How the EU Plans to Regulate Algorithmic Management in European Workplaces
Work News | New Stardom
European Parliament plenary session, July 2025.
Photo: European Parliament / CC BY 4.0
The European Union has introduced a draft law outlining new rules for how companies use software to manage workers. For the first time, the European Parliament’s Committee on Employment and Social Affairs is seeking a specific regulatory framework for algorithmic management in the workplace. This proposal responds to the reality that existing legislation, including the GDPR, the AI Act, and the Platform Work Directive, covers only certain aspects of digital workplace oversight and does not address the full scope of algorithmic management.
The draft law defines algorithmic management broadly, as any use of automated systems to monitor, supervise, evaluate, or make or support decisions about working conditions, performance, scheduling, compensation, safety, or training. This covers not only artificial intelligence systems as defined under the AI Act, but a wide range of current and future workforce technologies.
If adopted, the directive would require companies to inform workers in writing about any algorithmic management systems affecting their jobs. Information provided would need to specify what data is collected, how it is processed, what actions are monitored, and whether automated decisions are being made. This must be shared before the first working day, ahead of any major system changes, and at any time upon request. The proposal also extends these rights to solo self-employed workers, not just traditional employees.
Before deploying or updating such systems, employers would have to consult employee representatives, explaining the objectives, the types of data collected, the workers affected, the anticipated impact on work processes, and the measures in place to protect health and safety. The draft law prohibits the processing of sensitive personal data, such as emotional state, private conversations, or off-duty behavior. It requires effective human oversight for major decisions, including hiring, dismissal, or changes in pay, and gives workers the right to request a review of the functioning of algorithmic systems.
A key provision is the requirement for health and safety assessments of algorithmic management tools, including evaluation of risks related to accidents, psychosocial and ergonomic risks, and undue work pressure. National labor inspectorates would be responsible for monitoring compliance with these rules, covering not only health and safety, but also non-discriminatory use of algorithmic systems.
The legislative process is ongoing. The draft report must still be approved by the committee and the European Parliament before consideration by the European Commission and Council. If eventually enacted and transposed into national law, the directive would require companies to audit their workforce systems, update policies on data protection and performance evaluation, and introduce robust grievance mechanisms. It would also increase the need for training among managers and HR professionals who oversee and work with digital management tools.
The OECD, in parallel research, highlights the importance of worker consultation and governance of algorithmic management systems. Findings indicate that involving workers in the design and deployment of these systems can yield positive results for both firms and employees. Current OECD and European Parliament reports agree that as algorithmic management becomes widespread, regulation needs to adapt to address transparency, accountability, and fair treatment in digital workplaces.
The draft EU directive does not aim to ban algorithmic management, but seeks to set standards for its responsible use. Companies, workers, and regulators are closely watching the progress of this legislation, as digital oversight becomes a central issue in European employment policy.
A full vote in the European Parliament is projected around November 2025. After that, if approved, the European Commission would consider a formal legislative proposal.
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