Littler, the world’s largest employment and labour law practice representing management, has released its sixth annual European Employer Survey Report. Based on responses from 780 human resources (HR) executives, in-house lawyers and business leaders from across Europe, the report explores the myriad ways in which employers are responding to changes in workplace management, policy and culture.

Flexibility Remains a Key Workplace Management Strategy

After the upheaval and uncertainty of the last few years, it appears that European workplaces are settling into a new way of working – and that flexible and hybrid models are here to stay.

The breakdown between in-person and remote work in this year’s survey remains remarkably similar to Littler’s 2022 European Employer Survey. In both surveys, 30% of employers said they were requiring fully in-person work, while the majority (58% in 2023 and 57% in 2022) offer hybrid models that require some in-person work, but still provide employees with flexibility. European employers also seem to be placing higher value on in-office collaboration than their American counterparts, as Littler’s 2023 U.S. Employer Survey found that only 16% require fully in-person work while 71% operate on a hybrid schedule.

Enforcing in-office work requirements, however, has proven challenging for some European organisations, with resistance to in-person work likely reflecting an ongoing misalignment between employers and employees:

• Just 52% of respondents say their employees comply with in-person work policies to a large extent.
• Only 36% of respondents say that their work models match employee preferences, while 43% report that their employees prefer remote or hybrid work to a greater extent than their organisation offers it.

“What began as a temporary measure during the pandemic is clearly here to stay,” said Raoul Parekh, Littler partner in the U.K. “Those employers who have been able to accommodate hybrid work are in a position to embrace this new normal, and can therefore satisfy both employee preferences and the business fundamentals. In a competitive talent market, this approach can generate real advantages for employee retention, attraction and even compensation.”

Some employers are going even further in their flexible arrangements. Nearly half of employers responding to the survey (48%) say they allow employees to work remotely from abroad to some degree (known as “wandering workers”), while 38% say they are contemplating a four-day workweek. Both work models come with substantial legal, operational and practical challenges.

“Managing requests from employees to work outside their normal jurisdictions continues to cause headaches for companies, especially when adequate policies are not in place,” said Laura Jousselin, Littler partner in France. “Without policies guiding when, where and if employees can work remotely from abroad, it can be difficult to determine the applicable local laws and ensure employees and employers are not in violation.”

Employers Are Divided on AI Use in HR

As European employers parse the risks and benefits of incorporating artificial intelligence (AI) tools into HR functions, differences in approach are emerging between the early adopters and the more risk adverse.

Most respondents (61%) say they use predictive AI tools for at least one HR function, including for customised employee training, recruiting and hiring. Nearly six in 10 (59%) also report using generative AI for HR purposes, with content creation for materials such as job descriptions and onboarding materials the most popular application. Others, however, do not seem inclined to adopt such tools: 39% are not using predictive AI in their HR departments and 41% have yet to utilise generative AI.

While employers await specific compliance obligations from the proposed AI Act in the European Union (EU), most of those using AI in the employment context seem undaunted by regulatory uncertainty. Nearly 70% of respondents say they have not changed their AI usage in response to regulatory proposals.

“Implementing AI tools within HR departments in a compliant and effective manner takes time,” said Jan-Ove Becker, Littler partner in Germany. “While many companies may choose to wait for greater regulatory certainty or improved AI platforms before adopting such tools, the technology is developing so rapidly that laying the groundwork now can save time and increase the benefits to organisations when they are ready to incorporate AI tools into HR functions.”

Workplace Issues Take Centre Stage

Marking a key cultural shift, employers are struggling under pressure from employees and other stakeholders to respond to divisive issues both within and beyond the workplace, with 75% saying they have found it to be at least somewhat challenging to manage expectations surrounding social and political beliefs among employees and/or to navigate pressure to take a stance on social issues.

Workplace legal issues are also commanding increased attention at the leadership level, with 64% of respondents reporting that such issues are increasingly viewed as key areas of focus that can have high-stakes consequences for the organisation.

“We’re seeing a wide variety of labour and employment law issues increasingly reach the C-suite and board meeting agendas,” said Stephan Swinkels, Littler’s Coordinating Partner International. “At the same time, HR and employment counsel are increasingly getting a seat at the table among the highest levels of executive leadership and other key stakeholders at global companies. It’s clear why: The financial and reputational impacts of these issues are so significant that managing them effectively has become vital to a company’s success.”

The survey report covers a range of additional legal and HR matters impacting European companies, including the rise in mental health-related workplace accommodations, EU Directives on pay transparency and whistleblower protections, and environmental, social and governance (ESG) initiatives. The report – which is being released at Littler’s 2023 European Executive Employer Conference, taking place November 7-8 in Amsterdam – also includes U.S. comparisons where applicable and breaks out country-specific results for some of Europe’s top economies: Germany, France, Spain, Italy and the U.K.