Podcast Transcript 30.09

Hello and welcome once again to the Pinsent Masons podcast, where we try to keep you abreast of the most important developments in global business law every second Tuesday. I'm Matthew Magee and I'm a journalist here at Pinsent Masons. This week we hear how employers are dealing with rapid and significant changes to the rules governing who can work in the UK and we explore the implications of the EU's latest attempt to harmonise business laws with a so-called 28th regime.

But first, here's some business law news from around the world.
Germany consults on AI implementation law
Gatwick decision sends positive UK infrastructure signals and
UK regulators launch a new consultation on food advertising ban.

Existing regulators will take on responsibility for monitoring German companies' compliance with the EU AI Act, with an enhanced role earmarked for the Federal Network Agency, according to just-published legislative proposals. While the AI Act is an EU regulation that has direct effect in each EU member state, every country needs to take some steps within their own national frameworks to give practical effect to the legislation, such as in relation to the monitoring and enforcement of compliance. The plans include expanding the remits of existing authorities, including those responsible for product regulation and financial services regulation, to encompass duties to monitor and enforce compliance with the AI Act. Germany's federal and state data protection authorities will also have oversight roles.

The UK government's decision to sanction airport expansion at Gatwick is the latest strong signal to investors that it's serious about supporting infrastructure development in the country. An expert in infrastructure policy and planning has said. It's envisaged that up to 80 million passengers will be able to use Gatwick every year after the development, up from the current capacity of around 45 million.
The Gatwick project is just the latest nationally significant infrastructure project to have received development consent. The government said on Monday that the 21 development consent orders it has issued for projects during its first year in office is the largest number of major infrastructure projects to be greenlit in the first year of a Parliament in history.

The UK’s advertising regulators have published a further consultation on the implementation of less healthy food and drink product advertising restrictions ahead of new rules coming into effect in January. The new restrictions will prohibit adverts for identifiable less healthy products from being included in Ofcom-regulated television services and On Demand programme services between 5:30 AM and 9:00 PM. They will also not be allowed to be placed in paid-for space on the Internet. Restrictions on advertising less healthy food and drinks were due to come into force in October but were delayed over concerns about the clarity of the underlying legislation. Regulatory expert Zoe Betts said that even organisations keen to work within the regulations risked falling foul of more nuanced interpretations of terms capable of different understandings, and hoped the regulator would support organisations to understand the restrictions and how to comply once they're in force.

There is a bit of tension in UK public life around workers from outside the country. For periods of time, immigration becomes a political hot potato and some parties and voters make their views clear that they would rather it was law. On the other hand, the business community is usually broadly of the view that workers from elsewhere provide valuable skills, labour and experience to their companies and the wider economy. But those businesses have to act in line with the law, and the laws around workers from abroad change a lot. The latest changes in the UK were announced in May and came into force in July. Manchester-based immigration law expert Shara Pledger told me why changes were so frequent and what this summer's new rules say.

Shara Pledger: Immigration has been a hot topic in the UK for a number of years across multiple different governments. Over the past few years, all of the measures that we have introduced have been with a view of driving down the overall figure of net migration. The most recent changes to business immigration that we have seen are just the latest iteration of this. So it's a series of targeted measures that are aimed at reducing the overall number of migrant workers that are coming to the UK and then also remaining in the UK. In the main, business tends to be relatively positive in relation to immigration because of the opportunities that it can bring. There are obviously different sectors, different specialisms that really benefit from having a wider talent pool to be able to draw from in terms of filling vacancies within their organisation and obviously different jurisdictions and countries are developing different things as well, which means that we can bring new skills, new tech, new knowledge into the UK that we haven't been able to home-grow as of yet. So immigration really offers a lot of opportunity to business, but it doesn't necessarily come without its own pitfalls. It can be very expensive to sponsor a migrant worker in the UK, for example. So it can be a bit of a double-edged sword for business.

The biggest change from the most recent set of changes in July of 2025 is a recalibration about the skill level that's needed for somebody to be sponsored to work in the UK. What we saw at the end of 2020 in reaction to the end of the Brexit transition period was actually a reduction in the level of skill and the level of salary that was required to sponsor a worker in the UK and what we've now seen throughout the course of 2025 is basically a return to that pre-Brexit position. So it now means that for the first time in sort of, you know, four to five years, it's much more challenging to sponsor a migrant worker than it has been over the last few year and so it means that roles that employers, businesses might have got quite comfortable with using for sponsorship and being able to go outside of the resident labour market to fill, they now suddenly cannot do that any longer. So while they can retain the individuals within those roles, they can't perhaps add new migrant workers to those roles and that obviously requires a change in strategy about how those roles might be populated moving forward.

Matthew Magee: The changes are so broad that they will affect a huge proportion of Britain's businesses. But companies in some areas will be hit harder, such as those in social care or hospitality. So what should companies do to cope with the new rules and prepare for future ones? Will the frequency of the changes and the breakneck speed of implementation mean that sometimes the answer is not much says Shara.

Shara: The time that's available for employers, businesses, etcetera, to react to these changes is often quite short. So we had the white paper on immigration control that was released in May of 2025. The first set of immigration changes as a result of that were announced on the 1st of July and they were enforced three weeks later. So in terms of the idea of strategic planning about changes of what you may have been able to sponsor before that you no longer can, there is limited opportunity to be able to actually get a firm plan in place. What we do have, however, from that white paper is knowledge of what future changes may be on the horizon. So we know, for example, there will be changes to the English language requirement for both applicants into some work categories, but also an introduction of requirements for their dependents. We can plan for that. We know that graduates, visa holders in the UK currently have unsponsored right to work for usually a minimum of 24 months. That will be reducing to 18 months. So while there are certain steps that employers can put in place, unfortunately immigration is one of those areas where the rules tend to be announced with relatively short notice.

Employers that cope well with changes, particularly to the sponsorship system, are those that have a strategy about how sponsorship is going to benefit their business and where the core benefits will lie.
So working out exactly how areas of the business will be impacted by potential changes will put a business in good stead because it means that if further changes are then announced, they at least have a rough idea of what could this mean for us moving forward. I think another thing that really sets apart a sponsor that's able to cope well with changes are those that don't just plan forward but do keep account of the people that they already have. What a good sponsor doesn't want to do, really, is get through, say, three years of sponsorship with somebody and then in the last six weeks, as that person needs to extend, suddenly realise blindly this person needs to receive, you know, a £4000 pay rise in order to be sponsored again.
So continually looking back at who you've sponsored and having an understanding of how these changes may impact them for the future is just as important as planning for any future vacancies that you might want to fill.

Matthew: Companies will have to be careful about some unforeseen consequences, though. For example, when it comes to changes to graduate schemes, there's a risk that companies could find themselves subject to discrimination claims if they're not careful.

Shara: Over the last few years, the graduate route has been increasingly important for employers. It's an unsponsored route. It normally lasts for a minimum of two years. The reduction of time for graduates is obviously going to really accelerate that assessment process. It means that they will now no longer have a maximum of two years, but a maximum of 18 months. And if they're securing their role with an employer when they've already eaten into that period of time, it will be even less. What the danger is here, and what employers must be alive to, is the potential risk of indirect discrimination if they seek to exclude individuals who may well need sponsorship in future from assessment for graduate-level roles. Because it may well end up with a situation of a candidate saying, but I have the right to work right now, and unless you have a real reason as to why I cannot be hired into this role and look to explore my leave to remain in the future, there is discriminatory action there that cannot be defended and obviously, a discrimination claim needs to be avoided at all costs for an employer. So there's real risk here.

Matthew: The UK government is hoping that companies will invest in training and apprenticeships for workers here to fill gaps left because they can't hire as many workers from elsewhere. But Shara says that there can be a lag and that training takes time. In the meantime, she advises that employers keep an eye on changes that have been proposed but not fleshed out to rules about people's rights to work in the UK.

Shara: In addition to the changes that we've seen announced in the White Paper, we also alongside that have potential changes coming to right to work checks. So this impacts not just workers that you might be sponsoring in the UK, but every employee that you have and whether or not they have the right to work in the UK. Now, at the moment, the way that that scheme operates, it's relatively self-contained. You need a relationship of employment and you are directly responsible for your direct employees. The proposals will widen that quite significantly. So we move away from the idea of it being an employee to include lots of other types of workers, zero hours, gig economy workers, for example, and we also elongate that chain of liability as well, away from the organisation directly and including all of them, any other businesses, etcetera, who may well be using the services of that person. This has real potential to impact effectively every employer in the UK, but especially the case for large employers in the UK who may well have regular dealings with a large number of contractors, subcontractors, other forms of workers. It will be a very significant change if it is suddenly the case that you're needing to check many, many more workers than you currently do. So I definitely encourage employers to be on the lookout for that one.

A year ago, former Italian Prime Minister Mario Draghi published a report on EU competitiveness bemoaning that the US, China and others had economies that seemed more innovative, more competitive and more productive than Europe's. Many of his recommendations have not been acted on, but one idea has made progress, the creation of a 28th regime of company law to encourage innovation and growth. A major consultation on the idea closes today and concrete proposals are expected early next year. There are 27 EU countries and the 28th regime is meant to be a set of harmonised laws that would work in parallel with national law, covering the bits of companies' existence that can be seen as bureaucratic or as barriers to growth. So employment law, tax, insurance and corporate law. Dublin-based corporate law expert Paul White told me what's being proposed.

Paul White: So the 28th regime, it's, been proposed as a set of harmonised EU rules to assist innovative companies benefit from the single market, in particular, including changes to corporate law, insolvency, labour and tax law to assist businesses operate and function through the EU. Where we are at the moment is at a consultation phase. The Commission will be digesting all of these and the plan in Q1 of next year is that the Commissioner will come out with a number of proposals in terms of how this is going to work in practice. There has been an acknowledgement that there are challenges at the moment for companies who want to scale and operate across Europe. In particular, the focus is on those SMEs and also on the start-ups.

Matthew: The policy goal here is the creation of a more dynamic, high growth economy with half an eye on the trading bloc's main economic competitors.

Paul: I think when you look at what companies are doing and where they're scaling, there is a sense that the US in particular is probably a little bit more attractive. This proposal with the 28th regime almost is looking at the best parts of all the individual 27 countries, taking out those elements and seeing how we can harmonize them across the EU so as to compete. There's a few elements where we do compete. Obviously there's the bureaucracy part, the red tape involved in setting up a company. And believe me, every place in the world has some element of bureaucracy. That's just the very nature of doing business. What the 28th regime is looking at is whether we can streamline processes, use digital tools available to file documents, it's looking at looking at what is working in particular jurisdictions and then using what the best from people's experience to streamline these processes.
Matthew: The obvious question here is what happens if your national law says one thing and the 28th regime law says another? Paul says it's not yet clear how the plans will avoid direct conflicts with national laws, but this was amongst the issues that led to the failure of previous 28th regime plans, so it's a question that will need an answer. There are areas of the world's economy where a small number of companies have grown huge and dominate entire markets. Think about in the digital sphere companies in things like search or online retail. Paul says that the 28th regime's policy goal is to give European companies a better chance to reach large scale more quickly and easily.

Paul: Where there are options such as the EU compared to the US, the Commission wants to make it a lot more efficient, effective and attractive for EU-founded companies to scale on a larger basis across the bloc.
There are always going to be competitive challenges from other jurisdictions such as the US and Asia-Pacific but what the EU wants to do as an initial step is to focus that investment on creating business within the EU and the consequent growth in economies, employment, and a funding ecosystem that will continuously generate other business opportunities for other type companies as well.

Matthew: Concrete proposals are some months off, and this is a policy approach that has failed before. But Paul thinks that the fact that the European Commission is setting such store by another attempt to create a 28th regime is a good thing.

Paul: The focus in terms of where it will be most effective is on those smaller companies, startups and companies that are looking to scale quickly, rather than those that have already scaled. So very much those high-growth entities I believe is the sweet spot here. I think it’s absolutely hugely encouraging that the Commission are taking time to look at this. They've looked at it over a series of years, but it has been finessed, it is being targeted, and it's certainly acknowledging that there are challenges and trying to work with the business community in terms of fixing this and making it a lot easier for companies to scale and to operate and do business in the EU.

Thank you for listening again and spending time with us, we really appreciate it. We know how much pressure is on your time and attention. Remember, you don't have to wait for the podcast. You can read our news and analysis produced by your team of journalists every day at pinsentmasons.com. And you can sign up for a digest specifically tailored to you at pinsentmasons.com/newsletter. In the meantime, please do share it with and recommend it to anyone you think it might be useful to. And until next time, thank you for listening. Goodbye.

The Pinsent Masons Podcast was produced and presented by Matthew Magee for international professional services firm Pinsent Masons.