On June 26, 2025, the European Parliament’s Committee on Employment and Social Affairs published a draft report (“Draft Report”) recommending that the Commission initiate the legislative process for an EU Directive on algorithmic management in the workplace.  The Draft Report defines algorithmic management as the use of automated systems—including those involving artificial intelligence—to monitor, assess, or make decisions affecting workers and solo self-employed persons.

This Draft Report follows a Commission study published in March 2025 (“Commission Study”), which found that while existing EU legislation, such as the GDPR, addresses some risks to workers from algorithmic management, others remain.  The Commission Study also recognizes that the AI Act does not establish specific rights for workers in the context of AI use, which is noted as a concern.

The Draft Report encloses the proposed text for a new Directive on algorithmic management in the workplace (“Proposed Directive”).  The Draft Report has not yet been endorsed by the European Parliament.

The Draft Report defines “algorithmic management” as:

“the use of automated systems to monitor, supervise, evaluate, or make or support decisions—by electronic means—regarding the work performance and working conditions of workers including [1] systems that process personal data to oversee activities within the work environment, as well as [2] systems that take or support decisions significantly affecting workers or solo self-employed persons, such as the organisation of work assignments, earnings, safety and health, working time, access to training, promotion, and contractual status” (Art. 2(1)). 

The March 2025 Commission Study found that algorithmic management tools are used for various managerial activities, including for recruitment, work task scheduling, nudging and directing (e.g., suggesting how to complete tasks), worker monitoring and surveillance, worker evaluation, talent management and training, rewarding workers, and worker dismissal. 

As drafted, the Proposed Directive would apply to both “workers” (i.e., employees) and “solo self-employed persons”.  The Directive would require employers and procurers of services (i.e., natural or legal person contracting with solo self-employed persons to perform specific services or tasks) to, among other things:

• provide certain mandatory information about the use or planned use of algorithmic management in the workplace;
• consult employees when deploying new systems of algorithmic management or make updates to existing systems;
• ensure human oversight and review over all algorithmic management systems deployed in the workplace; and
• provide workers and solo self-employed persons an explanation of decisions taken or substantially influenced by an algorithmic system.

If adopted, these requirements may have significant operational and compliance implications.  Employers across the EU may need to update internal policies (e.g., by introducing standalone algorithmic management policies), train human resources teams to interpret and explain algorithmic decisions, and assess how the consultation requirement applies in jurisdictions without works councils—a task complicated by the opacity of many AI-driven tools.

The Proposed Directive would also prohibit employers and procurers of services from processing personal data concerning:

• the emotional or psychological state of workers or solo self-employed persons;
• neuro-surveillance;
• private conversations;
• the behaviour of workers or solo self-employed persons while off-duty or in private rooms;
• the prediction of the exercise of fundamental rights (including the right of collective bargaining and action); and
• inferences of  certain types of sensitive personal data (e.g., racial origin, health status, sexual orientation).

Next Steps

The Draft Report is proceeding under the Parliament’s legislative-initiative (“INL”) procedure (Art. 225 TFEU; Rule 47 of Parliament’s Rules of Procedure).  After the Employment Committee’s vote, expected to take place in December 2025, the plenary of the Parliament must endorse it by an absolute majority of all 720 MEPs.  If endorsed, the Parliament would formally request the Commission to present a Directive on algorithmic management.  The Commission must answer within three months and, if it agrees, table a proposal within twelve months or flag it in its next Work Program; a refusal requires a detailed explanation.

President von der Leyen’s mission letter of September 2024 already tasks Commissioner Mînzatu with an “initiative on algorithmic management”, so—if the Draft Report is endorsed by the Parliament—a legislative proposal in 2026 or early 2027 is probable, though its scope may diverge from Parliament’s text.