International Employment Law Alert – January 2026

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• England. Employment Rights Act receives Royal Assent.
• France. Social Security Financing Act for 2026.
• Germany. Pay transparency: what employers need to know.
• Hong Kong. Technology Talent Admission Scheme enhanced.
• Ireland. Misclassification of self-employed workers – opportunity to correct payroll tax issues.
• Italy. AI Act and employment law updates.
• Netherlands. Adoption of the proposed admission system for the posting of workers.
• People’s Republic of China. Clarification provided for labour disputes and non-compete clauses.
• Singapore. Anti-workplace discrimination statute implementation now set for end-2027.
• Spain. Digitised recording of working time expected.
• Dubai International Finance Centre. New Practice Direction in the DIFC strengthening access to justice in employment disputes.

England

Looking forward – three things on the horizon for 2026:

1. Employment Rights Act

Ongoing implementation expected throughout the year, alongside stakeholder consultation.

2. Non-compete clauses

A government review has outlined several policy options, including statutory limits on non-compete duration, outright bans, salary threshold-based bans, and combinations of these options.

3. Harassment

Further requirement for employers to “take all reasonable steps” to prevent sexual harassment in the workplace expected from October.

A summary of the key UK developments from 2025 and a look ahead to what’s on the horizon in 2026 is available here.

Updates from 2025 Q4:

Employment Rights Act 2025

It was an exciting end to the year for employment law, with the long-anticipated Employment Rights Bill finally passing through Parliament and receiving Royal Assent on 18 December 2025. Significantly, with effect from 1 January 2027, employees will only need six months’ service to qualify for unfair dismissal protection. In practice, this means that anyone hired from July 2026 could potentially bring a claim.

Of particular note, at the 11th hour the House of Lords agreed, in principle, to the removal of the unfair dismissal cap (both the 52 week and financial cap). In the impact assessments and analytical documents published on 7 January 2026, the Department for Business and Trade indicated that the government does not plan to conduct further consultations regarding the removal of the compensation cap and is committed to implementing this change, along with the reduced qualifying period, but will organise a series of meetings in early 2026 to gather stakeholder feedback on the unfair dismissal reforms. A summary of these responses will be published later in 2026, and the government will also assess whether additional targeted support or guidance is required.

There is a significant amount of change coming down the pipeline as a result.

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

France

Looking forward – three things on the horizon for 2026:

1. EU Pay Transparency Directive

The deadline for the transposition of the Directive is set at 7 June 2026. The French Labour Ministry has invited social partners to a new consultation meeting on 15 January 2026, further developments can be expected from this date.

2. Draft bill relating to the legal framework of internal investigations

A bill tabled on 9 December 2025 seeks to introduce a statutory framework for internal investigations, including a formal definition in the Labour Code, clearer procedural safeguards for individuals, and explicit protection of lawyers’ professional secrecy. Although still at an early stage, the proposal may lead to further discussions and developments in the course of 2026.

3. Decrees following the adoption of the Social Security Financing Act for 2026

Several implementing decrees are expected in the coming months to operationalise the measures in the framework of this Act, in particular with respect to the new birth leave and the framework governing the maximum duration of sick leave (see below).

Updates from 2025 Q4:

Social Security Financing Act for 2026

The Social Security Financing Act for 2026 (PLFSS 2026) was published on 31 December 2025. The main measures likely to impact employers and employees include the following:

• Creation of an additional birth leave: A new “birth leave” is introduced, in addition to the existing maternity and paternity leave, which entitles employees to up to two months of additional leave per parent. The level of compensation will be set by decree in the upcoming months, but is expected to be 70% of net salary for the first month and 60% for the second. The additional birth leave will be available starting 1 July 2026.
• Cap on sick leave duration: The duration of sick leave prescribed by doctors will now be limited to one month for an initial prescription, and up to two months for each renewal.
• Increase in employer contributions on certain termination indemnities: The employer social contribution applicable to indemnities paid in the context of a mutual termination agreement (rupture conventionnelle) and to retirement-related termination payments is increased by ten percentage points, rising from 30% to 40%.

Social and cultural activities - extension of deadline to terminate seniority requirements

The URSSAF (France’s social security collection body) has granted an additional compliance period to CSEs - and to companies where no CSE is in place - to remove seniority requirements for access to social and cultural activities (ASC).

Following an April 2024 ruling of the Cour de cassation, the introduction of seniority conditions restricting access to ASC was prohibited. While CSEs and employers were initially required to comply by 31 December 2025, URSSAF has now confirmed that the compliance deadline has been postponed to 31 December 2026.

As from that date, all employees - irrespective of their length of service - must be entitled to benefit from ASC. This represents a significant shift in practice and may have substantial budgetary implications for CSEs and employers.

URSSAF has nevertheless clarified that, if a seniority condition is identified during an audit before 31 December 2026, the organisation concerned will be required to bring its practices into compliance going forward, without retroactive financial adjustments.

New rules on career development interviews and employee representation

The reform of professional interviews has been adopted and published as part of legislation transposing several interprofessional national agreements. The professional interview, now renamed the career pathway interview, will no longer take place every two years but according to a new schedule: during the first year following hiring, then every four years within the same company, with a comprehensive career review every eight years. The interview must be conducted by a line manager or an employer representative and held during working time. This new regime will apply from 1 October 2026.

The same legislation also introduces additional changes. Companies with 300 or more employees are now subject to a new three-yearly obligation to negotiate on the employment of experienced workers, and the current limit of three consecutive terms for employee representatives serving on the CSE has been abolished.

Please contact our team in France for further detail.

Germany

Looking forward – three things on the horizon for 2026:

1. Legislative updates

Expected reforms to the Pay Transparency Act (implementing the Pay Transparency Directive) and the Working Time Act.

2. Works Councils Elections

Scheduled for Spring 2026.

3. Minimum wage increase

To €13.90 Euros per hour from 1 January 2026.

Updates from 2025 Q4:

Pay transparency: what employers need to know

Pay transparency is moving up the agenda in Germany, and recent developments mean employers should be paying close attention. In October 2025, the Federal Labour Court made it easier for employees to establish a presumption of pay discrimination. Now, if a female employee can show that a single male colleague doing the same or equivalent work is paid more, that’s enough to trigger the presumption—no need to compare the median salary of the male group. The burden is on employers to rebut this presumption to avoid equal pay claims. For more details, see our Insight Federal Labour Court Eases Equal Pay Claims.

Germany is also taking concrete steps to implement the EU Pay Transparency Directive, which must be transposed into national law by June 2026. An independent commission has published recommendations to guide the upcoming legislation. While not legally binding, these recommendations are likely to shape the new rules.

Key points for employers include:

• Companies with at least 100 employees will need to publish information on the pay gap and regularly report on measures to promote equality, including concrete data on the gender pay gap.
• The burden of proof for unequal pay will shift to employers if employees can show facts suggesting discrimination.
• Sanctions for unequal pay are expected, with fines explicitly mentioned in the EU directive, though details are still to be confirmed.

The commission’s recommendations go further in some areas, suggesting that pay transparency reports should be based on actual pay (not just target pay), and that certain elements like third-party stock options and minor benefits can be excluded. Employee information rights may be limited to one request per year and only for current employees. The commission also calls for clear justification grounds for pay differences and the use of digital tools and templates to simplify reporting.

At this stage, no immediate action is required, but employers should monitor developments closely as a draft bill is expected by Spring 2026, with final measures likely in the second half of the year. In the meantime, it’s wise to review your pay structures for any unjustified gender pay gaps and start documenting salary determination processes and criteria. Creating wage transparency now will help you prepare for the new requirements and avoid potential sanctions down the line.

If you have questions or would like support in reviewing your pay practices, please get in touch.

AI in employment law

Artificial intelligence is developing rapidly and is bringing not only technological innovations but also new legal challenges. In our two webinars in the series “AI Update for Employers”, we provided information on the latest developments in AI regulation and offered practical insights. Recordings of both webinars can be found on our AI website for employment law. Please note that both webinars were conducted in German. You can also register to receive updates from us.

No works council election for app/AI organisations

The next regular works council elections are scheduled for spring 2026. In digital, decentralised platform organisations and AI-supported management systems, the typical prerequisites for an independent business establishment are often lacking. Employees are provided with apps or AI tools that take over many tasks, such as shift planning, job assignment, communication, and reporting sickness, without any human management functions “on site”. You can find out more in this article written by Dr Sascha Morgenroth and Jasper Hertle.

Please contact our team in Germany for further detail.

Hong Kong

Looking forward – three things on the horizon for 2026:

1. Expanded “continuous contract” definition

2. Enhanced protections for digital platform workers protections

3. Increased use of AI in HR compliance

Updates from 2025 Q4:

Technology Talent Admission Scheme enhanced

The Innovation & Technology Commission has introduced three enhancement measures to the Technology Talent Admission Scheme to expedite the admission of innovation and technology talents from around the world. These measures include:

• streamlining application procedures to enable technology companies and eligible talent to submit applications for quotas and visas/entry permits in parallel;
• removing the requirement for engagement in Research & Development within 14 designated technology areas; and
• launching a dedicated application channel for the Hong Kong-Shenzhen Innovation & Technology Park, offering one-stop assistance to its tenants and occupants.

Maximum daily rates of reimbursable medical expenses increased for employees injured at work

On 3 October 2025, the Labour Department announced that from 1 January 2026:

I. the maximum daily rate of medical expenses for out-patient treatment under the Employees' Compensation Ordinance and the Pneumoconiosis and Mesothelioma (Compensation) Ordinance will increase from HK$300 to HK$500; and

II. the maximum daily rate of medical expenses for in-patient and out-patient treatment received on the same day will be increased from HK$370 to HK$700.

We have summarised the key developments from 2025 and highlighted what employers should watch out for in 2026 here.

Please contact our team in Hong Kong for further detail.

Ireland

Looking forward – three things on the horizon for 2026:

1. EU Pay Transparency Directive

The publication of the Pay Transparency Bill is awaited and becoming increasingly urgent as the Directive must be implemented into Irish law by June 2026. For employers with 150 workers or more the first reports (including 2026 pay data) are due by 7 June 2027.

2. Retirement Age

Ireland is awaiting the enactment of its Employment (Contractual Retirement Ages) Bill 2025. This legislation, once in force, will allow (but not compel), an employee to stay in employment until the State Pension Age of 66. The overall objective of the Bill is to provide additional protection, specifically for those employees who do not consent to retire at a contractual retirement age set below the state pensionable age.

3. Remote and flexible working review

A formal review of remote and flexible working provisions is scheduled to be conducted by the Department of Enterprise, Tourism and Employment by March 2026. This review will assess the operation of the legislation and will consider extending the right to request flexible working to all employees.

Updates from 2025 Q4:

Misclassification of self-employed workers

The Revenue Commissioners announced an opportunity for employers to correct payroll tax issues arising in 2024 and 2025 due to a bona-fide misclassification of workers as being self-employed rather than employees. Relevant employers will be permitted to enter into settlement terms in respect of this payroll tax issue, without incurring any penalties, providing they engage with Revenue prior to 30 January 2026. To assist employers, Revenue has published Revenue Guidelines - Settlement arrangement arising from Revenue v Karshan (Midlands) Ltd. trading as Domio’s Pizza.

Pension auto enrolment

From 1 January 1 2026, approximately 800,000 private sector employees are expected to be in scope for the new retirement savings system. Currently, one in three employees have no additional cover beyond the Irish state pension which has a 2026 value of approximately €15,000.

Minimum Wage

From 1 January 2026 this rose by €0.65 to €14.15 per hour impacting 201,000 workers. Implementation plans for the higher “living wage” have been deferred to 2029.

Please contact our team in Ireland for further detail.

Italy

Looking forward – two things on the horizon for 2026:

1. EU Directive on Pay Transparency

To be transposed by 7 June 2026. Government expected to issue a first draft of law by early February 2026.

2. AI Act and employment law updates

Further decrees to implement the AI Act, with focus on employment practices, are expected to be issued in the upcoming months.

Updates from 2025 Q4:

Whistleblowing ANAC Guidelines

On 12 December 2025, the National Anti-Corruption Authority (“ANAC”) approved a new set of Guidelines no. 1/2025 on internal whistleblowing channels. They provide specific instructions for both public and private sectors on how to implement and manage internal reporting channels. The Guidelines clarify, among other things, requirements for confidential whistleblowing channels, the use of secure digital tools, the role of trade unions in the establishment of internal reporting procedures, strict criteria for the whistleblowing manager’s independence and training and procedures for handling anonymous and oral reports.

Parental leave

According to the Budget Law 2026, which has strengthened maternity and paternity protections, effective from 1 January 2026 the age at which parental leave and leave for disabled children can be taken is increased from 12 to 14 years. The same protections are also extended to cases of adoption and fostering, both national and international. Moreover, the annual limit for sick leave for children is increased from 5 to 10 days, and the age of the child to qualify for the benefit increases from 8 to 14 years.

Reinstatement of 4 October (St. Francis of Assisi) as national public holiday

The Italian Parliament recently reintroduced a national holiday on 4 October, effective from 1 January 2026. From a payroll point of view, employees are entitled to ordinary remuneration during bank holidays in Italy even if they do not perform working activity. However, if employees are required to work during public holiday, they are entitled to ordinary remuneration plus additional indemnities provided by the NCBA. All amounts paid are subject to regular social security and tax contributions. Employers are advised to update their internal policies and company calendar.

Please contact our team in Italy for further detail.

Netherlands

Looking forward – three things on the horizon for 2026:

1. Whistleblowing update

The evaluation of the Whistleblowers Protection Act is scheduled for the first half of 2026. The findings of this evaluation will be taken into account when drafting a legislative proposal to strengthen the enforcement role of the House for Whistleblowers (the Dutch whistleblowers authority). It is also expected that the proposal will include provisions for anonymous reporting.

2. Pay transparency implementation

Nearly a year after the initial consultation closed, the legislative proposal to implement the Pay Transparency Directive into Dutch law is expected to be submitted to the House of Representatives in Q2 2026. As a result, implementation will be delayed and the Dutch government will miss the Directive’s implementation deadline of 7 June 2026.

3. Modernising legislation governing restrictive covenants

Nearly two years after the initial consultation closed, the legislative proposal to restrict the use of non-compete, relationship and anti-poaching clauses in employment agreements is expected to be submitted to the House of Representatives in Q2 2026. The proposal will likely have been amended since the consultation period. One anticipated provision is that a non-compete clause will be void unless the employee earns at least 1.5 times the modal income (which, in 2026, is expected to be €72,000 gross for a full-time position).

Updates from 2025 Q4:

Adoption of the proposed admission system for the posting of workers

In November 2025, the Dutch Senate adopted a proposal to introduce an admission system for temporary employment agencies and other labour providers. Once in force, temporary employment agencies will only be permitted to post workers if they are authorised by the Dutch Authority Lending Market (Nederlandse Authoriteit Uitleenmarkt). The new admission system will take effect from 1 January 2027, with enforcement of accreditation commencing on 1 January 2028. Companies that engage temporary employment agencies, other labour providers, or lend employees themselves are advised to soon consider (ie, in the first half of 2026), whether preparatory steps are required to ensure a timely compliance.

Please contact our team in the Netherlands for further detail.

People’s Republic of China

Looking forward – three things on the horizon for 2026:

1. Retirement-age employment protections

Ongoing drafting and stakeholder consultation expected throughout the year on new regulations to strengthen rights for workers employed beyond statutory retirement age.

2. New cause of action for platform-based work disputes

From 1 January 2026, “new forms of employment-related disputes” has been formally added as a standalone category by The Supreme People’s Court, enabling clearer judicial access for gig workers on issues such as pay, occupational injury, and labour relationship recognition.

3. Occupational injury protection for non-standard workers

A nationwide expansion of occupational injury protection schemes for non-standard workers, such as delivery riders, live-streamers, and freelance drivers is set to take effect in 2026.

Updates from 2025 Q4:

Clarification provided for labour disputes and non-compete clauses

In September 2025, The Supreme People’s Court’s Interpretation on the Application of Law in Labour Dispute Cases (II), clarified some key issues surrounding termination and non-compete clauses. These included:

• Non-compete clauses are only enforceable for employees with actual access to trade secrets or confidential IP-related information. Clauses must be reasonable in scope, geography, and duration. No compensation is required for non-compete obligations during employment. Courts will uphold claims for return of paid compensation and liquidated damages if an employee breaches a valid agreement.
• Reinstatement for unlawful termination is not mandatory and courts may deny it where objective barriers exist (eg, contract expiry, retirement, employer dissolution, or the employee taking a conflicting new job). If reinstatement is ordered, back pay is awarded from the termination date at full regular wage. Where the employee shares fault, they may be liable for a portion of the lost wages.

In the same month, China’s Ministry of Human Resources and Social Security issued new guidelines to curb the overuse of non-compete agreements. The key takeaways for employers to note are:

• Clarify the prerequisites and personnel scope for applying non-compete restrictions. Only employees with actual access to trade secrets (eg, senior management or technical staff) may be bound. Employees possessing only general industrial skills or general operational information shall not be included.
• Detail reasonable standards for economic compensation and liquidated damages. Monthly non-compete compensation shall be no less than 30% of the employee’s average monthly salary over the 12 months prior to termination (or the local minimum wage, whichever is higher). For restrictions lasting more than one year, compensation shall be at least 50% of that average salary. Liquidated damages are generally capped at five times the total compensation paid.
• Standardise the implementation process of non-compete agreements. An employer should conduct a necessity assessment before imposing non-compete obligations, prioritise technical safeguards (eg, encrypted storage and access controls), and define geographic and industry restrictions narrowly. Nationwide or global bans will require strong justification.

Please contact our team in the People’s Republic of China for further detail.

Singapore

Looking forward – three things on the horizon for 2026:

1. Anti-workplace discrimination

Further guidance associated with Singapore’s new anti-workplace discrimination statute expected – this may include guidance on accommodations for disabled persons, practical examples of when protected characteristics may be considered, and whether claims for discrimination may be subject to caps depending on the circumstances.

2. Restrictive covenants guidance

The Ministry of Manpower had announced in 2024 that further guidance was forthcoming, and we could see this published in 2026.

3. Primary labour statue review

A review of Singapore’s primary labour statute, the Employment Act 1968, is under way with the Tripartite Work Group expected to present proposed changes in the second half of 2026.

Updates from 2025 Q4:

Workplace Fairness (Dispute Resolution) Bill passed.

Singapore’s Parliament has passed the second and final part of its first anti-workplace discrimination legislation, the Workplace Fairness Act 2025. With its text complete, the Act is expected to come into effect by the end of 2027, leaving businesses just shy of two years to prepare for the seismic changes it is expected to introduce. Once the Act is effective, employees will have the right to sue under a new statutory tort of discrimination, after having gone through a compulsory mediation process. Discrimination claims below SGD 250,000 will be heard before the Employment Claims Tribunals, where lawyers are not allowed. Claims above that quantum will be heard before the Singapore High Court.

Please contact our team in Singapore for further detail.

Spain

Looking forward – three things on the horizon for 2026:

1. Recording working time

Digital implementation requirement for employers expected this year.

2. Training contract regulation

New provisions capping the number of training contracts depending on the amount of employees.

3. Heightened labour and Social Security compliance

Employers must adapt to a more rigorous inspection environment.

Updates from 2025 Q4:

Digitised recording of working time

A new Royal Decree on working time registration is expected during 2026, requiring employers to implement a digital daily system to record start and end times, breaks, work modality, and more. Employees and labour inspectors must have instant remote access to these records. Employers should review and upgrade their current systems, develop internal protocols, train staff, and ensure data protection compliance. Failing to comply can lead to significant fines, ranging from €750 to €225,018, depending on the severity of the breach, including undeclared overtime, hiding extra hours, or not observing rest periods.

Changes to training contracts

A new Royal Decree has been approved introducing significant developments to the regulation of training contracts including, new limits on the maximum number of training contracts allowed based on the size of the workforce, enhanced requirements for documentation (eg, mandatory inclusion of an individual training plan and cooperation agreement with the education centre), and reinforced prohibitions on overtime, night work, and shift work except in justified cases. The regulation also sets specific criteria for tutor allocation, requiring two tutors (one from the company and one from the education centre) with supervision limits. These measures aim to prevent fraudulent use of training contracts and ensure a stronger link between paid work and formal, assessable training. Contracts signed from 17 December 2025 are subject to the new framework.

New Labour Inspectorate Strategy 2025–2027

The new strategic plan for the Labour Inspectorate, published in September 2025, sets out a more digital, specialised, and demanding approach to labour and Social Security compliance in Spain. Key priorities include increased control over temporary work, “fijos discontinuos” contracts, and collective bargaining, alongside a focus on tackling undeclared work, false self-employment, and irregular contracts—especially in digital platforms. The plan also involves hiring over 500 new inspectors, introducing advanced digital tools (eg., electronic files and automated procedures), and strengthening oversight of Social Security fraud and occupational risk prevention. Companies will need to reinforce their compliance systems, update internal processes, and ensure careful document management to adapt to this more rigorous inspection environment for the incoming years.

Reduction of the maximum legal working hours not supported

The reduction of the maximum legal working day to 38.5 hours/week in 2024 and 37.5 hours/week in 2025 was under discussion but has been rejected by parliament, and with the Government unable to progress due to insufficient support from other parties, we do not anticipate significant regulatory developments in the short term.

Please contact our team in Spain for further detail.

DIFC/ADGM

Looking forward – three things on the horizon for 2026:

1. DIFC: confidentiality and access to justice in employment claims

Following a Practice Direction issued by the DIFC Courts in late 2025, we expect a noticeable shift in how employment claims are dealt with in 2026, particularly around private hearings by default, anonymised judgments and each party bearing their own costs regardless of the outcome of the claim.

2. ADGM: increased use of arbitration in employment disputes

A recent decision to uphold arbitration clauses in executive service agreements is likely to prompt more employers, particularly those with senior hires and cross-border structures, to include arbitration as the preferred forum for resolving employment disputes.

3. ADGM: move towards pension/savings schemes as an alternative to end of service gratuity

We expect broader uptake of workplace savings scheme arrangements for non-GCC national employees in the ADGM (and likely a push for clearer guidance on what qualifies as a “savings scheme”).

Updates from 2025 Q4:

Significant change for DIFC employment claims (effective 9 October 2025)

Practice Direction No. 1 of 2025 introduces private hearings by default (with anonymised judgments), a general rule that each party bears its own costs (subject to exceptions for unreasonable conduct), and broader scope for filing fee waivers/reductions and instalment payments based on financial hardship. The Practice Direction is aimed at “employment-related disputes” but does not define that term, so we are yet to see any clarification from the DIFC Courts on the scope of disputes intended to fall within the regime. We expect disputes (and hopefully further guidance in due course) over what qualifies as an “employment-related” claim for these purposes.

ADGM optional savings scheme for non-GCC nationals

The Updated ADGM Employment Regulations 2024 allow employers to offer eligible non-GCC national employees the option (in writing) to opt out of traditional End of Service Gratuity (EOSG) in favour of monthly contributions into a pension or savings scheme. Practical questions remain around scheme requirements and implementation, but uptake is expected as employers look for more structured, funded end-of-service alternatives.

Landmark ADGM arbitration ruling in employment disputes

In the consolidated cases of Mathonnet v Modus Operations LLC and Ayotte v Modus Operations LLC, the ADGM Court of First Instance rejected arguments that employment disputes must be brought “to the Court” and confirmed that arbitration clauses in executive service agreements can be enforced. The Court stayed the proceedings in favour of arbitration under the ADGM Arbitration Regulations 2015 and awarded costs to the employer. Before this decision, there was uncertainty as to whether the ADGM Courts would uphold an arbitration agreement for ADGM employment disputes. The position is now clear.

Please contact our team in the Middle East for further detail.