European Employers Are Not Ready for 2026's AI and Pay Transparency Rules
A new report shows a major gap between awareness and action as compliance deadlines approach.
Major regulatory changes are coming to Europe, but a recent report from Littler suggests most employers are far from ready. With significant reforms on AI and pay transparency set to take effect, the findings show a concerning lack of preparation.
Despite 2026 being a "watershed year for European regulations," the survey reveals that most organizations have not taken the core steps needed for compliance.
The EU AI Act: Awareness Isn't Action
The EU Artificial Intelligence Act introduces responsibilities for companies using AI, particularly for "high-risk" systems in employment. This includes ensuring human oversight and proper use of the technology.
While 80% of employers claim to be at least "somewhat prepared," only 18% feel "very prepared." The numbers show a disconnect between sentiment and genuine readiness.
The majority of these "somewhat prepared" companies have yet to implement foundational compliance steps. For instance, only 40% are conducting training, and just 34% are performing internal audits or risk assessments of their AI tools.
As Littler Senior Counsel Deborah Margolis noted, it's critical for businesses to act now. This means identifying obligations, auditing AI exposure, and providing your teams with the necessary AI courses and training.
Pay Transparency: Core Steps Are Being Missed
Similarly, the EU Pay Transparency Directive will mandate new obligations like gender pay gap reporting and disclosing salary ranges. While 89% of employers say they are somewhat prepared, a mere 24% are very prepared.
The most common step taken is simply identifying the changes needed (45%). Far fewer are actually monitoring pay practices for inconsistencies (35%) or establishing a dedicated compensation task force (33%).
Waiting for guidance from national governments is a common reason for the delay, but this overlooks the foundational work that can be done today. There are clear steps employers can take now to get ahead.
According to Littler Partner Nicola James, now is the time to take action. This includes auditing current pay practices, stress-testing your job architecture for gender-neutral criteria, and defining how your organization categorizes "work of equal value."
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