European Employers Face Renewed Uncertainty Amid Looming Compliance Deadlines and U.S. Policy Shifts, Littler Survey Shows

(November 19, 2025) – With critical regulatory deadlines looming in Europe and U.S. policy shifts sowing widespread confusion, European employers face new challenges in managing key workplace issues—from artificial intelligence (AI) usage and inclusion, equity and diversity (IE&D) programmes to pay transparency and in-office work policies.

That’s the topline takeaway from the 2025 European Employer Survey Report, released today by Littler, the world’s largest employment and labour law practice representing management. The eighth annual survey was completed by more than 400 human resources executives, business leaders and in-house lawyers from across Europe, 64% of whom hold C-suite or leadership positions.

Regulatory Uncertainty Persists as Compliance Deadlines Loom

Next year, key provisions of the European Union (EU) AI Act impacting employers go into effect, along with new obligations under the EU Pay Transparency Directive (PTD). Despite these major regulatory changes on the horizon, the survey data shows that European employers may face readiness challenges.

For instance, just 18% of respondents say their organisations are very prepared to comply with the EU AI Act, while 20% indicate they are not at all prepared—the latter matching the proportion who said the same in Littler’s 2024 survey.

“Our survey suggests that there is currently a lack of preparedness for the EU AI Act, which is a concern given the scale of the law’s compliance obligations and the significant penalties for non-compliance,” said Deborah Margolis, Littler Senior Counsel in the U.K. “It’s more critical than ever that businesses identify their obligations, audit their current exposure, conduct training and assign a cross-functional task force to oversee these efforts.”

Employers also showed limited progress when it comes to preparing for the PTD: Only 24% say their organisations are very prepared to comply with the law, compared with 21% in 2024. “With new obligations on the horizon in 2026 and 2027, now is the time for employers to take some fundamental steps in preparing for the PTD,” said Nicola James, Littler Partner in the U.K. “That includes conducting an audit of current pay practices, stress testing your job architecture to understand to what extent it is based on gender neutral criteria, and determining how you will categorise which workers are doing work of equal value.”

While slow progress on the part of national governments, which share regulatory responsibilities for these laws, could be hampering employers’ ability to prepare, the survey finds that many organisations have yet to implement some core compliance preparations for either one. That includes conducting audits of pay practices and AI use cases and assigning internal task forces dedicated to these issues.

U.S. Policy Developments Impact European Employers

Across the pond, the Trump administration has initiated sweeping policy changes in areas like immigration and IE&D, and European employers are not immune to the effects. Of the approximately two-thirds of respondents that have U.S. operations and/or a U.S.-focused workforce strategy, a striking 75% say they have taken at least one step to update that strategy as a result of these policy developments—including cancelling or reducing business travel to the U.S. (25%) and reducing U.S. operations (25%).

“U.S. policies are creating significant hurdles for European employers with U.S. operations, many of whom must reassess not only employee travel plans but U.S.-based contracts, investments and growth opportunities,” said Stephan C. Swinkels, Littler Partner and Co-Lead of the firm’s Global Practice.

On the IE&D front, more than two-thirds (69%) of those with IE&D programmes say they are considering new or expanded rollbacks of these initiatives as a result of heightened scrutiny from the Trump administration. Additionally, 79% of those with U.S. operations are facing challenges in managing the divergent approaches to IE&D in the U.S. and Europe. On the latter point, differing regulatory approaches have created difficulties for employers as practices that may be scrutinised in the U.S. could be in conflict with workplace requirements in certain European jurisdictions that promote such practices.

Push for In-Office Work Picks Up

Meanwhile, the push to get workers back to the office continues. A majority of respondents (63%) whose organisations have positions that can be performed remotely say they have increased or are planning to increase the number of in-person workdays. Roughly a quarter of respondents have increased (11%) required in-person workdays to five days a week or are planning/considering doing so (15%). Yet even as employers push to bring employees back to the office, 73% agree that remote or hybrid work schedules are important for attracting the right talent.

“For European employers looking to increase their in-office work requirements, there are a host of factors to consider to identify the optimal approach and develop policies based on their individual needs,” said Dr. Alexander Bartz, Littler Partner in Germany. “It is also important for employers to clearly document guidelines, expectations and potential consequences for non-compliance.”

In addition to the above findings, the report delves into other hot-button issues facing European employers, while also spotlighting important differences among respondents from various countries and company sizes.

Download Littler’s 2025 European Employer Survey Report

About Littler
With more than 1,800 labour and employment attorneys in offices around the world, Littler provides workplace solutions that are local, everywhere. Our diverse global team and proprietary technology foster a culture that celebrates original thinking, delivering groundbreaking innovation that prepares employers for what’s happening today, and what’s likely to happen tomorrow.