Employment Law Changes 2025 by Country

With the start of a new year, 2025 brings several significant updates to employment laws across Europe. These changes aim to address economic challenges, promote worker protections, and align with broader EU directives. This article provides an overview of notable employment law updates in key European nations.

Employment Law Changes in the Netherlands

Business Management

• Ban on Cash Payments Over €3,000
  Cash transactions exceeding €3,000 will be prohibited to prevent money laundering and improve financial transparency.
  
  
• Fuel Excise Duty Reduction Extended
  Reduced excise duties on petrol, diesel, and LPG will remain in place throughout 2025 at 2024 rates, providing continued relief to businesses and consumers.
  
  
• Low-Income Benefits (LIV) Abolished
  Employers will no longer receive contributions for low-income employees, as the LIV benefit is discontinued from 2025.

Taxes, Charges, and Levies

• Small Business Scheme (KOR) Extended Across the EU
  Entrepreneurs can now apply small business tax exemptions from other EU member states, facilitating cross-border business activities.
  
  
• Property Transfer Tax for Share Deals
  Indirect property purchases through share deals will now be subject to a 4% property transfer tax.
  
  
• BPM Tax Exemption for Company Vans Ends
  Entrepreneurs purchasing petrol, diesel, or LPG company vans must now pay private vehicle and motorcycle tax (BPM).
  
  
• Increased Fixed BPM Rate
  The fixed BPM rate for cars and motorcycles will increase from €400 to €600.
  
  
• Reduced Motor Vehicle Tax for Zero-Emission Cars
  Discounted motor vehicle tax (MRB) for zero-emission cars will remain in place until 2030, with reductions gradually decreasing over time.
  
  
• Adjusted Income Tax Rates and Brackets
  Income tax will feature three brackets with revised rates, offering lower tax on initial income.
  
  
• SME Profit Exemption Reduced
  The SME profit exemption will decrease from 13.31% to 12.70%, impacting small and medium-sized businesses.
  
  
• Energy Tax on Natural Gas Reduced
  Energy tax for the first 170,000m³ of natural gas usage will drop by 2.8 eurocents per cubic meter to ease energy costs.
  
  
• Betting and Lottery Tax Increase
  Tax on betting and lottery games will rise from 30.5% to 34.2%.
  
  
• 30% Ruling for Expats Adjusted
  The expat tax advantage will reduce from 30% to 27%, impacting highly skilled migrants and their employers.

Employment and Staff

• Support for Hiring Individuals with Disabilities
  Employers with 25 or more employees will face simplified processes and new incentives to hire workers with occupational disabilities.
  
  
• Extended Overtime Limits for Permanent Contracts
  Employers will no longer pay extra unemployment contributions for permanent employees working over 30 hours per week.

Starting or Ending a Business

• Stricter Business Succession Scheme (BOR/DSR) Requirements
  Beneficiaries of inheritance or gift tax exemptions under the Business Succession Scheme (BOR) must now be at least 21 years old.
  
  
• Adjusted Inheritance Tax Threshold for Businesses
  Businesses inheriting assets will benefit from a higher tax exemption threshold under the BOR scheme.

Environmental Impact

• Zero-Emission Zones
  Municipalities will be authorized to establish mandatory zero-emission zones, aligning with national environmental targets.

Childcare

• Language Proficiency for Childcare Workers
  Childcare staff must demonstrate basic proficiency in Dutch through certified diplomas or language certificates.
  
  
• Equipment Standards for Childminders
  New requirements will apply to playground equipment and cots used by childminders to ensure safety and compliance.

Culture, Media, and Sports

• Increased Betting and Lottery Taxes
  Organizers of games of chance will face higher taxes in 2025, with rates increasing to 34.2%.

Professional Services

• Implementation of Digital Operational Resilience Act (DORA)
  Financial institutions must comply with the new EU DORA regulations to ensure digital and cybersecurity resilience.

Retail and Wholesale

• Ban on Cash Payments Over €3,000
  Cash payments above €3,000 will be prohibited, impacting retail businesses and wholesalers.

Water, Energy, and Waste

• Energy Tax Reduction on Natural Gas
  A reduction of 2.8 eurocents per cubic meter will apply to the first 170,000m³ of natural gas consumption in 2025 to reduce energy costs.

Emplyment Law Changes in Germany

Works Constitution Act - Council Remuneration

Updates to the Works Constitution Act (Betriebsverfassungsgesetz) emphasize fair remuneration for works council members.

• Remuneration Standards:
  Council member salaries must align with comparable company roles. Agreements on these roles can only be challenged in court for gross error, reducing risks of abuse or excessive pay.
  
  
• Impact:
  These reforms protect the integrity of works councils while preventing potential mismanagement or embezzlement.
  
  
  
  

Training and Education Act – Addressing Skill Shortages

The German government has updated the Training and Education Act to combat labor shortages.

• Key Provisions:
  Employers must facilitate employee access to training programs, which are supported by financial incentives and state subsidies, particularly for small and medium-sized enterprises.
• Objective:
  Enhance workforce skills to adapt to technological advancements and demographic shifts, ensuring long-term labor market resilience.

Whistleblower Protection Act

Germany implemented the EU Whistleblower Directive to safeguard individuals reporting legal violations.

• Protections:
  Employees are shielded from retaliation, including dismissal and bullying.
  
  
• Obligations for Companies:
  Firms must establish secure, anonymous reporting channels for compliance violations. External reporting options remain available for companies unable to ensure adequate privacy.
  
  
• Impact:
  Strengthened transparency and integrity in corporate environments, encouraging safe reporting of unethical behavior.

2025 Outlook

• Bureaucracy Relief Act IV

Set to take effect in January 2025, the act aims to reduce administrative burdens on businesses.

• Highlights:
  Shorter document retention periods.
  Option to provide employees with electronic documentation of working conditions.
  Simplified digital employment contracts for remote work.

• Limitations:
  Written requirements will still apply to fixed-term agreements and terminations.
  
  
• Pay Transparency Act Update
  In preparation for the EU Pay Transparency Directive (effective 2026), Germany will revise its existing Pay Transparency Act.
  
  
• Expected Changes:
  Strengthened employee rights to pay-related information.
  Mandatory salary reporting for large companies, including gender-differentiated data.
  Severe penalties for non-compliance.
  
  
• Goal:
  Achieve equal pay for equal work, addressing shortcomings of the 2017 law.
  
  
• Large-Scale Staff Reductions
  Economic challenges may lead to widespread layoffs in 2025.
  
  
• Employer Responsibilities:
  Negotiate social plans and reconcile interests with works councils to mitigate employee hardships.
  Conduct union consultations where applicable, aiming for favorable solutions.
  
  
• Preparation Tips:
  Employers should establish a robust consultation strategy and assess potential financial and operational impacts early.

Employment Law Changes in the UK

Dismissals

One of the most notable changes is the introduction of day-one protection from unfair dismissal, replacing the previous two-year qualifying period. This provides immediate job security for new employees and curbs exploitative termination practices.

Key Points:

• Day-one protection against unfair dismissal.
• Restrictions on ‘fire and rehire’ practices, preventing employers from re-contracting employees under unfavorable terms.

Redundancy Consultation

Redundancy thresholds will now apply across entire companies instead of individual locations, ensuring broader employee protection during layoffs.

Key Points:

• Inclusive redundancy consultations covering all affected employees.
• Thresholds apply company-wide, not location-specific.

Zero-Hours Contracts

The government plans to eliminate exploitative zero-hours contracts, replacing them with ‘average-hours’ contracts. This ensures workers receive predictable hours based on their past work history.

Key Points:

• Ban on exploitative zero-hours contracts.
• Introduction of average-hours contracts for predictable scheduling.

Flexible Working

The right to request flexible working will be expanded, with the introduction of a ‘right to disconnect,’ allowing workers to log off outside regular hours to promote work-life balance.

Key Points:

• Enhanced right to request flexible working from day one.
• Introduction of the ‘right to disconnect’ to prevent overworking.

Worker Status

Employment categories will be simplified into a single worker status, enhancing protections for gig workers and the self-employed.

Key Points:

• Simplified worker status to clarify employment rights.
• Enhanced protections for gig workers and self-employed individuals.

Pay & Tax

The National Living Wage is expected to increase, benefiting low-income workers. Additionally, unpaid internships will be banned to prevent exploitation of young workers and career switchers.

Key Points:

• Increase in the National Living Wage.
• Ban on unpaid internships to ensure fair treatment.

Diversity & Discrimination Reporting

Employers may be required to report on pay gaps based on ethnicity and disability, in addition to gender pay gaps. These measures aim to foster workplace equity.

Key Points:

• Mandatory ethnicity and disability pay gap reporting.
• Gender pay gap action plans to include outsourced workers.

Employee Representation

Simplified processes for trade union recognition will make it easier for employees to organize and advocate for better working conditions. Unions will also have enhanced access to workplaces.

Key Points:

• Simplified trade union recognition process.
• Greater workplace access for unions to support employees.

Family Rights

Protections for employees returning from maternity leave will be strengthened, and bereavement leave will be introduced to support grieving workers.

Key Points:

• Enhanced maternity returner protections to prevent discrimination.
• Bereavement leave for employees to grieve without job-related concerns.

Sickness & Wellbeing

Reforms to statutory sick pay will improve access for ill workers. Best practices for managing terminal illnesses will also be introduced.

Key Points:

• Statutory sick pay reforms to provide better support.
• Guidelines for compassionate management of terminal illnesses.

Enforcement

A new enforcement body will oversee compliance with employment laws, and tribunal claim time limits will be extended to allow employees more time to seek justice.

Key Points:

• Creation of a state enforcement body for employment law.
• Extended time limits for tribunal claims.

Artificial Intelligence

The government is reviewing workplace AI use to ensure a balance between operational efficiency and employee privacy.

Key Points:

• Consultation on AI in workplace surveillance.
• Emphasis on safeguarding worker privacy.

Employment Law Changes in Spain

• Immigration Reform for Integration
  New regulations simplify processes for obtaining work permits and residency. Key highlights include extended validity for job-seeking visas (now up to one year) and reduced residency requirements for permanent status.
  
  
• Work Permits for Students
  Foreign students can now work up to 30 hours per week during their studies and are eligible for expedited work permits upon graduation.
  
  
• Family Reunification Expansion
  Family reunification rights have been enhanced, including extending the eligibility age for dependent children to 26 and adding protections for relatives of trafficking and violence survivors.

Employment Law Changes in France

• EGAlim Law Enhancements
  Updates under the EGAlim Law strengthen transparency in agricultural supply chains, requiring automatic price revision clauses in contracts to reflect raw material cost changes.
  
  
• Maternity and Family Leave Protections
  New measures extend protections against redundancy for employees returning from parental leave, applying for up to 18 months post-leave.
  
  
• Tax Neutrality in Mergers
  The revised Finance Bill expands the tax-neutral regime for corporate restructurings, simplifying processes for mergers, spin-offs, and asset transfers.

Employment Law Changes in Italy

• Gender Pay Equity Reporting
  Employers with 50+ employees must report on gender pay gaps annually, with corrective measures required for disparities.
  
  
• Enhanced Worker Protections
  New rules limit the use of temporary contracts and ensure full-time contracts for employees exceeding 12 months of consistent service.
  
  
• Parental Leave Adjustments
  Parental leave allowances have been increased, making it easier for families to manage work and childcare responsibilities.
  
  
• Whistleblowing Protections Across Europe
  As part of the EU Whistleblower Directive implementation, all six countries have strengthened protections for employees reporting legal violations, ensuring anonymity and safeguarding against retaliation.

In addition to the previously discussed employment law changes in the Netherlands, Germany, the UK, Spain, France, and Italy, several other European countries have introduced significant updates:

Belgium

Employment Rights for Sex Workers
Effective December 1, 2024, Belgium has enacted a groundbreaking law granting sex workers the same rights and protections as other employees. This includes access to maternity leave, sick pay, health insurance, and pensions. The legislation also ensures that sex workers have the right to refuse clients or specific practices without fear of dismissal and mandates safety measures such as emergency panic buttons in workplaces. This move positions Belgium as the first country to fully recognize prostitution as a legal profession with comprehensive social security provisions.

Ireland

Social Welfare Reforms
As part of the Pathways to Work Strategy, Ireland has implemented measures to reduce long-term unemployment by actively engaging jobseekers. Individuals who fail to engage with Intreo, the public employment service, may face reductions in social welfare payments. By 2025, approximately 50,000 individuals on the live register will be required to develop personal progression plans with Intreo advisors, meeting bi-weekly to encourage job seeking. Additionally, employers will receive subsidies for hiring unemployed jobseekers, and various education and training programs for job seekers will be expanded.

Portugal

Tightened Immigration Rules
In response to a rightward shift in European politics, Portugal has announced plans to tighten immigration rules. The government will eliminate the "manifestation of interest" mechanism, which previously allowed non-EU migrants to seek residency without prior employment contracts after a year of social security payments. Moving forward, migrants will need an employment contract to move to Portugal, with priority given to qualified professionals, students, Portuguese-speaking nationals, and those seeking family reunification. This policy change reflects a broader trend in Europe towards stricter immigration controls.

These developments highlight the dynamic nature of employment and immigration laws across Europe. Employers and employees alike should stay informed about these changes to ensure compliance and to take advantage of new rights and opportunities.