The measures are designed to ensure that AI systems find a balance between innovation and citizens’ rights.

These first-in-the-world regulations will be rolled-out gradually, with most of the Act becoming coming into force from August 2026.

The AI Act will regulate the use and development of AI systems within the EU and will oversee the actions of businesses within the AI value chain, including those who create, distribute and import.

The Act defines 4 risk categories;

• Unacceptable

• High

• Limited

• Minimal

Unacceptable risk covers areas that pose a clear threat to safety, livelihoods or rights and are banned entirely.

The High Risk category includes AI systems with significant implications for individual rights or public safety, e.g. those used in critical infrastructure, education, employment and law enforcement.

The Limited Risk group covers AI applications that involve some level of interaction with users, such as chatbots.

Minimal Risk: Most AI applications are most likely to fall within this category, where it is envisaged that the majority of AI development and use will take place

Fines for Non-Compliance:

Companies who breach could face penalties of up to €35 million or 7% of their total worldwide annual turnover.

Industry Reaction:

The regulations have been met with some some industry concern. Open AI’s chief executive has previously said that his company might ceases operating in the European Union, if it deemed compliance would be too costly and Meta has delayed the rollout of its AI offering in Europe due to similar concerns.

Meta had assumed it had the right to enable its AI user data collection models on Facebook and Instagram but this has been challenged by a number of European countries and also by Ireland’s Data Protection Commission

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The 158 page bill covers a total of 28 workplace reforms. The following are they notable changes;

• Flexible Working: yes ‘default’ where practical

The default position on Flexible Working Requests is to be set at ‘yes’. However, an employer could legitimately refuse the request if it can prove ‘reasonable grounds, such as; a burden of additional cost; detrimental effect on its ability to meet customer demand; an inability to re-organise work among existing staff; an inability to recruit additional staff; a detrimental impact on quality; a detrimental impact on performance; insufficiency of work during the periods the employee proposes to work; planned structural changes.

Flexible working could include starting work later to enable a parent to take children to school or other childcare obligations; working longer hours over fewer days of the week; working from home.

• Increased Protection from Unfair Dismissal:

The current 2-year qualifying period for protections from unfair dismissal will be removed. However, workers can still be subject to a 9-month probation period during which their employment can still be terminated without a formal process.

However, it is unclear whether an employee can make a claim for unfair dismissal if their employment is terminated during their probation period.

• ‘Day One’ rights

Many of the changes provide for the introduction of ‘day one’ rights to employees – where qualifying periods currently exist before entitlement applies. This will include; Statutory Sick Pay, Paternity Leave and Unpaid

• Notable Omissions

The Bill has some some notable omissions from the Government’s pre-election “new deal for working people” document, including:

• Employees’ right to switch off i.e. from being contacted out of hours – other than in exceptional circumstances.
• Legislation to end pay discrimination. This is expected to follow separately in a draft bill that will include measures to make it mandatory for large employers to report their ethnicity and disability pay gaps.

• Industry Reaction

Many large employers have responded by saying that they already apply most of the proposed changes through their own workplace practices and policies.

However, the UK Federation of Small Businesses, whose members employ up to 250 workers described the new bill as “rushed, clumsy, chaotic and poorly planned”.

• Speed of Change

Most of the planned changes will not take effect for at least two years and will firstly be subject to widespread consultations with employer representative organisations and trade unions.

For further details and guidance on how these changes may affect your workforce and policies, please email us at: mail@orsasaiwai.com

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VC investment in the UK more than doubles in quarter

After falling to a low not seen since Q2’18 in Q1’24, VC investment in the UK more than doubled quarter-on-quarter, rising from $2.9 billion to $6.9 billion between Q1’24 and Q2’24.

The largest deals included Wayve’s $1 billion raise and two large deals in the fintech space — a $999.6 million raise by Abound and a $621 million raise by Monzo. While many later stage companies in the UK found it challenging to raise money and close deals in Q2’24, the increasing number of mega-deals over the latter half of the quarter was viewed as a positive sign.

Pre-seed and seed stage deals continued to see robust interest from VC investors in the UK, with median deal sizes increasing quite substantially. The growth likely reflects both a growing appetite for making investments in Early-stage companies as the market in the UK begins to pick up and a desire on the part of VC investors to derisk their portfolios. 

Ireland sees VC investment pickup

VC investment in Ireland picked up in Q2’24, reaching $239 million compared to $150 million in Q1’24.

However, while the value of deals was up around 40% year-on-year, the number of deals brokered was down by just over 25%.

The Report recorded 24 Irish deals mainly in AI, biotech and fintech raising a total of $237.5 million.

A $110 million raise by biotech SynOx Therapeutics accounted for a large part of this total.

However, fintech company Nory, raised $16 million, Ocean data company, XOCEAN, raised $32.5 million in a Series B funding round and digital health and wellbeing provider Spectrum.Life secured $18.3 million.

Trends to watch for in Q3’24

The authors say that although positivity is growing in Europe, a number of uncertainties are expected to keep VC investors cautious heading into Q3’24, including yet to be finalised governmental decisions following the UK general election in July and the US presidential election in November. However, the firm believes that AI will likely remain a very hot area of investment in the region, in addition to energy and cleantech.

Despite these uncertainties, it says there is some optimism that the IPO market in Europe could see some fresh activity heading into Q3’24.

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X (formally Twitter) has been ordered to pay more than €550,000 compensation to a former senior executive based in Ireland, in another notable ruling by Ireland’s Workplace Relations Commission (WRC).

The award is a record in Ireland for a case of unfair dismissal.

X claimed that the employee had resigned because he had failed to confirm agreement to new pay and conditions.

The request to confirm was sent via email from Elon Musk in November 2022. In the email, Twitter’s new owner advised employees that building a breakthrough Twitter 2.0 would mean working long hours at high intensity. The email concluded with a requirement for the recipient employees to click “yes” on a link at the bottom of the email and stated that anyone who had not done so by 5pm the following day, would receive three months severance.

The day after this initial email, the employee received another which stated that failure to confirm would equate to resignation for which statutory redundancy or other termination payments would not apply unless otherwise required by local law.

During the 5-day hearing, the employee’s legal representatives argued that accepting Twitter’s request would “represent a radical change in employment law in Ireland”.

X denied the employee had been dismissed and claimed he was entirely responsible for his loss by failing to click “yes” to Mr Musk’s email. They maintained that because the employee had made a conscious decision not to click “yes”, he knew that he was resigning his role.

In a 73-page ruling, the WRC adjudication officer concluded X’s actions towards the employee were a dismissal “in fact and in law”.

He said the dismissal was unfair due to the absence of any substantial grounds to justify termination of employment and that allowing 24 hours to respond to the email could not be considered “reasonable notice”.

The employee had worked with Twitter for over 9 years but in November 2022, his access to X’s systems and network were barred and he then received an automated message the following day acknowledging his “decision to resign”. In December, he was given a draft severance agreement worth €22,834 which would be valid for 2 weeks and withdrawn if it not accepted by the employee within that timeframe. His employment was officially terminated on December 18th, 2022.

At that time, his total compensation package of €369,937, including a basic salary of €137,000 plus a 30% performance related bonus.

Ordering X to pay a total compensation of €550,131 for unfair dismissal, the WRC said the amount included compensation for future loss of earnings.

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The Complainant alleged that her employer, TikTok Technology Ltd, was not aligned with Ireland’s Work Life Balance and Miscellaneous Provisions Act 2023 because it did not consider her application to work permanently from home.

One of the reasons cited by the employee was the difficulty she experienced in securing suitable and affordable living accommodation within reasonable distance of her place of work. In this regard, she claimed that TikTok had only considered its own business needs and had “completely disregarded” her needs as an employee.

The employee added that she did not live in Dublin (Ireland’s capital) and that commuting to the company’s premises there would require her to wake at 3am and then drive two-and-a-half hours to reach the office by 7am.

In response, TikTok informed the hearing that although the employee’s contract did provide for remote working during the Covid-19 pandemic, the contract also clearly stated that her “normal place of work” would be at its Dublin office.

In July 2023, TikTok communicated a return to office for all employees effective from October 2023 stating that all employees would be required to work in the office a minimum of three days per week, unless otherwise dictated by local laws or regulations.

TikTok submitted that the employee did not return to the office three days a week or return to the office at all but that she continued working entirely from home.

The company argued that the complainant’s view that her job could be entirely carried out remotely, did not take precedence over its own evidence-based view that employees returning to the office, even for three days per week, results in an increase in productivity and accuracy. They also submitted that in their view, problem-solving solutions are best found through in-office communication and that it is within an employer’s remit to decide what is best for its business.

In its decision to dismiss the employee’s claim, the WRC adjudication officer said it was clear from the evidence that the complainant’s request was treated very seriously by the respondent and that two members of staff – one from HR and the other a manager from the complainant’s operational area, met on several occasions to consider the request in detail.

The WRC therefore ruled that the company had complied with its obligations under section 21(1)(a) of the Work Life Balance and Miscellaneous Provisions Act 2023.

Key takeaways:

Being the first reported ruling on this relatively new legislation, the key reminder for employees and employers is that the legislation allows for a request – but not a right – to remote working. From an employer’s perspective, the case confirms the importance of ensuring that all procedural steps and timelines are adhered to when handling and deciding upon employee flexible working requests.

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A US multinational software firm has been ordered to pay an award of €168,682 to a senior past-employee based in Ireland, following a ruling of unfair dismissal by Ireland’s Workplace Relations Commission (WRC).

A key deciding factor in the the case hinged on the employer’s US-based in-house lawyer conceding that he had not checked Irish employment law before dismissing the employee’s redundancy appeal. At the time, the employee was its most senior employee in Europe.

Although the WRC adjudicator did acknowledge that there had been a genuine redundancy situation, he considered the company’s appeals process to be flawed and therefore, the employee’s complaint under Section 8 of the Unfair Dismissals Act 1977 was well-founded.

The employer was ordered to pay to a gross sum of €168,682.09 in full and final settlement with payment to be made within 42 days. The WRC also recommended the employer obtain expert advice on any tax implications involved in the making of the payment.

Case Summary:

The employee held the post of Senior Director of Sales (EMEA) over 17-month period from May 2021 until his dismissal in October 2022. 

The employee claimed he was dismissed under the guise of a redundancy and that the employer did not follow a proper consultation process. He also claimed that the employer had refused to engage with him, had failed to consider any proposals that he had put forward to avoid redundancy and that the employer had already reached its decision to terminate his employment before the process began.

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Non-qualified stock options (NSOs) reporting deadline for your UK employees – 06 July 2024

Companies have less than five weeks to go until UK Non-qualified stock option (NSO) reporting deadline for UK employees. If your company has granted Non-qualified stock options (NSO) to UK employees, you will need to make the required regulatory filing by the 06 July 2024.

The regulatory filing, which is referenced as Employment Related Securities (ERS) annual returns, which covers NSOs and ISOs needs to be filed with the UK Tax Agency, HMRC.

These will be relevant to you if your company has UK employees and/or directors that have been granted shares or options. Many US companies grant US NSOs to their UK employees but fail to make the necessary statutory filing to the UK Tax Agency.

It is important to note that the UK Tax Agency does not send reminders to companies to file their share plan returns, so many US companies are unaware that they are not compliant.

If your company has UK employees or directors who have been issued shares or granted options and then action needs to be taken in respect of this upcoming HMRC filing deadline, 6th July 2024. 

The majority of USA companies with UK employees will have issued either NSOs or ISOs in the USA parent company to the UK employees and these will be treated as Non-tax advantaged plans (also known as ‘unapproved’ or ‘other’ plans and previously all schemes which were filed on a Form 42) in the UK.

All employment related securities (ERS) annual returns for the 2023/24 tax year must be filed by 6 July 2024. The returns are filed via HMRC’s online service (via the PAYE for Employers – Employment Related Securities section).

A couple of points you should note in particular:

• It is a legal requirement for the company that grants UK employees employment related securities, such as share option to file the Employment Related Securities (ERS) annual return.
•  Even if there have been no reportable events, a filing must still be made to HMRC (known as a ‘nil return’);
• one-off share acquisitions by employees or directors must still be reported as part of an “other” arrangement; the returns are not limited to formal ‘schemes’.

Penalties

If a return is filed after 6 July 2024, HMRC will issue a late filing penalty of £100 ($125) on 7 July 2024. Additional late filing penalties will be charged if the return remains outstanding as follows:

•  three months after the filing deadline £300 ($375)
• six months after the filing deadline an additional £300 ($375)
• nine months after the filing deadline, further daily penalties of £10 may be charged until the return is filed

As well as the late filing penalties, HMRC may also issue a penalty not exceeding £5,000 ($6,250) if a return is found to contain a material inaccuracy that was careless or deliberate, or if the return is not corrected once the company becomes aware that the return is incorrect.

Please note the registering of any plan creates an annual filing obligation. If a plan is registered but no reporting events occur during the tax year, a nil return still must be filed. The obligation to file only ceases once the scheme has been closed down. Likewise, if a plan is incorrectly registered, a nil return is required to be filed after which the scheme should be closed down. Failure to do so may result in late filing penalties being issued.

Please get in touch if you need assistance or any further information.

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At the heart of this initiative is the Central Electronic System of Payment information (CESOP), a pivotal tool set to transform the landscape of cross-border payments.

Legislative Package Highlights:

Within this legislative package, payment service providers are now mandated to transmit essential information on cross-border payments, specifically on the beneficiaries (“the payees”) of these transactions. Notably, payees receiving more than 25 cross-border payments per quarter will be closely monitored. The cornerstone of this strategy is the establishment of the CESOP, a European database designed to centralize, store, aggregate, and cross-check payment data, accessible to anti-fraud experts via the Eurofisc network.

Objectives and Impact:

The primary objective of this legislative measure is to equip tax authorities with effective instruments to detect potential e-commerce VAT fraud perpetrated by sellers operating in other Member States or non-EU countries. By leveraging CESOP, tax authorities gain unprecedented insights into cross-border payment activities, fortifying their ability to combat fraud and maintain the integrity of the digital economy. If you are a North American Business selling B2C make sure to act now, by ensuring that you are compliant with EU VAT regulations.

Data Protection and Compliance:

Crucially, the initiative prioritizes data protection rules, ensuring that only information linked to payments associated with economic activities is transmitted to tax authorities. Consumer information and payment reasons remain excluded from this transmission.

Implementation of CESOP:

CESOP came into force on 1 January 2024

In brief and Call-to-Action for North American businesses:

CESOP is the EU solution to combat B2C VAT fraud, its reporting system is designed to identify #vatfraud by #non-eusellers. CESOP implementation means that tax authorities across the EU will have improved access to data and tools for scrutinising e-commerce vendors.

If you are a North-American business selling B2C you have to act now to avoid being found un-compliant with EU VAT regulations.

Visit www.orsasaiwai.com  now or call at 1-828-378-5593 to book a free 15 minutes appointment or  email us at vat@orsasaiwai.com .

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Currently, UK payrolled employees contribute 12% of annual their earnings between £12,571 and £50,270. From January 2024, the contribution rate will drop to 10%

For an employee earning £50,000 a year, the reduction is worth ~ £650 per annum and for an employee earning £70,000 a year, it will mean an increase in take-home pay of ~ £750 per annum.

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In its policy paper, ‘Smarter regulation to grow the economy’, it has announced its intention to cap the length of non-compete clauses 3 months.

Currently, non-compete clauses can apply for 12 months or more and there is currently no legislation in the UK that limits their use.

However, the Government believes non-complete clauses may be inhibiting workers from moving to another employer for fear of being pursued for breach of contract. Therefore, they intend to legislate to limit the duration of non-compete.

No date has yet been set for when the new legislation will be enacted.

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