Legislation

Several recent legislative updates address key workplace issues. The emergence of AI in recent years has led to scrutiny from legislators, and new regulations on the use of AI in employment are under consideration around the globe. As the pandemic forced many workers into remote work, employee wellbeing and work-life balance became a top priority for both organizations and lawmakers, and laws regarding pay inequity, predictive scheduling, and the right to disconnect are being increasingly introduced by legislators at all levels.

AI in Hiring

AI can increase efficiency in hiring, making AI-based recruitment popular with employers. Yet, AI tools rely on data to be trained, creating the potential for algorithmic bias. In response, regulators globally have introduced legislation pertaining to AI’s use in employment.

The European Union leads the charge for AI legislation, passing the comprehensive EU AI Act. The act recognizes recruitment as “high risk,” meaning AI poses a threat to the fundamental rights of individuals. As a high risk use case, employers utilizing AI must comply with regulations including implementing a risk management system and monitoring the system.

In Canada, the proposed Artificial Intelligence and Data Act sets forth similar guidelines to the EU, labeling employment-related decisions as high-impact. No nationwide legislation has been proposed in the US, but algorithmic bias has the potential to violate employment law outlined in Title VII of the Civil Rights Act of 1964, the Americans with Disability Act and the Age Discrimination in Employment Act, which prohibit discrimination based on race, religion, sex, disability and age; and the EEOC has issued guidelines on the application of these laws to AI. At the state and local level, legislators have passed legislation, such as in Colorado, Illinois, Maryland and New York City.

AI-related legislation is less developed in the Asia-Pacific region. The Australian government issued guidance for AI recruitment systems used in the public sector, but no formal legislation has been passed. The Indian government has issued two advisories on AI, neither covering employment.

Another notable trend within the world of IR35, is related to the share of postings citing a role being deemed 'Inside' vs 'Outside' IR35 -- as companies hiring contractors make the determination of where a role will fall. This gap was widest in mid-2021, with only 30% of job postings, according to Lightcast data, mentioning ‘Outside IR35.’ As of 2024, this figure has now increased to almost 50%. This is suggestive of companies being more nuanced in navigating this legislation and better able to confidently identify roles that fall outside of the legislation.

Those organizations with large contingent workforces in the UK should pay close attention to possible changes to IR35 legislation in the future. Further, they should engage with partners that know how to navigate this landscape and help gain access the best possible talent whilst effectively managing costs.

Impact of IR35 on Today’s UK Contingent Workforce

Along with the impacts stemming from COVID-19, the UK workforce has been altered by a key piece of legislation related to the way companies engage with contingent workers, known as IR35. This legislation, introduced to the UK in 2020, was designed to clamp down on the number of contractors posing as their own limited companies rather than engaging correctly as temporary (PAYE) employees.

Coinciding with the start of the pandemic in early 2020 and introduction of IR35, according to ONS data the numbers of self-employed individuals declined rapidly, going from 15% to just 13% as a share of the total workforce. Meanwhile, the share of temporary employees in the workforce also began to rise at the same time - going from around 4.5% to over 5%. This highlights the large migration of those limited company individuals to PAYE workers status, to benefit from the government furlough scheme as well as fall in line with widespread policy changes among companies to only hire PAYE contractors. (Note, many limited company workers would identify as self-employed when completing the ONS labor force survey)

Pay Equity

Gender and racial pay inequity remain persistent issues globally, and pay transparency laws and pay history bans serve to close the gap. Pay transparency laws give candidates access to salary data, and bans on pay history questions prevent employers from using pay history to set compensation, which can perpetuate pay inequity.

Pay transparency requirements and pay history bans are increasingly popular in North America. Twelve US states have passed laws requiring employers to disclose salary information in job postings, and by mid-2025, 1 in 3 Americans will be impacted by pay transparency laws. Regarding pay history, 22 states and 23 municipalities have passed legislation banning salary history questions. In Canada, multiple provinces have passed pay transparency laws, with Ontario being the most recent province to consider such legislation.

The EU passed comprehensive pay transparency regulations in 2023 through the Directive on Pay Transparency, requiring employers to disclose salary information and report on pay gaps. Pay transparency is less common in Asia, with pay transparency initiatives being employer led. India leads the region in terms of employers proactively communicating pay transparency (32%). In Australia, pay transparency is not required by law, but salary disclosure appeared in 35% of job postings, primarily in lower-wage roles. Similar to the EU, Australia requires organizations to report on gender pay gaps, which has contributed to a narrowing of the pay gap.

Pay Transparency Is on the Rise Globally

1 in 3

Americans will be impacted by pay transparency laws by mid-2025

32%

of employers in India proactively communicate pay transparency

35%

of job postings in Australia disclose salary ranges

Work-Life Balance

The pandemic brought work-life balance to the forefront of organizations' and lawmakers’ minds as a large portion of the global workforce worked remotely. Predictive scheduling and right-to-disconnect laws aim to improve work-life balance through allowing workers to know their schedules in advance and to unplug outside of working hours.

Predictive scheduling primarily targets retail and food-service workers, and legislation requires employers to notify workers of their schedules and may place limits on the hours an employee can work. Oregon is the only state to have enacted laws on predictive scheduling, but several major cities including Chicago, New York City and Seattle have related ordinances. Predictive scheduling laws cannot be enforced in every state in the absence of federal legislation, as most right-to-work states prohibit enforcement by local governments. Several provinces in Canada, including British Columbia, Ontario and Quebec have enacted legislation, and with the exception of Ontario, all provinces require employers to provide compensation to workers asked to work with less than four days’ notice.

While predictive scheduling primarily impacts in-person services workers, right-to-disconnect laws have a broader impact, and grant workers the right to refuse contact outside of work hours. Australia, Argentina, France and Ireland have all passed right-to-disconnect legislation impacting all workers, while Mexico and Chile have laws protecting remote workers. Such legislation ensures workers are not penalized for unplugging after work hours, contributing to greater employee wellbeing.