CSE) and any representative trade unions. A class action may only be brought after a six-month period, and only if the employer has failed to implement a satisfactory resolution.

The reform also broadens the standing to sue: all representative trade unions and approved associations may now initiate a class action.

Directive on pay transparency and gender equality index

As part of the announced transposition of the EU Pay Transparency Directive, the French government is looking to introduce a completely revised Gender Equality Index by 2027. According to the Labour Minister, the current index would be replaced by a new system aligned with the directive's indicators. This "new index" would apply to companies with at least 50 employees.

Six of the seven key indicators - relating to average and median pay gaps, variable compensation, and gender distribution across pay quartiles - would be automatically pre-filled via payroll systems (DSN), in order to ease the administrative workload. The seventh indicator - pay gaps by employee category - could be declared annually by companies with over 250 employees and every three years for those with 50 to 250 employees. The government has already launched consultations with social partners from 21 May 2025 and draft law is expected to be presented by autumn. If adopted, 2026 would mark the final year of the current index.

In addition, the French Government is also considering additional legislative measures as part of the transposition of the Directive (e.g. information for candidates on salary range and additional rights for employees relating to pay transparency). These remain to be discussed by trade unions and Parliament but are expected by the end of the year.

Paid leave and sick leave

On 18 June 2025, the European Commission issued a formal notice to France for non-compliance with EU regulations on paid leave. French law currently prevents employees from postponing paid leave if they fall ill during their holiday. Such days are considered taken even if the employee is unable to enjoy effective rest due to illness. According to the European Commission, this approach conflicts with EU regulations, and in particular the Working Time Directive, which guarantees the right to paid leave that ensures genuine rest and recovery. France now has two months to respond to the notice. This development comes less than two years after the French Supreme Court ruled in favour of the accrual of paid leave during sick leave. The government must now decide whether to amend the French Labour Code to align with EU requirements.

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

Germany

Expiry clauses for virtual option rights

The Federal Labor Court has departed from its previous case law with the most recent decision on the expiry of virtual option rights. The Federal Labor Court has ruled that terms which state that options shall immediately expire in case of resignation by the employee are invalid. Furthermore, clauses containing an expiry over time are also invalid in the event of other termination of the employment if the period is too short. The Federal Labor Court held that the entitlements from virtual option rights are part of the remuneration owed for the work performed and the forfeiture provision and such clauses constitute an unreasonable obstacle to termination due to the potential loss of assets.

For expiry clauses on virtual option rights to be valid, the expiry clauses must not put the employee at an unreasonable disadvantage. Clauses stipulating the immediate expiry of options in the event of resignation by the employee are invalid. Furthermore, clauses which provide for virtual options to expire over time are also invalid in the event that employment is terminated if the expiration period is too short compared to the duration of the "vesting". 

This decision concerns a situation in which the employer itself grants option rights as part of the employment relationship or commits to provide the corresponding shares itself under the employment contract. In principle, it should still be permissible for other group companies to exclusively grant option rights outside the employment relationship in accordance with (foreign) law, which could provide for corresponding forfeiture clauses (depending on the applicable foreign law).

Coalition agreement of the new government - initiatives

The coalition agreement was recently published, which includes the following labour law-related initiatives:

• Working hours. In line with the European Working Time Directive, intention to create the option of a weekly rather than a daily maximum working hours. Furthermore, it includes the intention to record working hours electronically, thus in an unbureaucratic manner, with transitional rules.

• Minimum wage. Increase of the minimum wage (currently €12.82) to €13.90 starting 1 January 2026, followed by a further increase to €14.60 from 1 January 2027.

• Bogus self-employment and freelance work  - distinction between self-employment and dependent employment. The status determination procedure is intended to be made faster and more transparent, and a presumption of approval is intended to be implemented.

• Reduction of bureaucracy. Reduction of written form requirements, for example for fixed-term employment contracts.

Some aspects that had been expected are not included in the coalition agreement, e.g. reform of the Federal Data Protection Act.

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

Hong Kong

New "continuous contract" requirement from 18 January 2026

The Employment (Amendment) Bill 2025, which will take effect from 18 January 2026, updates the definition of "continuous contract" under the Employment Ordinance. The weekly working hours threshold will be lowered from 18 to 17 hours, such that employees who work at least 17 hours per week for four or more consecutive weeks will qualify ("4-17 rule") as being employed under a continuous contract. A new "4-68 rule" also allows employees with an aggregate of 68 or more hours worked over any four-week period to qualify.

Most of the statutory benefits under the Employment Ordinance are available only to employees who are employed under a continuous contract. The new 4-17 rule and 4-68 rule may result in some employees, who do not currently fulfil the "continuous contract" requirements, becoming eligible for additional statutory entitlements. These may include statutory holiday pay and paid statutory annual leave. Further details are available here.

Hong Kong Court clarified the application of the doctrine of frustration in the employment context

The Court reaffirmed in Stahl Matthew Ian v Brilliant Jet Limited [2025] HKCFI 2013 that the threshold for establishing frustration remains high. The case involved a private jet pilot who was dismissed after being unable to return to the Shanghai base due to COVID-19 travel restrictions.  Although the Labour Tribunal found the dismissal unjustified, it dismissed the pilot's wrongful termination claim on the ground of frustration, concluding that the pandemic had fundamentally altered the employment relationship.

On appeal, the Court of First Instance overturned the Tribunal's decision, finding that the contract had not been frustrated. The Court emphasised that frustration requires  proof of unforeseen outside event(s) or change(s) of situation which rendered the performance of contract impossible or radically different from what the parties contemplated when entering into the contract, that neither party is at fault for the event and that no alternative method of performance exists. The assessment is a fact-sensitive exercise requiring examination of the contract terms, context, the nature of supervening event(s) and the parties' expectations.  Further details of the case are available here.

Hong Kong Court clarified the limit of marital status protection

In Cheuk Kit Man v FWD Life Insurance Company (Bermuda) Limited & Ors [2025] HKCFI 1369, the Plaintiff's agency agreement was terminated shortly after her husband, also an agent with the Defendant, resigned to join a competitor. The Plaintiff alleged that the termination amounted to unlawful discrimination on the ground of her marital status and family status under the Sex Discrimination Ordinance ("SDO") and Family Status Discrimination Ordinance ("FSDO").

The Court clarified that being married to a specific individual, instead of being married generally, does not fall within the meaning of "marital status" under the SDO. This interpretation overturned a broader view previously adopted by the Court in an interlocutory decision. Accordingly, the marital status discrimination claim was dismissed. The Court also dismissed the family status discrimination claim, finding that the Plaintiff did not have caregiving responsibilities for her husband, hence is not a person with a "family status" for the purpose of the FSDO.

On the contractual side, the Court held that the Defendant was entitled to terminate the agency agreement without cause, and rejected the Plaintiff's argument that the termination must be exercised in good faith. The Court also upheld the enforceability of clawback provisions, allowing the Defendant to recover over HK$4 million incentive payments previously made to the Plaintiff.

The judgment can be found here.

Please contact our Hong Kong team for further detail.

Italy

Remote working notification

The Italian Ministry of Labour recently issued guidelines concerning electronic notification to the Ministry of Labour of remote working agreements applicable to all private employers. According to the Ministry of Labour guidelines,  the employer must notify to the Ministry of Labour the names of the workers as well as the start and the end of remote working agreements within 5 days:

• from the effective starting date of the agreement which may be different from the date on which the agreement is signed; 

• from the effective termination date if the termination is anticipated before the date provided in the agreement; and

• following the date on which any amends of the agreement originally signed is agreed  (i.e. extension of the duration of the agreement).

This must be submitted through the Ministry of Labour website within the relevant timeframes above. Failure to comply with such provisions will result in an administrative fine ranging between €100,00 and €500,00 for each employee involved.

Resignation from employment for unjustified absence

The Ministry of Labour recently clarified that in cases of resignation from employment for an unjustified absence,  employers cannot apply the timeframe set for unjustified absence by the applicable collective bargaining agreements (CBAs) for disciplinary dismissals, as terms provided by the CBAs are generally shorter than the 15-day minimum statutory period in cases of resignation for an unjustified absence. The Ministry of Labour underlines that CBAs must provide for a different and specific timeframe in cases of resignation for an unjustified absence, at least 15 days, to ensure that an employee's intention to terminate the employment relationship has sufficient time to be clearly ascertained.

A recent ruling from the Trento Court provided a different interpretation, stating that time limits set out in the applicable CBAs for unjustified absences in the context of disciplinary dismissals should also apply in cases of resignation due to unjustified absence. Therefore, the minimum statutory 15-day period should be regarded as a residual rule, applicable only when the CBA does not provide a specific timeframe.

Retention limits for email and internet metadata

The Italian Data Protection Authority (Garante Privacy) has recently clarified that email metadata - such as sender and recipient addresses, IP addresses and routing data - are considered personal data under the GDPR. The collection and retention of such data may constitute indirect monitoring of employees' activities, especially when stored for extended periods (more than 21 days) or used beyond technical purposes (i.e. employees' performance analysis). If the 21-days period is exceeded, a trade union agreement or a labour inspectorate authorisation will be required. The same principles apply to internet browsing metadata, when allowed for monitoring employees. Although no specific retention period is prescribed for internet metadata, employers must ensure their collection and retention policies comply with the principles of lawfulness and proportionality.

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

Netherlands

Proposal for implementation of the Pay Transparency Directive

The consultation period for the legislative proposal implementing the Pay Transparency Directive ((EU) 2023/970) into Dutch law closed on 7 May 2025. The proposal is mostly a 'clean' implementation (i.e., not imposing any further obligations on employers other than those that are absolutely necessary on the basis of the directive). Due to the fall of the Dutch government in June, the timeline for presenting the legislative proposal to the House of Representatives has become slightly uncertain. Nonetheless, we anticipate that the outgoing government will still aim for implementation by 7 June 2026. Further rules on the transparency obligations will be laid down in an administrative order.

Future Pensions Act

In force from 1 July 2023, a transition phase will commence in which employers / trade unions and employees can make arrangements regarding the amendment of their pension scheme and afterwards how pension providers will implement these arrangements. While, originally, the deadline for the transition period has been set for 1 January 2027, on 20 May 2025, the House of Representatives adopted a legislative proposal to extend the deadline of the transition period by one year. If the proposal is adopted by the Senate as well, the new deadline for the transition will be set at 1 January 2028.

Proposed admission system for posting of workers

On 15 April 2025, the House of Representatives adopted the legislative proposal for the Provision of Personnel (Accreditation) Act (PoPA)(Wet toelating terbeschikkingstelling van arbeidskrachten). In short, the PoPA would introduce an admission system for the posting of workers. If PoPA is also adopted by the Senate, then, from the date of entry into effect, companies that post workers in the Netherlands on a commercial basis (such as temporary employment agencies) would only be allowed to do so if they are authorised by a special institute of the Ministry of Social Affairs and Employment. This is regardless of whether the provider is located in the Netherlands or elsewhere. In order to receive the accreditation, amongst others, providers would have to (i) provide financial collateral (of up to €100,000) and (ii) substantiate that they comply with a regulatory framework (including legislation on minimum wages, wage tax and housing).

At this point in time, the envisaged date for entry into effect of the PoPA is 1 January 2027 (with enforcement on accreditation taking effect from 1 January 2028).

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

Singapore

New workplace safety and health guidelines on preparing for adverse weather

On 7 April 2025, the Ministry of Manpower and the Workplace Safety and Health Council published guidelines containing recommendations for managing workplace safety risks during adverse weather conditions (e.g., strong winds, floods, lightning, heat stress, and haze). These guidelines aim to help companies prepare their workplaces for such conditions to minimise injuries to individuals and damage to property, including by developing comprehensive response plans that are adjusted according to the severity of the adverse weather.

Changes in qualifying salaries and levies for S Pass holders

The Ministry of Manpower will raise the qualifying salaries and levies for S Pass (work visa tailored to mid-skilled workers) holders with effect from 1 September 2025. The minimum qualifying salary (which increases progressively with age) for new S Pass applications will be raised from SGD$3,650 to SGD$3,800 for the financial services sector, and from SGD$3,150 to SGD$3,300 for all other sectors. These increased qualifying salaries will also apply to the renewal of S Passes expiring from 1 September 2026. The S Pass basic / tier 1 levy rate (quota of up to 10% of the total workforce) will be increased from SGD$550 to SGD$650 per month, aligning it with the current tier 2 levy rate (quota of above 10% to 15% of the total workforce).

Please contact our team in Singapore for any further detail.

Spain

Abolishing automatic termination of employment due to permanent disability

From 1 May 2025, Law 2/2025 abolishes the automatic termination of employment contracts due to total permanent, absolute, or severe disability. Termination is now allowed only if: (i) reasonable adjustments or redeployment to a compatible role are not possible, or (ii) the worker rejects a suitable redeployment offer. The law introduces an urgent procedure to challenge such terminations, and suspends disability benefits if the worker takes on an incompatible role. It also establishes criteria to assess whether adjustments impose an excessive burden, particularly for companies with fewer than 25 employees.

Breastfeeding leave with improved conditions: agreement with the employer required

On 4 April 2025, the National Court (Audiencia Nacional) ruled that improvements to breastfeeding leave agreed in collective bargaining agreements (i.e. extending leave to 12 months or reducing working hours) require employer agreement. These enhancements are voluntary contractual benefits, not automatic legal entitlements, and  must be negotiated with the employer.

Supreme Court establishes right to defence before disciplinary dismissal

The Supreme Court has ruled that, under Article 7 of the ILO Convention No. 158, employees must be given the opportunity to defend themselves before a disciplinary dismissal. This procedural guarantee is directly applicable in Spain without requiring further legislative development. Employers must now include a prior hearing stage into their disciplinary procedures, allowing employees to present their case before a final decision is made. Failure to do so will result in the dismissal being deemed unfair, though not void, due to non-compliance with these procedural requirements.

Please contact our team in Spain for further detail.