Global HR News

British Columbia Pay Transparency Act – expansion of mandatory reporting to employers with 50 employees

British Columbia’s Pay Transparency Act continues its phased rollout, with a significant expansion of reporting obligations taking effect in 2026.

What has changed

The legislation introduces a staged approach to mandatory reporting based on employer size:

• In 2024, reporting applied to employers with 1,000 or more employees
• In 2025, this expanded to employers with 300 or more employees
• In 2026, the threshold reduces to employers with 50 or more employees.

This reduction from 300 to 50 employees represents a substantial expansion in scope, bringing a much larger group of employers into the reporting regime.

Nature of the reporting obligation

Employers meeting the threshold must prepare and publish annual pay transparency reports.

These reports must be completed annually (by November 1) and be made publicly available, typically via the employer’s website or otherwise at the workplace.

The purpose of the reports is to disclose information on gender-based pay differences within the organisation.

What must be reported

Pay transparency reports are designed to provide structured insight into compensation disparities.

The reports generally include:

• differences in mean and median pay between gender categories
• differences in overtime hours and pay
• differences in bonus pay
• core employer and reporting period information.

The framework uses a ‘reference category’ (for example, men where sufficiently represented) to enable comparisons across gender groups.

Broader framework

The reporting requirement sits within a wider legislative framework aimed at improving pay equity and transparency.

In addition to reporting, the Act introduces obligations such as:

• including salary or pay range information in job postings
• prohibiting employers from asking about an applicant’s pay history
• protecting employees who discuss or inquire about pay.

These measures are intended to address systemic pay disparities and promote fairness in the workplace

Why this matters

The extension of reporting to employers with 50 employees significantly increases regulatory reach. A large number of mid-sized organisations will now be required to collect detailed pay and gender data, analyse internal pay structures and publicly disclose pay gap information.

This increases both compliance burdens and reputational exposure in relation to pay equity.

Key lessons for employers

• employers approaching the 50-employee threshold should assess their reporting obligations as a priority
• data collection processes, particularly around gender and pay, will be critical to ensuring accurate reporting
• public disclosure means that inconsistencies or pay disparities may attract scrutiny from employees, regulators and the wider public
• compliance should be approached not only as a reporting exercise, but as part of a broader review of pay practices.

Practical considerations

Employers should begin preparing ahead of reporting deadlines by:

• confirming whether they meet the employee threshold based on their BC workforce
• implementing systems to collect and validate pay and gender data
• reviewing compensation structures to identify potential disparities
• planning how reports will be published and communicated.

Employee side hustles and competitive risk

The increasing prevalence of ‘side hustles’ creates a growing area of legal risk where employees develop competing products or business activities during their employment. Recent appellate authority in Canada highlights that the outcome in such cases often turns less on general duties of loyalty, and more on the scope of the employment relationship and the terms of any written agreement.

Core issue: when does employee-created work belong to the employer?

A central legal question is whether work created by an employee, particularly where it has a competitive dimension, was produced ‘in the course of employment’.

Absent an express contractual provision, ownership may instead fall to the employee, even where:

• the work overlaps with the employer’s business
• it is developed during the period of employment
• it ultimately competes with the employer’s product or service.

This reflects the operation of statutory regimes (such as copyright legislation) which allocate ownership to employers only where the work falls within the employee’s assigned duties.

The case

In the relevant case, a senior software developer created, without disclosure, a competing software product during his employment. The product directly competed with the employer’s offering, and it was subsequently commercialised, including targeting the employer’s customer base. The employer claimed ownership on the basis that the work was created in the course of employment.

Both the trial court and the Court of Appeal rejected that argument, finding that:

• the employee’s assigned duties were too narrow to encompass development of the competing product
• there was no written employment agreement addressing IP ownership
• the work was not sufficiently connected to the employee’s contractual responsibilities.

As a result, ownership of the competing product remained with the employee.

Why the employer’s claim failed: limits of default statutory protection

The employer relied on statutory provisions that typically vest copyright in works created ‘in the course of employment’.

However, the decision illustrates the limited scope of that protection:

• it applies only where the work is created within the employee’s defined duties
• it does not extend to broader or adjacent activities unless contractually captured
• it will not fill gaps where the employment relationship is informally defined or poorly documented.

The absence of an express IP assignment clause was therefore decisive.

Interaction with employee duties: loyalty, competition and disclosure

The case is notable for demonstrating that competitive conduct alone is not enough to establish employer ownership of the work.

In principle employees owe a duty of loyalty and must not actively compete in a manner that conflicts with their employment obligations however, the scope of that duty depends on the employee’s role, responsibilities and whether any fiduciary obligations arise.

General legal principles recognise that:

• all employees owe baseline duties of good faith and must not undermine their employer’s interests
• more onerous fiduciary duties arise only in specific circumstances (e.g. senior positions involving trust and discretion).

Accordingly, where an employee creates a competing product outside the defined scope of their duties and without misuse of confidential information, the legal analysis may focus primarily on ownership and contractual rights, rather than breach of duty.

Distinguishing between lawful preparation and wrongful competition

Canadian law draws a distinction between:

• permissible preparation to compete (e.g. developing ideas, setting up a business for post employment activity), and
• impermissible conduct, such as:
  • using confidential information
  • diverting business opportunities
  • exploiting the employer’s resources or client relationships.

Where employees cross into the latter category, liability may arise for:

• breach of fiduciary duty
• breach of confidence
• misuse of proprietary information.

However, in the present scenario, the absence of contractual restrictions and the limited scope of duties meant that these arguments were not sufficient to transfer ownership.

The central role of contractual drafting

The case underscores a key principle:

• in the absence of clear contractual provisions, courts will apply relatively narrow default rules that may favour the employee.

Employers seeking to mitigate risk must therefore ensure that employment agreements address:

• ownership of intellectual property (including future and derivative works)
• restrictions on outside business activities
• disclosure obligations relating to side ventures
• confidentiality and use of proprietary information.

Without these protections, employers may be left relying on general legal doctrines that are often insufficient in practice.

Practical implications for employers

The decision has wider relevance in a labour market where side businesses are increasingly common. Employees may develop commercially valuable assets outside formal job descriptions and the boundary between personal and professional activity is often blurred (particularly in knowledge-based roles).

Reliance on informal understandings of ‘loyalty’ is unlikely to provide adequate protection. A key risk is the emergence of direct competition from employee-developed products, particularly where those products are technologically adjacent to the employer’s core offering.

Labor reform on the right to disconnect

Mexico is progressing a significant labour reform to formally recognise a broader ‘right to digital disconnection’ for employees, extending beyond its current limited scope in telework arrangements.

What has changed

In March 2026, the Chamber of Deputies approved a bill to amend the Federal Labor Law to formally introduce a general right to digital disconnection.

The proposal has been sent to the Senate for further review and potential approval.

The reform would explicitly recognise employees’ right to disengage from work-related communications outside working hours, including:

• after the end of the working day
• during rest days
• during vacations and authorised leave.

Current position vs proposed reform

At present, Mexican law already recognises a right to disconnect, but only in a limited form for teleworkers.

The proposed reform would extend this protection more broadly across the workforce, effectively generalising the right beyond remote work arrangements.

Core employer obligations

If enacted, the reform would introduce new and more explicit obligations on employers.

Employers would be required to:

• guarantee employees’ right to disconnect outside working hours
• implement an internal digital disconnection policy applicable across the workforce
• align workplace practices, including communication and supervision, with the new framework.

The policy framework would need to reflect operational realities and be consistent with the nature of the business and working arrangements.

Limits and exceptions

The right is not absolute. Employers may contact employees outside working hours only in exceptional and justified circumstances. For example, in situations of force majeure or similar urgent events.

Practical compliance expectations

The proposed reforms imply a more structured approach to managing digital communications.

Employers are expected to review existing practices relating to after-hours communications (emails, messaging, calls), train managers and staff on the scope of the right and when exceptions may apply, document any justified out-of-hours contact to reduce legal risk and establish internal channels for employees to raise concerns about breaches.

Impact on working models

The reform is particularly relevant for organisations operating with remote or hybrid working arrangements, flexible working patterns or cross-border or time-zone-based teams.

It is likely to require adjustments to operational models, workload allocation and supervision practices.

Policy rationale

The reform is aimed at strengthening work-life balance and addressing the effects of constant connectivity in modern workplaces.

It seeks to ensure clearer boundaries between working time and personal time, reflecting broader international trends in employment law.

Why this matters

For employers, the proposal signals a shift toward more regulated management of employee availability and communication, Non-compliance could create labour risks, particularly if employees are expected to remain available outside contractual working hours. It also introduces a need for clearer governance around digital tools and communication expectations.

Practical considerations

Employers operating in Mexico may wish to:

• review policies on working hours, communications and availability
• assess how teams manage deadlines and cross-time-zone collaboration
• prepare a formal digital disconnection policy in advance of potential enactment
• train managers to avoid inadvertent breaches through routine communications.

Final pay on the final day – Rising enforcement of ‘Technical’ breaches

Recent Australian case law signals a clear shift in how courts approach the timing of termination payments- even short delays in final pay can result in penalties, including in circumstances previously treated as minor or administrative breaches.

This development has important implications for employers who rely on payroll cycles or award-based timing provisions when processing termination payments.

What is the issue?

In practice, many employers have historically paid termination entitlements:

• in the next payroll cycle, or
• within the seven-day timeframe commonly set out in modern awards.

However, a growing body of case law confirms that statutory obligations under the Fair Work Act 2009 (FW Act) may require payment on the actual date of termination, not later.

This creates a disconnect between Modern Award provisions (which may allow some delay), and statutory obligations (which can require immediate payment).

The key legal principle

The courts are increasingly reinforcing that certain termination payments must be made at or before the time employment ends, including:

• payment in lieu of notice
• accrued but unused annual leave
• redundancy pay (where applicable). 

Failure to meet these timing obligations can constitute a breach of the FW Act, even where the payments are ultimately made in full.

What do the cases show?

A leading example is the Federal Circuit and Family Court decision in Jewell v Magnium Australia Pty Ltd (No 2) (2025).

In that case:

• payment in lieu of notice and annual leave was made around 11–12 days after termination
• redundancy pay was made months later
• the total termination payments exceeded AUD 70,000
• the employer had not acted deliberately and took steps to correct the position.

Despite this:

• the court held that the delays breached the FW Act
• the employer was ordered to pay civil penalties (totalling AUD 18,600 in that case).

The court emphasised that the breach arose from carelessness and misunderstanding of legal obligations, rather than intentional misconduct, yet penalties were still imposed. 

A clear trend: penalties for ‘technical’ contraventions

Courts are increasingly willing to impose penalties even where:

• the breach involves only a short delay (e.g. a few days)
• the employee suffers little or no loss
• the employer has acted in good faith or corrected the error promptly.

In other words, timing breaches alone are sufficient to trigger liability.

This reflects a stricter enforcement approach to the National Employment Standards (NES) and related provisions of the FW Act.

Why this matters

This development is particularly significant because it challenges common employer assumptions:

• that payment within seven days (as permitted under some Modern Awards) is sufficient
• that payment in the next payroll run is acceptable
• that minor or inadvertent breaches will not attract penalties.

The courts have now made clear that statutory timing obligations prevail, and even ‘administrative’ non-compliance can result in financial consequences.

Key lessons for employers

1. Final pay may be due on the termination date
   Certain entitlements crystallise at the point of termination and should be paid immediately.
2. Modern Award provisions do not override statutory obligations
   Where there is a conflict, the FW Act (including NES entitlements) takes precedence.
3. Timing is as important as the amount
   Even if the correct amount is paid, paying it late can still constitute a breach.
4. Intention is not decisive
   Courts have imposed penalties even where breaches were inadvertent. based on misunderstanding and quickly remedied.
5. Exposure can extend to multiple breaches
   Separate components of final pay (e.g. notice, leave, redundancy) may each give rise to individual contraventions.

Practical next steps

Employers should consider taking proactive steps to reduce risk:

• review termination processes to ensure all statutory entitlements are ready for payment on the final day
• align termination dates with payroll capability, or consider using notice periods or garden leave where appropriate
• ensure HR, payroll, and legal teams understand the distinction between award timing and statutory obligations
• conduct audits of recent terminations to identify any systemic timing issues
• implement clear internal checklists for processing termination payments.

New trade secret protection regulations

China has introduced a significant update to its trade secret protection regime through the Regulations on the Protection of Trade Secrets, issued by the State Administration for Market

Regulation and effective from 1 June 2026.

The reforms represent a comprehensive modernisation of the framework and include several provisions with direct implications for employers’ employment practices and workforce management.

What has changed?

The Regulations refine and expand the rules governing:

• employee confidentiality obligations
• employer compliance and internal controls
• liability for misuse of trade secrets.

A key theme is a shift away from a contract-centric approach towards a broader, policy  and conduct based framework for confidentiality obligations.

Key employment-related reforms

1. Expanded scope of employee confidentiality obligations
   The Regulations confirm that employees and former employees are primary actors in trade secret protection and confidentiality obligations are not limited to written contracts or agreements.
   Instead, such obligations may arise from multiple sources, including:
   • express contractual commitments (e.g. employment contracts or NDAs)
   • the nature of the employment relationship and principles of good faith and business ethics
   • internal rules, policies, and employer-imposed confidentiality requirements that are clearly communicated.
   • This significantly broadens the legal basis on which employers can assert confidentiality obligations.
2. Greater emphasis on employer internal policies and management practices
   A key practical shift is that employers are no longer required to rely solely on contractual clauses to enforce trade secret protections; instead, enforcement will depend heavily on whether the employer has established clear internal confidentiality requirements and effectively communicated these to employees.
   This elevates the role of HR policies, employee handbooks, training and internal controls in demonstrating compliance and enforceability.
3. Extended liability for third parties
   The Regulations also address situations involving third parties. A third party may be liable for trade secret infringement where it knew or should have known that an employee or former employee breached confidentiality obligations.
   This reinforces the importance of managing information flows at and after termination.

Why this matters

The reforms reflect a broader shift in China’s regulatory approach:

• moving from formal contractual compliance to a more substantive, behaviour based assessment
• increasing expectations around internal governance and risk management
• strengthening enforcement against both employees and third parties.

For employers, the practical implication is that the quality of internal systems and controls is now as important as contractual documentation.

Key lessons for employers

1. Contracts alone are no longer sufficient
   While confidentiality clauses remain important, employers must ensure that obligations are also reinforced through:
   • policies
   • procedures
   • consistent communication.
2. Internal controls are critical to enforcement
   Employers will need to demonstrate that they have:
   • clearly defined trade secret protections
   • communicated expectations effectively
   • implemented reasonable confidentiality measures.
3. Evidence of communication becomes key
   In disputes, emphasis is likely to be placed on whether employees were aware of confidentiality obligations and properly informed through policies and training.

Practical next steps

Employers operating in China should consider:

• reviewing employment contracts to ensure alignment with broader regulatory expectations
• updating internal policies to clearly define confidential information and trade secret protections
• implementing or strengthening employee training and awareness programmes
• ensuring confidentiality obligations are effectively communicated to both current and departing employees
• reviewing onboarding and offboarding processes to manage risks associated with trade secret access
• assessing third party engagement practices to mitigate indirect liability risks.

Kerala State -  Proposed ‘Right to Disconnect’

India has joined a growing number of jurisdictions considering a formal ‘right to disconnect’, with the Indian state of Kerala introducing a draft bill aimed at regulating after hours work and employee availability.

While still at a proposal stage, the development reflects a broader global trend towards protecting employee wellbeing and limiting expectations of constant availability outside working hours.

What is the proposal?

The draft legislation seeks to introduce a statutory framework that would:

• recognise employees’ right to disconnect from work communications outside normal working hours
• limit employers’ ability to require or expect after-hours engagement
• establish safeguards against adverse treatment where employees choose not to engage outside working time.

The proposal aligns with similar developments in jurisdictions such as Europe and Australia, where regulators are increasingly focusing on work/life boundaries.

Key features of the bill

While the detailed provisions will continue to evolve, the core elements of the proposal include:

1. A formal right to disengage outside working hours
   Employees would have the right not to respond to work-related communications (e.g. emails, messages, calls) outside their normal working hours, except in defined circumstances.
2. Protection from retaliation
   Employers would be prevented from taking adverse action against employees who exercise their right not to respond outside working hours.
3. Employer obligations to regulate communication practices
   Organisations may be required to:
   • establish clear policies on after-hours communication
   • define when out of hours contact is appropriate
   • ensure expectations are communicated consistently across the workforce.
4. Limited exceptions
   The framework is expected to recognise practical exceptions, such as emergencies, roles requiring on call availability and operational exigencies. However, these exceptions would need to be clearly justified and proportionate.

Why this matters

Although the bill is not yet law, it reflects an important policy direction in India:

• increasing focus on employee wellbeing and mental health
• recognition of the challenges created by remote and hybrid working models
• growing expectation that employers take responsibility for managing digital boundaries.

For multinational employers, this is also part of a broader global shift, with similar rights either already in place or under consideration in multiple jurisdictions.

Key lessons for employers

1. ‘Always-on’ cultures are under scrutiny
   Expectations that employees remain available outside working hours are increasingly being challenged.
2. Policy clarity will be critical
   Ambiguous or informal expectations around after-hours communication may create risk.
3. Global consistency is becoming more complex
   Employers operating across jurisdictions will need to manage differing regulatory approaches to working time and availability.
4. Cultural change may be required
   Compliance is not just about policy, it may require changes in management practices, communication norms and performance expectations.

Practical next steps

Employers with operations in India (or globally) should consider:

• reviewing existing out-of-hours communication practices
• assessing whether managers or teams regularly expect after-hours responses
• developing or updating policies on availability and communication boundaries
• identifying roles where on-call or emergency availability is genuinely required
• training managers to align expectations with emerging best practice.

Uttar Pradesh updates Shops and Establishment Act

Uttar Pradesh has implemented significant amendments to its Shops and Commercial Establishments framework, introducing changes that both expand employee coverage and narrow the scope of mandatory registration requirements.

The reforms, introduced under the Uttar Pradesh Shops and Commercial Establishments (Amendment) Act, 2025, reflect a broader effort to modernise labour regulation for white collar employees while recalibrating compliance obligations for businesses.

What has changed?

The amendments introduce a number of important updates affecting:

• the scope of covered establishments
• the definition of employees
• registration thresholds
• working time rules and penalties.

A key structural shift is the move towards a threshold based applicability model, combined with broader inclusion of modern business types and workforce arrangements.

Key areas of reform

1. Higher registration threshold (narrower applicability)
   The Act now applies only to establishments employing 20 or more employees, compared to the previous regime, which covered all establishments regardless of size.
   This means that smaller businesses (fewer than 20 employees) are generally excluded from mandatory registration and compliance requirements, although the standards in the Act are still applicable, and regulatory focus is increasingly directed at larger employers.
   This represents a material shift in the regulatory approach, balancing employee protection with reduced compliance burdens for smaller enterprises.
2. Expanded definition of ‘commercial establishment’
   The definition of covered establishments has been significantly widened to include a broader range of modern service-sector businesses, such as:
   • medical practitioners and healthcare establishments
   • architects and professional services firms
   • service providers, including delivery-based and platform businesses.
   This reflects the evolving structure of the economy and ensures that newer business models fall within the regulatory framework where thresholds are met.
3. Broader definition of ‘employee’
   The scope of who qualifies as an employee has been expanded to include:
   • individuals engaged through outsourcing agencies
   • workers performing manual, skilled, technical, operational, or clerical roles.
   This expansion is particularly relevant for businesses relying on contracted or indirect labour models, increasing the likelihood that such workers are counted for coverage and compliance purposes.
4. Strengthened enforcement and penalties
   The amended regime reflects a clear shift towards stricter enforcement, including:
   • Increased penalties for non-compliance:
   • up to INR 2,000 for first offences
   • up to INR 10,000 for subsequent offences.
   Introduction of an ‘improvement notice’ mechanism, requiring inspectors to give employers a 15-day opportunity to rectify breaches before initiating prosecution (for certain offences).
   This balances stricter sanctions with a structured compliance process.
5. Additional changes affecting workforce management
   Other notable updates include expanded conditions for night work by women employees, with increased safeguards and amenities and additional employer obligations relating to workplace facilities and employee welfare.
   These changes reflect increased emphasis on employee protection alongside operational flexibility.

Why this matters

The reform reflects a dual policy objective:

• Reducing regulatory burden for smaller businesses.
• Extending protections and oversight for employees in larger establishments and modern sectors.

For employers, the key implication is a shift towards more targeted regulation and heightened enforcement expectations for in-scope businesses.

Key lessons for employers

1. Thresholds now determine compliance obligations
   Employers must monitor headcount carefully, as crossing the 20-employee threshold triggers full compliance requirements.
2. Workforce composition is more relevant
   Outsourced and indirect workers may now count towards employee thresholds and coverage.
3. Scope of covered activities is wider
   Businesses previously considered outside the framework (e.g. certain service providers) may now be included if thresholds are met.
4. Enforcement risk is increasing
   Higher penalties and clearer enforcement mechanisms signal a stronger compliance focus.
5. Flexibility is paired with accountability
   While working hours rules are more flexible, this is balanced by stricter oversight and penalties.

Practical next steps

Employers operating in Uttar Pradesh should consider:

• assessing whether they meet the 20 employee threshold for registration (although the basic provisions of the Act still apply)
• reviewing workforce structures, including outsourced and contract labour
• updating registration and compliance processes where newly in scope
• ensuring working hours and overtime practices align with revised limits
• reviewing policies related to night work, particularly for female employees
• strengthening compliance documentation and internal audit processes.

Proposal to introduce mandatory advance retrenchment notifications

Singapore’s Ministry of Manpower is considering whether to introduce a requirement for employers to provide advance notification of retrenchments, as part of a broader review of the Employment Act. 

Current position

Under the existing framework, employers with at least 10 employees are required to notify the Ministry of Manpower within five working days after informing employees of their retrenchment. 

The current regime does not include:

• any obligation to notify authorities before retrenchment decisions are implemented
• a requirement to consult employees before making redundancy decisions
• a statutory minimum notice period specific to redundancy situations
• a prescribed minimum severance entitlement.

In practice, employers follow non-binding guidance under tripartite advisories, which recommend severance payments based on length of service. 

Proposed direction of reform

The Ministry of Manpower is reviewing proposals that would require employers to provide notification before retrenchments take effect, rather than after employees have been informed. 

The aim of this potential change is to:

• provide earlier visibility of impending job losses
• enable affected employees to access job placement support and retraining before termination
• allow government agencies to deploy assistance in a more proactive manner.

This would represent a significant shift from the current position, which is primarily reactive. 

Policy considerations and consultation

The proposal is at a review stage and forms part of a wider reform programme. The Ministry has indicated that it will consult with tripartite partners, reflecting Singapore’s established approach of developing employment policy through consensus-based engagement. 

Why this matters

The review signals a broader trend towards strengthening employment protections in Singapore, particularly in the context of workforce restructuring and job displacement. 

For employers, the potential introduction of advance notification requirements would represent a shift towards greater transparency and earlier engagement with both regulators and employees.

Key lessons for employers

Employers should note the likely direction of travel and prepare for possible changes to retrenchment processes. Retrenchment exercises may become subject to earlier regulatory visibility, and internal planning timelines may need to accommodate advance notification requirements. There may also be increased expectations around workforce transition planning and employee support.

Customer harassment prevention becomes a statutory employer obligation

Japan is introducing a significant expansion of workplace harassment regulation by imposing mandatory obligations on employers to address ‘customer harassment’ (kasu hara).

The reform reflects a broader shift in labour law: protection is no longer confined to internal workplace conduct, but extends to interactions with third parties, including customers and business counterparts.

1. Legislative framework and timing
   The new obligations arise from:
   • amendments to the Comprehensive Labour Policy Act, and
   • a Ministry of Health, Labour and Welfare (MHLW) guideline issued in February 2026.
   The requirements will become effective on 1 October 2026 and will apply to all employers, irrespective of size or sector. This places customer harassment prevention on a similar statutory footing to existing obligations relating to power harassment and sexual harassment.
2. Definition of ‘customer harassment’
   The concept is defined using a three limb test. Conduct must:
   1. originate from a customer or equivalent third party
   2. exceed the bounds of socially acceptable behaviour
   3. adversely affect the employee’s working environment.
   All three elements must be satisfied.
   Importantly, the framework draws a clear distinction between:
   • legitimate complaints or requests (which remain permissible), and
   • conduct that is unreasonable, excessive, or abusive.
   The definition is therefore contextual and fact sensitive.
3. Scope: broad concept of ‘customer and others’
   The regime applies to a wide range of external actors, not limited to traditional customers.
   Relevant parties include:
   • purchasers and service users
   • business partners or counterparties
   • users of facilities and associated individuals
   • residents or persons connected to the business environment
   • prospective customers or persons with a commercial relationship.
   This reflects a deliberate move away from a narrow ‘consumer’ concept toward a broader third party interaction model.
4. Types of conduct captured
   The guidance identifies two principal categories of customer harassment:
   1. Unreasonable demands
      Examples include:
      • demands without legitimate basis
      • requests unrelated to the business
      • excessive or contractually unjustified requirements
      • demands that are clearly impossible to fulfil
      • unjustified claims for compensation.
   2. Conduct exceeding acceptable behaviour
      Although specific examples vary by context, the focus is on behaviour that is disproportionate, abusive, or disruptive to the work environment. 
      The framework also makes clear that customer harassment is not limited to face to face interactions, but extends to:
      • telephone communications
      • social media
      • other digital channels.
5. Nature of the employer obligation
   The reform does not simply recognise customer harassment, it imposes a positive duty on employers to implement preventive and responsive measures.
   Under the amended framework, employers must adopt employment management measures to ensure that such conduct does not create a harmful working environment.
   Although detailed requirements are contained in the MHLW guidelines, the overall structure aligns with Japan’s existing harassment compliance model, requiring:
   • policy development and internal communication
   • systems for consultation and reporting
   • appropriate action following incidents
   • measures to prevent recurrence 
   • this represents a shift toward a systems-based compliance obligation, rather than a purely reactive approach.
6. Policy rationale: extending duty of care
   The reform addresses a gap in the existing legal framework.
   Prior legislation primarily targeted harassment by supervisors (power harassment) and between employees (workplace harassment generally). Customer harassment, however, involves external actors outside the employer’s direct control. The new rules effectively extend the employer’s duty of care to include protection against third party conduct, recognising the operational reality of customer facing roles.
7. Compliance implications for employers
   The practical implications are significant, particularly for businesses with high levels of customer interaction.

Key challenges include:

• Defining acceptable customer behaviour
  Employers must operationalise a legal standard based on ‘social acceptability’, which inherently requires contextual judgment.
• Balancing commercial and employee-protection interests
  The framework implicitly rejects the traditional view that ‘the customer is always right’, requiring employers to take a more assertive stance against unreasonable behaviour.
• Integrating third-party risk into HR systems
  Compliance structures must now extend beyond employee conduct to include external interaction management.

Overall takeaway

The reform represents a material expansion of workplace protection law in Japan. At a conceptual level, it confirms that employers are responsible not only for regulating internal workplace conduct, but also for managing the impact of third party behaviour on employees.

For organisations particularly those operating in customer-facing sectors, the key risk is failing to translate this duty into clear, enforceable internal systems before the October 2026 implementation date.

Labour Law Reforms - Greater Flexibility on Working Time, Overtime and Notice Periods

Belgium has approved a significant package of labour law reforms which will impact how employers organise working time, structure contracts, and manage overtime.

Two Acts were approved by the House of Representatives on 30 April 2026, introducing changes across working time, night work, notice periods and voluntary overtime. These reforms are designed to modernise the labour market and increase flexibility for employers.

What is changing?

The legislation introduces several key developments:

• greater flexibility in working time arrangements
• reduced minimum working hours for part-time roles
• removal of the general ban on night work
• a cap on notice periods for new contracts
• expansion and simplification of voluntary overtime.

Taken together, these changes signal a shift towards a more flexible and employer responsive framework.

Key changes in more detail

1. More flexible working time frameworks
   Employers will be able to move away from listing every working schedule in their work rules. Instead, they can introduce a broader framework defining when work may be performed within the organisation.
   This framework must clearly set out:
   • days of work
   • daily time windows
   • minimum and maximum daily hours
   • normal and maximum weekly hours.

   This approach allows more flexibility, while still requiring clear boundaries to prevent overly broad or purely theoretical arrangements.

2. Greater flexibility for part-time work
   The minimum weekly working time for part-time employees will be reduced significantly — from one third to one tenth of a full-time schedule.
   This change is expected to:
   • enable more flexible staffing models
   • support businesses with fluctuating demand
   • increase opportunities for occasional or supplementary work.
3. Removal of the general ban on night work
   The longstanding prohibition on night work (generally between 20:00 and 00:60) will be abolished.
   While this creates greater flexibility, sector specific rules will still apply in certain industries, particularly in distribution and e-commerce, where additional protections and premiums may remain in place.
4. Cap on notice periods
   For new employment contracts, notice periods will be limited to a maximum of 52 weeks essentially capping off the progressive increase in notice periods at 17 years’ service.
   This represents a significant shift, particularly for long serving employees, where notice periods could previously exceed one year. The reform is intended to improve predictability and manage termination costs for employers. The change is scheduled to take effect from 1 June 2026.
5. Expansion of voluntary overtime
   The voluntary overtime system will be relaxed and expanded to provide greater flexibility.
   Reforms include an increase in the number of voluntary overtime hours available, simplification of the system and a reduced administrative burden.
   The overall aim is to allow employers to respond more easily to peaks in workload while offering additional earning opportunities for employees. 
6. Reintroduction of probationary periods
   In 2024 Belgium abolished probationary periods in employment contracts. Scheduled for 1 June 2026 probationary periods will be reintroduced allowing the parties to terminate with only one weeks’ notice in the first six months of employment.

Practical next steps

Employers with operations in Belgium should consider:

• reviewing and updating work rules to incorporate working time frameworks
• assessing part-time arrangements and opportunities for greater flexibility
• preparing for the introduction of night work where relevant
• reviewing employment contracts in light of the new notice period cap
• updating policies and procedures for voluntary overtime.

GDPR access rights - German Federal Court clarifies when business data becomes ’personal data’

A recent decision of the German Federal Court of Justice (FCJ) provides important clarification on the boundary between business data and personal data under the GDPR, particularly in the context of data subject access requests (DSARs) under Article 15.

The ruling represents a judicial attempt to address the growing use of DSARs as a litigation tool and to narrow what qualifies as ‘personal data’ for disclosure purposes.

1. Background: expansion of DSARs and legal uncertainty
   In recent years, organisations have experienced a significant increase in DSARs, often seeking broad categories of business records, and being used in support of pre litigation strategies.
   This has created practical challenges around identifying what information actually qualifies as “personal data” and therefore falls within the scope of disclosure obligations.
   The absence of a clear boundary has led to a tendency toward over-expansive interpretations, particularly at lower court level.
2. The core legal issue: what qualifies as ‘personal data’?
   The FCJ focused on the fundamental definition in Article 4 (1) GDPR - information must relate to an identified or identifiable natural person.
   The key clarification is that it is not sufficient for data merely to have an impact on an individual instead, the data itself must be linked to the person in a way that enables identification, based on its content, purpose or effect.
   This introduces a more structured “identifiability” test, tightening the threshold for classification as personal data.
3. Case context: insurance premium information
   The dispute arose where a policyholder requested access to premium history, timing and amount of premium changes and the tariff adjustments and contract developments.
   These requests were framed as a DSAR under Article 15 GDPR.  A lower court accepted a broad interpretation, treating this information as personal data. However, the FCJ rejected this approach and overturned that reasoning.
4. Distinguishing business data from personal data
   The court drew a critical distinction between:
   • data about a product or service, and
   • data about an individual.
   Applying this distinction, the FCJ held information such as pricing structures or tariff adjustments does not qualify as personal data where it does not identify a specific individual.
   Even if such data affects a person (e.g. impacts premiums), it remains primarily business or product-related information, unless it is sufficiently linked to an identifiable individual.
   This is a significant narrowing of scope.
5. Treatment of communications and documents
   The judgment also differentiates between documents as a whole, and the personal data contained within them.
   The court indicated that not every internal or external communication automatically qualifies as personal data and only the elements that actually relate to an identifiable individual fall within GDPR access rights.
   This reinforces the principle that Article 15 GDPR is concerned with data, not documents per se.
6. Rejection of ‘impact-based’ interpretations
   A key aspect of the ruling is the rejection of a previously emerging approach under which data was considered personal simply because it had effects on a data subject.
   The FCJ expressly rejected this, emphasising that mere economic or factual impact is insufficient there must be a direct informational relationship to the individual.
   This marks a deliberate move away from expansive interpretations that had effectively blurred the line between business records and personal information.
7. Implications for DSAR strategy and litigation
   The decision has clear practical implications:
   • Limits on DSAR scope
     Organisations are not required to disclose: general business or pricing information or documents that do not contain identifiable personal data.
     This curtails attempts to use GDPR rights as a substitute for disclosure in litigation.
   • Reduced risk of overproduction
     The ruling supports a more targeted approach to data identification, allowing organisations to distinguish personal data (disclosable), from operational or commercial data (not disclosable under GDPR).
   • Greater legal certainty
     By clarifying the identifiability threshold, the decision provides a more workable framework for:
     • internal data mapping
     • DSAR response processes
     • disputes over scope.
8. Broader conceptual takeaway
   The judgment reinforces a fundamental principle of GDPR that personal data is defined by its relationship to the individual, not by its business relevance or downstream effects.
   In practical terms, business data remains outside GDPR scope unless it can be directly tied to an identifiable person and GDPR access rights are not a general right to obtain business information.

Overall takeaway

This decision represents a refinement rather than an expansion of GDPR rights.

It signals a judicial effort to contain the scope of DSARs, and prevent their use as a broad discovery mechanism.

For employers and HR/legal functions (particularly in data rich environments), the key message is classification of data must be based on a strict identifiability analysis, rather than a broad or impact based approach.

Paid leave after termination – New limits on employer discretion

A recent decision by the German Federal Labor Court introduces important limits on how employers manage employees during the notice period following termination.

It has long been common practice in Germany to place employees on paid leave (garden leave) once notice has been given. However, this new ruling clarifies that employers cannot rely on broad contractual clauses to do so without justification.

What happened?

After termination, many employers seek to remove employees from active duties,often for reasons such as protecting business relationships, managing risk, or maintaining workplace stability. Paid leave until the end of the notice period has been a widely used approach.

In its March 2026 decision, the German Federal Labor Court held that blanket contractual clauses allowing employers to place employees on paid leave at their sole discretion are unenforceable.

The court found that such clauses fail to properly consider the employee’s legitimate interest in continuing to work during the notice period and therefore place the employee at an unreasonable disadvantage.

Why this matters

The decision significantly reshapes how employers can approach garden leave:

• employers can no longer rely on standard “one-size-fits-all” clauses to remove employees from work
• employees have a recognised interest in continuing to perform their role, even after notice is given
• any decision to place an employee on paid leave must now involve a case-by-case assessment.

The practical effect is that garden leave is no longer simply an administrative step — it must be justified and proportionate.

Key lessons for employers

1. Blanket clauses are no longer sufficient
   Contractual provisions allowing paid leave at the employer’s discretion, without reasons or safeguards, are likely to be invalid.
2. A balancing of interests is required
   Employers must consider:
   • their own business interests (e.g. confidentiality, client relationships)
   • the employee’s interest in continuing to work.
   Only where the employer’s interests outweigh those of the employee will paid leave be justified.
3. Case-by-case assessment is essential
   Decisions must be based on the specific circumstances, rather than applied automatically on termination.
4. Contract drafting needs to evolve
   More carefully drafted clauses incorporating objective grounds, proportionality, and employee protections, may be more likely to withstand scrutiny, although the full scope will depend on further case law.

Practical next steps

Employers with German operations should consider:

• reviewing employment contracts to identify and revise broad paid leave clauses
• introducing clearer criteria for when paid leave may be applied
• ensuring decisions to place employees on leave are documented and justified
• training HR teams and managers on the need for a case-by-case approach.

Final thought

Garden leave is no longer purely a matter of employer discretion, it requires justification and balance. Employers who adapt their contracts and practices now will be better placed to manage risk and maintain flexibility within the evolving German employment law framework.

German court rejects blanket limits on consecutive vacation: Key takeaways for employers

A recent decision by the Thuringian Higher Labor Court has significant implications for German employers who rely on internal rules limiting the length of employee vacations. The court held that employers may not impose blanket restrictions, such as a maximum of two consecutive weeks, on annual leave. Instead, each request must be assessed individually and justified with concrete operational reasons.

What the Law requires: Consecutive leave is the default

German statutory vacation law presumes that annual leave should be granted as a continuous, uninterrupted period. Splitting vacation into shorter segments is only permissible in exceptional cases, such as:

• compelling operational needs, or
• personal reasons attributable to the employee.

Despite this, many employers have long applied internal practices limiting consecutive leave, practices the court has now made clear are unlawful.

The Case: Employee request for three-plus weeks of eave

The dispute arose when an employee requested vacation from 1 March to 25 March 2026, totalling slightly more than three weeks. The employer rejected the request, citing an internal rule that no employee could take more than two consecutive weeks of vacation.

Two legal proceedings followed:

• Main proceedings – The employer was ordered to grant the full requested leave.
• Preliminary injunction – Because the vacation start date was imminent and compliance was uncertain, the employee sought urgent relief.

In the injunction proceedings, the court ordered the employer to grant leave from 3 March to 25 March 2026. The first two days (1–2 March) were excluded because the employee either had no work obligation or was unfit for work due to illness, and vacation cannot be granted retroactively.

Why the employer’s policy failed

The court emphasised that general references to staffing shortages or ’company practice’ are not enough to deny a specific vacation request. Employers must provide specific, case by case operational reasons.

Examples of legitimate grounds for refusal may include:

• concrete understaffing in a particular role
• lack of qualified replacement personnel
• overlapping approved vacation requests.

However, rigid rules such as no more than two consecutive weeks’ do not meet legal requirements and cannot justify rejecting an employee’s request.

Implications for employers

This ruling serves as a clear reminder that:

• vacation policies must align with statutory requirements, not internal convenience
• case by case assessment is mandatory; blanket rules are unlawful
• operational reasons must be concrete and demonstrable, not hypothetical or generalised
• employees may seek preliminary injunctions if vacation disputes arise close to the planned leave period.

Employers should review their vacation policies and manager training to ensure compliance and reduce litigation risk.

Auto Enrolment Exemption – Employers Required to Act

As Ireland’s auto enrolment pension regime beds in, employers are now facing direct regulatory engagement where their existing pension arrangements do not meet the required standards.

Recent developments confirm that the National Automatic Enrolment Retirement Savings Authority (NAERSA) has begun contacting employers whose pension schemes fail to meet the minimum criteria required to remain outside the State system (My Future Fund).

What is happening?

Since 1 January 2026, new minimum contribution standards apply to workplace pension schemes that employers rely on to exempt employees from auto enrolment.

NAERSA has adopted a staged approach to enforcement:

1. It first reviewed payroll data using a 13 week look back period from January 2026.
2. It has now started contacting employers where contributions fall below the required levels.
3. Employers are being asked to explain how they intend to address any shortfall.

This marks the transition from preparatory phase to active compliance monitoring.

What are the minimum standards?

To qualify for exemption from auto enrolment, an employer’s existing pension scheme must meet specific thresholds.

For defined contribution schemes and PRSAs:

• Minimum employer contribution:
  • at least €1,200 per year, or
  • 1.5% of gross salary (whichever is lower).
• Minimum total contribution (employer + employee):
  • at least €2,800 per year, or
  • 3.5% of gross salary (whichever is lower).

For defined benefit schemes:

• the employee must be entitled to accrue a long service benefit under the scheme rules.

If these thresholds are not met, employees will fall within the scope of auto enrolment, regardless of any existing pension arrangement.

Why this matters

The key risk emerging from the current phase of NAERSA engagement is dual pension obligations.

Where a scheme does not meet the standards employees may be automatically enrolled into the State system and employers may be required to contribute to both their existing pension scheme, and the State auto enrolment scheme.

This could result in duplicated contribution costs, at least on a temporary basis while issues are resolved.

Crucially, while NAERSA has indicated that it will engage with employers and allow time to rectify issues, formal notifications may follow if compliance is not achieved.

Key lessons for employers

1. Existing pension arrangements are not automatically compliant
   Many employers assumed that having any pension scheme in place would be sufficient. That is no longer the case, schemes must now meet defined minimum contribution thresholds.
2. Compliance is being actively monitored
   The use of payroll data and proactive outreach shows a clear shift to real-time regulatory oversight.
3. Financial exposure can increase quickly
   Failure to meet the standards may trigger auto enrolment contributions on top of existing provision.
4. Engagement with the regulator is critical
   Employers contacted by NAERSA are expected to respond and set out how they will address any deficiencies.

Practical next steps

Employers should consider taking immediate action to:

• assess current pension contribution levels against the new minimum standards
• identify any groups of employees who may fall below those thresholds
• model the potential cost impact of auto enrolment, including the risk of dual contributions
• review whether to adjust existing schemes to meet exemption criteria
• engage with advisors and, where relevant, NAERSA, to agree a compliance plan.

Remote work and occupational health and safety: New employer obligations

Recent legislative developments have introduced enhanced occupational health and safety obligations for employers in relation to remote (or ‘smart) working arrangements.

What has changed

New rules strengthen the application of health and safety legislation to remote work by clarifying and expanding employers’ responsibilities.

Employers are now required to provide remote workers and employee health and safety representatives with annual written information setting out:

• general risks associated with remote work
• specific risks linked to the tasks performed outside the employer’s premises.

This obligation is reinforced by a formal sanctioning framework, meaning that non-compliance may result in penalties under occupational health and safety legislation.

Extension of health and safety duties beyond the workplace

The reforms confirm that employers’ health and safety obligations extend to work carried out in locations outside the employer’s direct control, including employees’ homes. 

Employers must therefore ensure compliance with applicable safety requirements even where the physical environment is not managed by the organisation.

At the same time, employees retain an obligation to cooperate with the employer’s preventive and protective measures.

Greater focus on remote-work-specific risks

The updated framework places particular emphasis on risks that are more prevalent in remote working environments.

These include risks linked to the use of display screen equipment, such as:

• visual strain
• postural issues
• physical fatigue
• mental fatigue.

The explicit inclusion of these risks signals a shift towards a more tailored approach to occupational health and safety for remote work.

Strengthening existing framework

Although employers were already required to protect the health and safety of remote workers, previous rules lacked effective enforcement mechanisms.

The new provisions are designed to strengthen the practical application of these obligations by:

• clarifying the content of employer duties
• introducing consequences for non-compliance
• reinforcing the importance of structured risk communication.

Why this matters

The reforms reflect a broader recognition that remote work requires a distinct occupational health and safety approach.

Employers are expected to actively identify, assess and communicate risks associated with work carried out outside traditional workplaces

This represents a shift from a purely workplace-based safety model to one that covers a wider range of working environments

Key lessons for employers

Employers must ensure that remote workers receive clear, documented information about health and safety risks on at least an annual basis.

Risk assessment processes need to be adapted to account for work performed outside the employer’s premises. There is increased emphasis on documentation and evidence of compliance and therefore Health and safety frameworks should specifically address risks linked to remote working conditions, particularly display screen work.

Practical considerations

Employers may wish to review and update remote working policies to ensure they reflect the new requirements. Processes should be implemented to deliver and record annual risk information to remote workers, health and safety training and guidance should be tailored to remote working environments, and organisations should ensure that responsibilities are clearly defined between employer obligations and employee cooperation.

Proposed limitation on compensation for statutory severance payments

The Dutch government has proposed a significant reform to its system of compensating employers for statutory severance payments (the transitievergoeding) following long-term employee illness.

If implemented, the change would represent a notable shift in how termination costs are allocated between employers and the state.

What is the current position?

Under the current framework:

• employers must pay a statutory severance payment where employment is terminated
• in cases of dismissal following two years of illness, employers can reclaim this cost from the Dutch Labour Office (UWV)
• importantly, this compensation is currently available to all employers, regardless of size.

This system has been designed to mitigate the financial impact of long-term sickness dismissals.

What is being proposed?

The government has proposed to limit access to this compensation scheme:

• compensation for statutory severance payments would be restricted to small employers only
• medium-sized and large employers would no longer be eligible for reimbursement.

The policy rationale is that larger employers are sufficiently financially robust to absorb these costs without public support.

How will employer size be assessed?

Employer size (small, medium, or large) will be determined on an annual basis and assessed according to the calendar year in question. This introduces a dynamic element, as employers may move between categories over time.

Timing and legislative status

The proposal is currently under consideration by both chambers of the Dutch legislature, If adopted, the changes are intended to take effect from 1 July 2026. Transitional rules are expected to apply where the two-year sickness period ends before that date.

Potential impact on employment law principles

The proposal may have wider implications beyond cost allocation, particularly in relation to the ‘Xella standard’ established in Dutch case law.

Under this principle employers are generally required to cooperate with termination of a ‘dormant’ employment relationship. This is typically where an employee has been sick for two years and salary obligations have ended. The obligation is linked to the fact that employers can recover the statutory severance cost from the state.

If compensation is no longer available to medium and large employers, the underlying justification for this obligation may weaken. It is unclear whether courts will continue to apply the same standard and this creates a degree of legal uncertainty pending further developments.

Why this matters

The proposed reform reflects a broader policy trend:

• targeting public compensation measures towards smaller businesses
• increasing expectations that larger employers absorb statutory employment costs.

For employers, the practical effect could be a material increase in termination costs in long-term sickness cases.

Key lessons for employers

1. Cost exposure may increase significantly
   Medium and large employers may need to fund statutory severance payments themselves in relevant cases.
2. Financial planning assumptions may need updating
   Existing cost models that assume reimbursement from UWV may no longer be valid.
3. Legal obligations could evolve
   Changes to compensation rules may influence how courts interpret employer obligations under existing case law.
4. Employer size classification matters
   Annual reassessment of employer size introduces potential variability in eligibility.

Practical next steps

Employers operating in the Netherlands should consider:

• reviewing termination cost assumptions, particularly for long-term sickness scenarios
• assessing whether they are likely to fall within the ‘small employer’ category
• monitoring legislative developments closely ahead of the proposed July 2026 implementation
• considering the potential impact on handling dormant employment relationships
• updating internal policies and financial reserves where appropriate.

Final thought

State-backed cost mitigation mechanisms are increasingly being targeted towards smaller employers, with larger organisations expected to absorb greater statutory employment costs.

Conditional job offers: contractual risk and the importance of drafting clarity

Recent appellate authority confirms that a job offer expressed to be “’subject to’ conditions does not necessarily prevent the formation of a binding contract of employment. The legal effect of such wording depends on how those conditions are properly characterised and interpreted in context.

Core legal issue: when does a contract arise?

The key question is whether the stated conditions operate as:

• conditions precedent (preventing a contract from coming into existence unless and until satisfied); or
• conditions subsequent (allowing a contract to exist upon acceptance but enabling termination if the conditions are not fulfilled).

This distinction is determinative. If conditions are precedent, an employer may withdraw the offer without contractual liability. If they are subsequent, withdrawal is treated as termination of an existing contract, requiring compliance with notice obligations.

Case analysis

In the relevant case, a candidate was offered a project manager role, with a defined start date and detailed terms including salary, benefits, working hours, and job description. The offer was expressed to be subject to:

• satisfactory references
• a right to work check
• successful completion of a six month probation period.

The candidate accepted the offer by email and began the onboarding process, providing documentation and completing pre employment forms. The employer also undertook preparatory steps, including arrangements for first-day access.

Shortly before the agreed start date, the employer withdrew the offer for business reasons unrelated to the candidate. This triggered proceedings for breach of contract.

Tribunal vs appellate approach

At first instance, the Employment Tribunal treated the conditions as precedent, concluding that key conditions (references and right-to-work checks) had not yet been fully satisfied and therefore no binding contract had been formed.

On that basis, the withdrawal was treated as non-contractual.

The Employment Appeal Tribunal rejected this analysis and adopted a fundamentally different approach:

• the conditions were properly characterised as conditions subsequent
• the contract came into existence upon acceptance of the offer
• the employer did not have an unrestricted right to withdraw the offer after acceptance.

Factors supporting contract formation

The appellate tribunal emphasised that the correct approach is one of contractual construction based on the substance of the arrangements, not the mere use of the words ‘subject to’.

The following elements were decisive:

The offer letter contained all essential terms required for a binding contract (start date, remuneration, role, and benefits).

The parties behaved consistently with an existing contractual relationship, including onboarding activity and operational preparation.

Supporting documentation (e.g. reference requests) was framed on the basis that employment could be terminated if conditions were not satisfied, rather than stating that no contract existed until those conditions were met.

One of the conditions a probationary period was inherently incapable of operating before employment commenced, indicating that it could only function post contract formation. 

Importantly, all three conditions were drafted together without distinction, which led the tribunal to interpret them uniformly as conditions subsequent.

Consequence: breach of contract and implied notice

Having determined that a contract existed, the withdrawal of the offer amounted to termination of employment.

The absence of any express notice provision required the tribunal to imply a term that the contract could only be terminated on reasonable notice. 

In assessing reasonableness, factors included:

• the seniority of the role
• the length and nature of the recruitment process
• the level of reliance placed on the offer (including relocation arrangements).

On the facts, three months’ notice was held to be reasonable.

Key technical takeaways

1. ‘Subject to’ wording is not determinative
   The legal effect of conditions depends on how they operate in substance, not how they are labelled.
2. Conditional offers can give rise to immediate contractual obligations
   Acceptance of an offer containing sufficiently certain terms may create a binding contract even if conditions remain outstanding.
3. Pre-employment checks are frequently treated as conditions subsequent
   This is particularly likely where they are drafted alongside obligations (such as probation) that clearly operate after commencement.
4. The absence of a notice clause is a material risk
   Where no express notice provision exists, tribunals will imply a term requiring reasonable notice, which may exceed statutory minimums.
5. Conduct during onboarding is evidentially significant
   Steps taken by the employer and candidate prior to the start date may reinforce the conclusion that a contract has already been formed.

Practical implications

Employers seeking to retain flexibility at the pre-employment stage must ensure that documentation clearly and consistently reflects their intended legal position.

In particular, if the intention is that no contract arises until specified conditions are satisfied, this must be stated expressly and supported by consistent language across all recruitment materials and processes.

Fair work agency – What employers need to know

The Fair Work Agency was launched on 7 April 2026 and represents a significant shift in how employment rights are enforced.

The agency is intended to consolidate and strengthen enforcement powers, moving towards a more centralised and proactive regulatory model for workplace compliance.

What is the fair work agency?

The fair work agency brings together key enforcement functions currently carried out by multiple bodies.

Its remit includes oversight of:

• National Minimum Wage enforcement
• Statutory sick pay compliance
• Holiday pay and working time rights
• Agency worker protections
• Modern slavery and labour exploitation (in some areas).

The aim is to create a single, visible enforcement authority with increased powers to investigate and act on non-compliance.

Why is this changing?

The UK government has identified that the current system is:

• fragmented, with multiple enforcement bodies
• sometimes reactive rather than proactive
• perceived as lacking sufficient deterrence against non-compliance.

The Fair Work Agency is designed to address these gaps by improving coordination between regulators, increasing enforcement activity and enhancing worker protection through more robust oversight.

Key features of the new model

While the final structure is still developing, several core themes are emerging:

1. Centralised enforcement
   The FWA will act as a single enforcement authority, reducing fragmentation and providing a clearer point of contact for both employers and employees.
2. Increased investigatory powers
   The agency is expected to have enhanced powers to investigate suspected breaches, including the ability to act without waiting for individual complaints in certain cases.
3. Greater focus on proactive compliance
   Rather than relying solely on employee complaints, the FWA is likely to adopt a more risk-based and proactive approach, targeting sectors or employers where non-compliance risks are highest.
4. Stronger penalties and sanctions
   The new regime is expected to reinforce existing penalties and potentially increase financial and reputational consequences for non-compliance.
5. Broader scope of enforcement
   By combining responsibilities, the FWA will be able to consider compliance holistically across multiple employment rights, rather than in isolation.

Why this matters

The introduction of the Fair Work Agency signals a clear policy direction. A move towards more active enforcement of employment rights, greater scrutiny of employer practices and increased expectation that employers demonstrate systematic compliance, not just reactive responses.

For employers, this means that compliance failures are more likely to be identified earlier, investigated more thoroughly and subject to coordinated enforcement action.

Key lessons for employers

1. Enforcement risk is increasing
   Employers should expect a higher likelihood of investigation, particularly in areas such as pay, working time, and statutory entitlements.
2. Compliance needs to be demonstrable
   It will not be sufficient to have policies in place, employers must be able to show that those policies are effectively implemented in practice.
3. Cross-cutting issues will be scrutinised
   The FWA’s integrated approach means that issues such as pay, working time, and worker status may be examined together.
4. Governance and oversight will be key
   Senior management involvement in compliance frameworks will become increasingly important.

Practical next steps

Employers should consider preparing for the new regime by:

• reviewing compliance with core statutory obligations, including minimum wage, holiday pay, and sick pay
• auditing payroll systems and processes to ensure accuracy
• identifying higher-risk areas (e.g. casual workers, complex pay structures, or variable hours)
• strengthening record keeping and documentation practices
• ensuring clear accountability for compliance within the organisation.

Final thought

The creation of the Fair Work Agency represents a broader shift in the UK employment landscape: From fragmented and reactive enforcement towards coordinated, proactive regulation.

Employers who take early steps to review and strengthen their compliance frameworks will be better positioned to manage risk as enforcement becomes more centralised and robust.

Holiday pay compliance becomes an evidential (and criminal) issue under new record keeping duty

The UK’s new holiday pay reforms fundamentally change how employers must approach compliance.

From 6 April 2026, employers are no longer simply required to get holiday pay right, they must be able to prove it with adequate records, failing which there is potential criminal liability. 

This represents a notable shift from a substantive compliance obligation to an evidence-based regulatory framework.

Core change: statutory duty to keep ‘adequate’ records

The new rules introduce a legal obligation to maintain records demonstrating compliance with statutory holiday entitlement, holiday taken and the calculation and payment of holiday pay. 

The obligation applies universally across the workforce, including irregular hours workers and part-year workers. There is no prescribed format but records must be sufficiently detailed to demonstrate compliance.

What employers must be able to demonstrate

The evidential burden is relatively high. Employers must be able to prove that they have:

• correctly calculated holiday entitlement (including more complex categories of workers)
• correctly calculated and paid holiday pay
• properly handled: 
  • carry-over of holiday, and
  • payments on termination.

This goes beyond high-level records and requires traceability of calculations.

Increased complexity of holiday pay calculations

A key driver of risk is the evolving definition of holiday pay which must be based on normal wages that include variable pay components such as regular commissions and overtime.

As a result, payroll processes must reflect a more complex ‘normal remuneration’ test, and employers must retain evidence of how that test was applied.

Retention and format requirements

The legislation imposes clear (but flexible) requirements:

• records must be retained for six years
• they may be kept in any format the employer reasonably decides.

Enforcement and legal risk: shift to criminal liability

One of the most significant aspects of the reform is the change in risk profile. Historically, holiday pay issues primarily gave rise to civil claims (e.g. unlawful deduction from wages), however under the new regime a failure to maintain adequate records becomes a criminal offence, with potential fines. Enforcement will sit with the Fair Work Agency, which is expected to inspect records, investigate compliance and impose penalties for underpayment.

Compliance implication: ‘evidence over assumption’

It is no longer sufficient to assume compliance, employers must be able to prove it. This means payroll outputs alone are insufficient employers need end-to-end audit trails, covering leave entitlement calculation, eave taken, pay calculation, and the payment that was made.

Practical actions recommended

Areas of focus for employers should include:

• audit holiday pay calculations, particularly for complex worker categories
• review treatment of variable pay elements in holiday pay calculations (such as commissions, overtime etc)  
• ensure systems can evidence calculations, not just perform them
• review contracts and policies to align with updated rules.

Broader trend: evidential compliance in employment law

This reform reflects a wider shift in UK employment regulation moving from principles-based compliance to documented, auditable compliance frameworks. It mirrors developments in other areas (e.g. minimum wage, working time, and right-to-work checks), where record keeping is integral to legal compliance.

Overall takeaway

Holiday pay compliance is now an evidential obligation backed by criminal enforcement risk

For employers the practical implication is clear, systems, not just policies, must stand up to scrutiny and an absence of records may be treated as non-compliance, regardless of actual payment accuracy.

Right to work checks expansion

The UK government is moving towards a significant expansion of the right to work regime, representing a structural shift from a model focused on employment to one based on broader engagement of labour.

The direction of travel is now clear, even though full legislative implementation is pending.

1. Expansion of scope: from employment to wider ‘engagement’
   The central change is the extension of right to work obligations beyond traditional employment relationships.
   Historically, the statutory duty has been tied to employment contracts. The developing framework will instead apply to a wider category of individuals engaged to perform work, including:
   • workers engaged under non employment contracts
   • self employed contractors performing services forming part of the organisation’s business
   • non employee zero hours and casual workers
   • partners or members of Limited Liability Partnerships
   • individuals engaged via subcontracting arrangements or digital platforms This reflects a policy objective to close perceived gaps in coverage, particularly within gig economy and flexible workforce models where individuals may fall outside the traditional definition of ‘employee’.
2. Sponsor licence obligations: immediate tightening
   irrespective of pending legislation, sponsor guidance updates introduced in April 2026 have already expanded compliance expectations.
   Under the revised guidance:
   • sponsor licence holders must verify the right to work of any worker they sponsor, employ or directly engage prior to commencement
   • this obligation applies even where the individual is not a direct employee.
   Although the term ‘directly engage’ is not formally defined, it is clearly intended to extend beyond employment relationships and encompass a wider category of working arrangements.
   The practical effect is that, in advance of legislative reform, sponsors are already expected to adopt a broader interpretation of their compliance obligations.
3. Timing: October 2026 as the anticipated implementation point
   The expansion is expected to be implemented through secondary legislation and revised codes of practice, with a target commencement date of 1 October 2026. 
   While not yet formally in force, multiple government publications and consultations indicate:
   • a consistent implementation timetable
   • application to both new engagements and ongoing right to work checks from that date
   • a broader ’illegal workin’ regime underpinning the expanded obligations.
   As such, employers should treat the changes as imminent rather than speculative.
4. Conceptual shift: ‘employer’ vs ‘engager’
   The reforms represent more than a technical extension, they reflect a conceptual shift in how responsibility is allocated.
   The existing model is binary. If the individual is an employee a check is required, if the individual is not an employee they generally outside the regime. The new model focuses on whether an organisation derives benefit from labour, regardless of the legal classification of the relationship.
   This creates a broader category of responsible entities (effectively ‘engagers’) and aligns compliance with modern workforce structures involving:
   • outsourced service provision
   • supply chains
   • flexible or contingent labour models.
5. Interaction with digital status and evolving verification methods
   The proposed framework also operates alongside a continued transition to digital immigration status (eVisas) and diversified verification methods.
   Draft guidance indicates that employers may satisfy right to work obligations through a combination of:
   • manual document checks
   • Home Office online checking services
   • certified Digital Verification Services (DVS).
   This reinforces a trend towards a more technology-enabled compliance model, but with multiple permissible routes depending on worker status.
6. Practical compliance challenges
   The expansion raises a number of technical and operational issues for employers:
   • Determining scope
     Organisations must identify which categories of individuals fall within the expanded concept of ‘engagement’, which may be unclear in borderline scenarios (e.g. consultants, agency workers, platform-based relationships).
   • Absence of statutory ‘safe harbour’ for non-employment relationships
     Existing statutory protections (i.e. the ‘statutory excuse’) are designed around employment relationships. The extension of obligations beyond employment raises questions about how this defence will operate in practice for non-employees.
   • Contractual risk allocation
     Where labour is supplied through third parties, organisations will need to reassess:
     • warranties and indemnities in supply agreements
     • responsibility for carrying out checks
     • audit and compliance rights within the supply chain.
7. Immediate actions (based on emerging guidance)
   Although legislative detail is still evolving, the current guidance supports a number of preparatory steps:
   • mapping all categories of individuals engaged by the business (not limited to employees)
   • reviewing existing right to work processes against wider engagement models
   • training hiring and operational teams on the broadened scope of checks
   • monitoring further Home Office guidance and consultation outcomes
   • assessing potential reliance on digital verification tools and services.