Welcome to the first edition of the new year.
As 2026 begins, we see immediate shifts in the compliance landscape. January is traditionally a month of resets: new budgets, fresh strategic goals, and updated statutory thresholds.
This year is no exception, with significant changes to wage baselines and immigration criteria taking effect from day one.
In this edition, we look at how these updates impact your planning for the year ahead.
How Enterprises Choose a Global Employer of Record
Global Employer of Record (EOR) decisions are rarely made by a single person. In practice, they are managed by what we call a Buying Committee — the group of internal stakeholders spanning HR, Finance, Tax, and Legal who collectively evaluate the solution.
Because each member of this committee has different priorities — HR needs speed, while Finance and Tax need compliance and cost control, aligning on a single provider can be challenging. What looks like a simple vendor selection often becomes a broader governance discussion.
To help these stakeholders align around a common language, we outline five dimensions that allow the Buying Committee to compare providers on an equal footing:
- Legal Posture: Does the provider offer a robust employment framework or just a technology platform?
- Execution Consistency: Are processes standardised across countries to ensure reliability?
- Cost Structure: Is there clear visibility on how costs behave when compensation or regulations change?
- Regulatory Absorption: Can the provider handle legal updates without turning them into client-side projects?
- Preventative Governance: Does the provider actively flag employment-related risks before they become issues?
Labour Law and Employment Updates
Germany: Minimum Wage Increase and Secondary Cost Effects
From 1 January 2026, Germany’s statutory minimum wage increased to €13.90 per hour. While headline impact is concentrated in hourly-paid roles, the broader effect sits in secondary calculations.
In Germany, minimum wage acts as a reference point for overtime premiums, marginal employment thresholds (mini-jobs), and collective agreements that peg entry bands to statutory floors. The January increase therefore compresses wage ladders and increases payroll cost even where base salaries already exceed the minimum. Employers with mixed hourly and salaried populations are likely to see knock-on effects in overtime exposure and working-time modelling, particularly in logistics, manufacturing, and support functions.
January 2026 matters because the increase lands mid-planning cycle for many employers, forcing recalibration of 2026 labour budgets rather than gradual absorption.
Ireland: Minimum Wage Reset
Ireland increased the national minimum wage to €14.15 per hour from 1 January 2026. This change affects more than entry-level roles.
Ireland’s employment framework links several statutory and contractual assumptions to the minimum wage, including overtime expectations, age-band progression, and sectoral employment orders. For employers operating shift work or flexible scheduling, the January reset increases exposure where pay structures were built narrowly above the prior floor.
The practical issue for employers in 2026 is pay compression. Supervisory and skilled roles close to the minimum are pulled into review, particularly where internal relativities are relied on rather than formal job architecture.
Mexico: Minimum Wage Increase as an Enforcement Multiplier
Mexico implemented a 13% minimum wage increase effective 1 January 2026. As in prior years, the wage increase operates as an enforcement multiplier rather than a simple pay rise.
In Mexico, minimum wage is used as a reference for fines, social security ceilings, and labour law penalties. The January 2026 increase therefore raises the financial impact of misclassification, unpaid overtime, and record-keeping failures. Employers with variable pay, commissions, or informal allowances face heightened exposure because statutory calculations tighten automatically when the base increases.
The January timing matters because payroll, social security, and labour inspection benchmarks all reset simultaneously, leaving little room for phased adjustment.
Colombia: Minimum Wage and Transport Allowance Interaction
Colombia’s 2026 minimum wage and mandatory transport allowance took effect on 1 January 2026. Together, they materially increase total employment cost at the lower and middle ends of the wage spectrum.
The interaction matters. The transport allowance applies based on salary thresholds, meaning some employees move into or out of eligibility as wages rise. This creates complexity in payroll calculations, particularly for part-time or hybrid roles. Overtime, night work, and social contributions are also recalculated against the new base.
For employers, January 2026 marks another step in Colombia’s shift toward higher statutory cost density per employee, reinforcing the need for precise payroll configuration rather than negotiated workarounds.
International Labour Organisation (ILO) – 2026 Focus & Standards
The ILO’s Employment and Social Trends 2026 report was released in January 2026, offering the most recent global labour market analysis. It shows ongoing pressures on job quality and highlights challenges even where overall employment growth remains stable.
This report provides a fresh baseline for global labour dynamics and can inform employer strategy on workforce planning, demographic shifts, and macro labour conditions.
Payroll, Tax, and Employer Cost Mechanics
Netherlands: End of Wage Cost Benefit for Older Workers
From 1 January 2026, Dutch employers can no longer apply the wage cost benefit (LKV) for employees aged 56 and over, subject to limited grandfathering.
This change removes a structural subsidy that many employers had priced into long-term workforce planning. Its removal disproportionately affects sectors with experienced or ageing workforces, including technical, engineering, and specialist professional roles.
The January cut-off matters because it converts what was previously a predictable offset into a permanent cost increase, altering hiring economics for 2026 onward rather than acting as a temporary budget fluctuation.
European Union – Pay Transparency Directive and 2026 Implementation Phase
The EU Pay Transparency Directive remains the most consequential EU-level employment reform moving into 2026, because 2026 is the year in which implementation decisions become legally binding.
EU Member States must transpose the Directive into national law by 7 June 2026. Although the first mandatory pay gap reporting cycle will apply from 2027, the data underpinning those reports will be generated during the 2026 financial year, making 2026 the real point of no return for employers.
The Directive introduces several structural obligations that go beyond reporting:
- mandatory gender pay gap reporting above defined headcount thresholds;
- employee rights to access pay information and comparator data;
- an obligation to disclose pay ranges in job advertisements;
- a shift in the burden of proof in pay discrimination claims, requiring employers to justify pay differences rather than employees to prove discrimination.
Member States are progressing at different speeds. Some, including Sweden, have already published draft implementing legislation. Others are still working through consultation and legislative design.
Saudi Arabia: Saudisation Expansion in Marketing and Sales
From 19 January 2026, Saudi Arabia increased Saudisation requirements to 60% for marketing and sales roles in the private sector. The change applies to establishments with three or more employees in the relevant function and covers a defined list of managerial, specialist, and design roles across both disciplines.
In marketing, the policy also introduces a minimum monthly salary threshold of SAR 5,500 for covered roles, directly linking localisation compliance to pay structure. In sales, the expanded scope captures core commercial roles, including specialist and sector-focused sales positions.
The January 2026 update materially tightens workforce composition constraints for employers with expatriate-heavy commercial teams, particularly multinationals. Compliance now depends not only on hiring nationals, but on how roles are structured, paid, and distributed across marketing and revenue functions.
United Arab Emirates: Private-Sector Minimum Wage for Emiratis
From 1 January 2026, the UAE set a minimum monthly wage of AED 6,000 for Emirati nationals employed in the private sector. The threshold applies when issuing, renewing, or amending work permits for Emirati employees, with a transitional period for staff already employed before 2026.
Emiratis earning below the new threshold will not be counted towards Emiratisation targets after 30 June 2026, and establishments may face restrictions on new work permit issuance if salary alignment is not achieved. The increase follows earlier adjustments to the Emirati wage floor and continues the government’s approach of linking private-sector nationalisation targets to defined salary levels.
Immigration and Global Mobility Updates
Belgium: Regional Salary Thresholds for Work and Single Permits
For 2026, Belgium’s regions confirmed updated minimum salary thresholds for work permit and single permit applications for non-EEA nationals. The criteria continue to be set regionally, with different calculation bases and update timings.
In Wallonia, new minimum salary levels for 2026 have been published and are assessed on the basis of annual gross salary. In the Brussels-Capital Region, the minimum thresholds remain unchanged from 2025 and continue to be assessed using monthly gross salary.
In Flanders, the 2025 annual salary thresholds remain in force at the start of 2026. Updated figures will apply once Statbel publishes the new wage index, after which Flanders is expected to revise its permit salary criteria within one month. Work authorisations issued in the interim reference this pending adjustment.
Because salary thresholds are a hard eligibility condition, applications that fall below the applicable regional minimum are refused regardless of role, seniority, or labour market context.
Malaysia: Revised Employment Pass Salary Thresholds and Duration Framework
Malaysia will implement a revised expatriate salary policy for Employment Pass (EP) Categories I, II, and III from 1 June 2026, following Cabinet approval in October 2025. The revision replaces the salary framework in place since 2016 and introduces materially higher minimum thresholds alongside defined employment duration limits.
The new framework doubles the entry salary for EP Category I to RM 20,000 and raises Category II to RM 10,000–19,999, both with potential validity of up to ten years. Category III thresholds increase to RM 5,000–9,999, with a shorter maximum duration of five years. Categories II and III are explicitly tied to succession planning requirements, formalising a link between expatriate roles and local capability development.
The changes apply to all new and renewal EP applications submitted on or after 1 June 2026.
United Kingdom: English Language Threshold Raised Mid-Route
From 8 January 2026, the UK increased the English language requirement to B2 for several work routes, including Skilled Worker and Scale-up.
This change does not affect job design or salary directly, but it alters who is actually sponsor-able. Candidates who previously qualified on experience and technical skill alone may now fail eligibility despite meeting salary and role criteria. Transitional protections apply unevenly, meaning employers managing extensions and role changes face mixed eligibility outcomes within the same workforce.
January 2026 matters because language competency has shifted from a background requirement to a front-loaded gate, changing candidate screening dynamics.
Singapore: Employment Pass Renewals Enter the New Salary Regime
From 1 January 2026, Singapore’s higher Employment Pass salary thresholds apply to renewals, not just new applications.
This turns historic hiring decisions into live compliance risk. Roles that were compliant at hire may no longer meet renewal criteria without salary or scope adjustments. Employers with long-tenured foreign professionals are now forced to reconcile internal pay architecture with immigration eligibility.
January 2026 is the moment when immigration compliance stops being prospective and starts reaching backward into the existing workforce.
Netherlands: Immigration Sponsorship Moves Closer to Payroll
Effective 1 January 2026, recognised sponsors in the Netherlands must retain documentary evidence of actual salary payments as part of sponsorship compliance.
This closes a gap between contractual salary and executed payroll. Where payroll timing, variable components, or corrections diverge from contract terms, discrepancies become visible at immigration level. The change increases exposure for employers relying on complex pay structures or post-pay reconciliation.
The January implementation matters because it ties immigration compliance directly to payroll execution, not just HR documentation.
United Arab Emirates: Emirati Private-Sector Wage Floor
From 1 January 2026, the UAE raised the minimum wage for Emiratis in the private sector to AED 6,000 per month.
This change increases the cost of compliance with Emiratisation programmes and affects role design where nationals are hired into junior or transitional positions. Employers relying on staged progression models must now reassess entry-level structuring.
January 2026 matters because the increase lands alongside broader enforcement of localisation and workforce nationalisation policies.
Ukraine: Higher Salary Threshold for Foreign Employees
Ukraine increased the minimum salary threshold applicable to certain foreign work permits effective 1 January 2026.
The change affects both new permits and renewals, tightening eligibility where roles were previously structured close to statutory minimums. For employers, this raises gross-to-net costs and reduces flexibility in compensating foreign specialists through allowances or variable components.
January 2026 marks another step in aligning immigration permission more closely with formal wage standards.
Looking Ahead
There is a lot to digest in this edition, but that is the reality of January. The regulatory bar is clearly getting higher across the globe, and the margin for error is shrinking.
We hope this edition helps you drive global expansion conversations with more confidence. It’s going to be a busy year, and we look forward to navigating it with you.
Thank you for reading. See you next month in your inbox.
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