- Global regulation shifts in focus
- A complex AI compliance environment
- Fairness in practice: Right to disconnect and pay transparency
- Looking ahead in 2026
As sweeping reforms converge to redefine workplace standards, employer responsibilities and employee rights, 2026 will require businesses to balance rapidly evolving workplace regulation with the need to safeguard commercial interests.
Global regulation shifts in focus
Across the UK, the Americas and Europe, three key themes dominate: equity, openness and flexibility.
In the UK, the recent Employment Rights Act will broaden protection against unfair dismissal by reducing the qualifying period from two years to six months and removing the existing caps on compensation. These changes are anticipated from January 2027. The act will create other significant changes in 2026 and into 2027, including measures strengthening union influence; broadened thresholds for collective consultation and increased associated penalties for breaches; severe restrictions on imposing contractual variations, improved job security for zero- and low-hours workers; and broadened protections against harassment. In short, there will be a seismic shift to the compliance landscape. Employers will need to stay alert, as many of the finer details remain unknown.
The European Union is taking a proactive approach to strengthen its global competitiveness, aiming to boost innovation and economic growth. However, core worker protections are likely to remain strong with employers facing a wave of new regulation including the Pay Transparency Directive, the AI Act, and a revised framework for European Works Councils. Meanwhile, the Quality Jobs Roadmap forms part of the EU’s strategy to generate and maintain sustainable, high-quality employment. This potentially includes legislative measures to safeguard workers' rights while adapting to ongoing technological, economic, and societal developments.
Recent employment law developments across Asia Pacific and Latin America also reflect a strong focus on worker protection, flexibility and fairness. Wage reforms are prominent, with South Korea and multiple Philippine regions announcing significant minimum wage increases, while Malaysia’s Gig Workers Bill enhances rights and security for nontraditional workers. Broader labor rights are evolving through measures like South Korea’s Yellow Envelope Act, which expands union protections, while Singapore’s Workplace Fairness Act seeks to ensure fair treatment for employees, including by providing greater protection against workplace discrimination. In Latin America, labor reforms are continuing, with Brazil seeking to strengthen equal pay compliance, Colombia modernizing its labor inspection regime, Mexico proposing reforms to strengthen workers’ rights and Argentina seeking to introduce sweeping changes to modernize labor relations while fostering competitiveness.
Overall, these changes underscore a regional trend toward safeguarding employee well-being, regulating digital work environments and ensuring equitable treatment across diverse employment models.
A complex AI compliance environment
The AI regulatory framework for US employers is a patchwork of existing federal and state anti-discrimination laws (Title VII, ADA) and new state and local laws (primarily in California, Colorado, Illinois, Maryland, and New York) that target the use of AI in employment decisions and emphasize privacy, transparency, fairness and accountability. State and local measures trend toward regulating algorithmic bias, privacy considerations, and explainability in workplace AI applications.
In contrast, the federal government has taken a deregulatory approach. On 11 December 2025, President Trump issued an executive order titled “Ensuring a National Policy Framework for Artificial Intelligence,” to curb what it characterizes as a “patchwork of 50 different regulatory regimes” by directing federal agencies to challenge state AI laws that impede interstate commerce or conflict with national policy objectives.
It remains unclear how courts will decide legal challenges to state AI laws under the order. It is equally unclear whether a political consensus will emerge for a federal AI law in a midterm election year.
While the executive order calls for their removal, state and local AI laws remain in place for now. Employers therefore must navigate a complex compliance environment.
“With limited exceptions, employers subject to state and local AI laws should comply rather than taking a ‘wait-and-see’ approach in deference to the December 11 Executive Order. Even if state and local laws ultimately are struck down or pre-empted, it will take some time for litigation and legislative processes to play out," says Robin Samuel, Baker McKenzie partner, Los Angeles.
Samuel also notes that "companies therefore should proactively strengthen their AI governance and policy frameworks, aligning them with current and emerging state requirements. This forward-looking approach not only mitigates compliance risk but positions organizations to adapt quickly as the regulatory landscape evolves.”
Fairness in practice: Right to disconnect and pay transparency
Technology has transformed the workplace, enabling seamless connectivity—but this convenience has fuelled concerns about employee well-being, giving rise to the “right to disconnect.” First introduced in France in 2016 and accelerated by the pandemic-driven shift to remote work, this principle aims to protect employees from after-hours obligations.
Its application varies globally: Spain is considering a full ban on employer outreach, while Australia’s 2024 law simply affirms that employees do not need to respond outside working hours unless reasonable. Belgium, Luxembourg and Portugal, along with Chile, Argentina and Colombia, have enacted similar measures, while other countries, such as the UK and Mexico, remain in discussion stages. Though early reports from Australia show minimal disruption, employers should act now by training managers, monitoring workloads, reviewing contracts and adopting practices like delayed email sends to support work-life balance.
At the same time, the EU Pay Transparency Directive, which must be implemented by EU member states by June 2026, introduces measures aimed at making it easier to identify gender pay inequality and enforce the right to equal pay for men and women doing equal work. It introduces stringent compliance obligations, including pre-employment pay transparency, public pay gap reporting and, in some circumstances, the requirement to carry out joint pay assessments in cooperation with worker representatives.
“With less than six months until the deadline for the member states to implement the Pay Transparency Directive, the landscape across the EU is evolving rapidly and we expect this to accelerate in the coming months. The Directive will shift the dial on pay scrutiny across the EU and employers should be actively preparing by reviewing pay structures, conducting equal value assessments, and mapping jurisdictional risks,” says Katja Haeferer, Baker McKenzie partner, Frankfurt.
Implementation is uneven across member states, but multinational employers must prepare systems for cross-border compliance through pay audits, equal value assessments and proactive engagement with worker representatives. Beyond compliance, these measures signal a shift toward transparency and fairness.
Looking ahead in 2026
- Organizations must anticipate evolving legislation across multiple jurisdictions.
- Invest in compliance readiness and workforce technology to stay ahead of regulatory shifts.
- Prioritize employee well-being and inclusive workplaces as a cornerstone of a sustainable workforce strategy.