Majority of employers have yet to take core steps to prepare for compliance with either regulation, report finds
Preparedness among employers in Europe remains limited despite major regulatory reforms on AI implementation and pay transparency impacting their organisations next year, according to a new report from Littler.
Its latest employer survey report revealed that just 18% of employers are very prepared to comply with the EU Artificial Intelligence Act, which has provisions related to AI use in employment processes taking effect in August 2026.
Only 24% of European employers also said they are very prepared to comply with the EU Pay Transparency Directive, which has a local implementation deadline in June 2026.
"2026 is shaping up to be a watershed year for European regulations impacting the workplace," the report read. "But are employers ready to meet the moment? Our survey suggests more work may need to be done."
These low rates of preparedness come despite the reforms on AI use and pay transparency occupying the top of employers' minds, with data privacy and workplace inclusion and diversity also expected to impact their workforce management, according to the report.
The report noted that slow progress on the part of national governments could be hampering employers' ability to prepare for reforms.
However, it pointed out that the majority of employers in its report have yet to take some core steps to prepare for compliance with either law.
EU AI Act preparedness
The EU AI Act regulates the technology and places responsibilities on providers and deployers of the technology. The act covers employers, who will face a string of compliance obligations for "high-risk" systems, from ensuring AI is being used in accordance with its instructions to assigning human oversight and more.
According to the report, 80% of employers in Europe are at least "somewhat prepared" for the act. More than half of them (51%) even said they are already reviewing or updating internal policies related to AI use.
It found, however, that only 40% of employers are conducting training, while just 34% are conducting internal audits or risk assessments of AI use.
"Given this state-of-play, it's potentially worrisome — and somewhat understandable — that only 18% of survey respondents say their organisations are very prepared to comply with the Act," the report read.
"More concerning, perhaps, is that of the 80% who say they are at least somewhat prepared for the Act, the majority have yet to implement foundational compliance steps."
Deborah Margolis, Littler Senior Counsel, UK, also expressed concern over the lack of preparedness among employers for the EU AI Act.
"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," she said in the report.
EU Pay Transparency preparedness
Meanwhile, the EU Pay Transparency Directive introduces new obligations in workplaces such as mandatory gender pay gap reporting and disclosing salary ranges.
At least 89% of employers said they are somewhat prepared for the directive, with their most-taken step being identifying the changes needed to comply with the regulation's baseline requirements (45%).
A third also said they are monitoring pay practices for inconsistencies (35%) and establishing a compensation task force covering key divisions (33%).
"The lack of draft legislation or guidance from many jurisdictions could partially explain the lack of preparation," the report read.
"Still, there are numerous steps employers can take today, regardless of national directives, to prepare for compliance."
Nicola James, Littler Partner, UK, said now is the time for employers to take fundamental steps in preparing for the pay transparency directive.
"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," James said in a statement.
