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In today’s M&A market, carve-out transactions remain one of the most important tools for private equity sponsors and strategic acquirers seeking to acquire high-value businesses from larger corporate groups. Yet while the commercial rationale may be straightforward, workforce execution rarely is. In global carve-outs, workforce issues often become the difference between a transaction that merely closes and a transaction that actually delivers. In our experience, workforce issues are rarely the reason a carve-out is pursued, but they are frequently the reason a transaction becomes more expensive, more complex, or slower to close than expected – all outcomes which can avoided with careful planning. A carve-out is rarely a simple transfer of employees, contracts and assets. More commonly, it requires separating a business that has been deeply embedded within a seller’s global operating structure, with shared employees, shared systems, centralized payroll functions, common benefit plans, employee representative obligations and differing transfer requirements across jurisdictions.

The key challenge is not identifying every workforce issue before signing – that’s impossible. The challenge is identifying the workforce issues that most likely impact deal certainty, closing timelines, costs, or Day 1 operations and building a practical execution plan around them. Most of these workforce issues ultimately stem from three fundamental questions:

  1. Who actually supports the business?
  2. How do those individuals move from Seller to Buyer?
  3. What must be operational on Day 1 for the business to function?

In practice, these questions often arise under intense time pressure, when the deal team is simultaneously negotiating transaction documents, building a TSA, standing up local employer infrastructure, managing employee communications and trying to preserve critical talent. That is why workforce planning needs to start early and be treated as part of the core separation strategy.

Question 1: Who Actually Supports the Business?

The first workforce question in any carve-out sounds simple: Who is part of the business being sold? In practice, it is often one of the most important and complex exercises in the entire transaction.

Continue Reading Global Carve-Outs: Why Workforce Execution Is Often the Critical Path
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We are pleased to share with you The Global Employer – Global Immigration & Mobility Quarterly Update, a collection of key updates from Asia Pacific, Canada, Philippines, Singapore, South Africa, the United Kingdom, and the United States.

Click here to view.

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Recent developments affecting Temporary Protected Status (TPS)[1] beneficiaries have created uncertainty for employers managing work authorization and reverification obligations. In response, California Attorney General Rob Bonta has reminded employers that changes affecting TPS beneficiaries do not change employers’ existing obligations under federal and California law. The guidance underscores a key compliance point: employers should not assume that an employee whose TPS designation has been affected is no longer authorized to work, and employers must continue to follow standard I-9, reverification, anti-discrimination, and anti-retaliation requirements.

The guidance reflects California’s longstanding approach of reinforcing workplace protections for immigrant workers during periods of federal immigration policy change. While TPS-related developments may create uncertainty for employers, the Attorney General’s message is that employers should continue to follow existing verification and reverification rules rather than impose additional requirements or take adverse action based on assumptions regarding an employee’s immigration status. The guidance further encourages employers to consult immigration counsel before acting based on an employee’s TPS status, recognizing that affected employees may remain authorized to work through another immigration status, a pending application, or another provision of law.

Among other things, the guidance reminds employers:

  • To follow current employment verification requirements. Employers must complete the Form I-9 to verify an employee’s identity and authorization to work in the United States and should monitor USCIS and E-Verify for current TPS termination and work authorization expiration dates.
  • That employment authorization may remain valid beyond the expiration date shown on a work permit. Employers should not rely solely on the expiration date printed on an Employment Authorization Document (EAD). Work authorization may be automatically extended through a Federal Register notice, USCIS notice, court order, or applicable DHS regulations. Before acting based on an apparent expiration date, employers should confirm whether an automatic extension or another basis for continued work authorization applies.
Continue Reading California Reminds Employers: TPS Changes Do Not Alter Workplace Obligations
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Federal EEO-1 reporting may be heading for a major reset — but employers should be careful not to mistake federal uncertainty for a broader retreat from workforce pay-data obligations. The Equal Employment Opportunity Commission (EEOC) has proposed rescinding the long-standing annual EEO workforce demographic reporting rules, including the EEO-1 Component 1 report filed by many private employers and federal contractors. At the same time, several states and localities are moving in the opposite direction, adopting or expanding pay-data and demographic reporting requirements that are more granular, more jurisdiction-specific, and less dependent on the federal framework.

For multinational and multistate employers, the practical message is straightforward: do not dismantle EEO-1 data infrastructure yet. Instead, use this moment to rationalize workforce data governance, build flexibility for diverging state requirements, and ensure demographic and pay data are collected, stored, analyzed, and used in a legally defensible way.

EEO-1 Requirements

The EEO-1 framework has been part of the US employment law compliance architecture for decades. Historically, the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) have jointly administered the EEO-1 Component 1 Data Collection program to monitor compliance with federal civil rights laws. Private employers with 100 or more employees and certain federal contractors with 50 or more employees have been required to file annual workforce demographic reports.

Component 1 requires covered employers to report headcount data disaggregated by race/ethnicity, sex, and job category. The Biden administration’s proposed rule to reinstate Component 2 pay data reporting — which required employers to report aggregate compensation and hours-worked data segmented by race, sex, and job category — was formally withdrawn following the change in administration and is not currently required.

What’s Changing at a Federal Level

On July 23, 2026, the EEOC issued a Notice of Proposed Rulemaking that would rescind annual EEO-1, EEO-2, EEO-3, EEO-4, EEO-5, and EEO-6 workforce demographic reporting and related recordkeeping rules. If finalized as proposed, covered private sector employers — including covered federal contractors — would no longer file routine EEO-1 reports with the EEOC. Until the EEOC issues a final rule, existing federal reporting and recordkeeping requirements remain in effect.

For federal contractors, the status of EEO-1 reporting is more complicated than for purely private-sector employers. On August 21, 2026, OFCCP published three coordinated final rules that eliminate – from a regulatory perspective – federal contractor affirmative action requirements for women and minorities and narrow contractor affirmative action requirements regarding individuals with disabilities.

Continue Reading Federal Retreat, State Expansion: The New Workforce Data Landscape for US Employers
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Special thanks to our articling student Brianna Grieff for contributing to this update.

As pay transparency obligations continue to expand globally, employers with operations in Canada should be paying close attention to a rapidly evolving provincial landscape. Much like developments across the European Union, the United Kingdom, and numerous US states, Canadian jurisdictions are increasingly adopting measures designed to promote pay equity and greater transparency in compensation practices. These measures include salary disclosure requirements in job postings, restrictions on salary history inquiries, employee protections related to pay discussions, and, in some jurisdictions, pay transparency reporting obligations.

For US-based multinational employers, Canada presents both familiar challenges and unique compliance considerations. While Canada does not yet have a single nationwide pay transparency framework, a growing number of provinces have enacted or proposed legislation that requires employers to revisit recruiting practices, compensation governance, pay equity analyses, and data collection processes. As a result, organizations operating across multiple Canadian jurisdictions may find themselves managing another layer of regulatory complexity alongside existing US, EU, and UK transparency requirements.

The trend is gaining momentum. Recent developments in New Brunswick, together with existing requirements in British Columbia, Prince Edward Island, Ontario, and other provinces, reflect a growing expectation that employers provide greater visibility into compensation practices and be prepared to explain and defend pay differentials.

Below, we summarize the current pay transparency landscape across Canada and the key considerations for employers with Canadian workforces.

New Brunswick: The Latest Province to Act

New Brunswick recently joined the growing list of provinces imposing pay transparency requirements.

Continue Reading Canada’s Pay Transparency Momentum Continues: New Brunswick Signals the Direction of Travel
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Employment law developments across Asia Pacific continue at a rapid pace, with regulators expanding their enforcement powers, unions gaining influence, employees becoming more willing to challenge workplace decisions, and governments introducing significant reforms affecting workforce management.

Our latest AP Employers’ Forum 2026 Highlights and Insights report provides practical guidance on key developments across Australia, China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

The report highlights several trends that should be on every multinational employer’s radar. Among them are South Korea’s far-reaching “Yellow Envelope Act,” which broadens union rights and may significantly affect restructuring and workforce reduction strategies; Australia’s proposed restrictions on non-compete clauses and increased scrutiny of AI-driven employment decisions; Singapore’s forthcoming Workplace Fairness Act; Taiwan’s new workplace bullying regime; and growing regulatory inspection and dawn raid activity across the region.

The report also examines the increasing complexity of cross-border non-compete enforcement, rising claims relating to equity incentive plans, and the challenges employers face when navigating restructurings in an environment marked by geopolitical uncertainty, union activism and rapid technological change.

Click here for more!

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On August 6, 2026, the IRS released Fact Sheet FS-2026-13, substantially revising and replacing FS-2026-01, its January 2026 guidance on the new deduction for qualified overtime compensation enacted by the One Big Beautiful Bill Act (OBBBA). The revised guidance reflects the transition from the temporary 2025 reporting relief period to a more formal compliance regime applicable for tax years 2026 through 2028.  As a reminder, the IRS provided transition penalty relief for tax year 2025 to excuse the requirement that employers and other payers report qualified overtime compensation separately on Forms W-2, 1099-NEC, and 1099-MISC. See Notice 2025-62.

While the updated fact sheet includes numerous technical revisions, several changes are particularly significant for employers, payroll providers, and employees seeking to claim the deduction. Most notably, the IRS emphasizes that beginning in 2026 employees generally may claim the deduction only based on amounts separately reported by employers, increasing the importance of accurate overtime calculations and information reporting.

Key Changes in FS-2026-13

The August update to the FAQs:

  • Removes guidance applicable solely to the 2025 transition year.
  • Clarifies deduction limitations and timing rules, including that the same principles governing when a payment is treated as wages for income tax withholding purposes apply to determine when qualified overtime compensation is paid.
  • Expands guidance regarding Fair Labor Standards Act (FLSA) coverage and exemptions.
  • Provides detailed Form W-2, Form 1099-NEC, and Form 1099-MISC reporting rules.
  • Adds federal income tax withholding guidance.
  • Clarifies the requirement that qualified overtime compensation be separately reported to support the deduction.
Continue Reading IRS Updates FAQs on the Qualified Overtime Compensation Deduction: Compliance Obligations for Employers
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The Department of Labor (DOL) issued Technical Release 2026‑02 on June 17, 2026, providing critical clarity for employers evaluating whether to offer contributions to “Trump Accounts” under IRC sections 530A and 128; contributions to Trump accounts could be made as of July 4, 2026. The guidance addresses a key open question flagged in our earlier post regarding whether these arrangements would trigger Employee Retirement Income Security Act (ERISA) plan status, which would implicate technical rules regarding fiduciary duties, claims and appeal procedures, and plan reporting and disclosures, among others.

The DOL concluded that Trump Accounts and related employer Trump Account Contribution Programs (TACPs) will generally not constitute “employee pension benefit plans” under ERISA Title I, even if funded in whole or in part by employer contributions pursuant to IRC section 128. The guidance provides favorable clarity and removes a potential stumbling block for employers considering establishing a TACP.

DOL Technical Release 2026-02

Prior to Technical Release 2026‑02, ERISA classification was a key unresolved risk for employers, particularly given that TACPs require a written employer program and could resemble benefit plans.

DOL’s conclusion that TACPs will generally not be subject to ERISA removes a major barrier for employers. The rationale underlying the guidance includes that Trump Accounts are individually owned Individual Retirement Accounts (IRAs), not employer‑established retirement plans; that in most cases, benefits accrue to a child (dependent), not the employee, which weighs against ERISA plan characterization; and that the accounts can be funded by multiple sources (family, government, employers), reinforcing their non‑employer‑centric design.

Continue Reading DOL Clarifies ERISA Treatment of Trump Accounts: What Employers Need to Know
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Compared to many other countries, Germany has rather strict labor and employment laws. The current government has just announced plans to make employment law more flexible through comprehensive changes. Among other things, these plans include:

  • Allowing fixed-term employment contracts more frequently and for longer periods
  • Enabling employers to terminate the employment of “high earners” in exchange for a severance payment, even without a specific reason
  • Tightening the requirements for employees to take sick leave
  • Making it easier to implement and update software in companies with a works council.

Against this background, employers should already assess how they can best benefit from the new regulations, for example with regard to employment contracts and proceedings in case of terminations. However, it should be noted that the plans still need to be approved by parliament and implemented into law. Changes to the plans are therefore possible.

Key takeaways

  • For employees hired until December 31, 2030, it is planned that fixed-term employment contracts without objective grounds will be permitted for a maximum duration of up to four years and may be extended up to six times. This would provide additional flexibility for employers and is particularly helpful for companies that rely on such flexibility, such as start-ups.
  • For high earners, it is planned to introduce a regulation effective January 1, 2027 that allows termination of the employment relationship in exchange for a severance payment. Even if a court does not consider the termination to be socially justified, this instrument would still allow the employment relationship to be terminated. This creates a promising tool in termination proceedings involving employees with high income.
  • Other planned changes, such as stricter rules for employees taking sick leave, tax advantages for severance payments also appear attractive for businesses in Germany.
  • Even though the resolutions of the coalition committee must still be approved by parliament, the plans are already quite tangible. The likelihood of approval is increased given that the proposals are the result of negotiations between the coalition parties.

In more detail

More flexibility for fixed-term contracts:

  • For employees hired until December 31, 2030, it is planned that fixed-term employment contracts without objective grounds will be permitted for a maximum duration of up to four years – rather than the previous two years – and may be extended up to six times, instead of the previous limit of three extensions. In this context, it will also be possible to rehire an employee by the same employer for the first time.
Continue Reading Planned Significant Changes to German Employment Law
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Baker McKenzie’s legal resource for companies taking business models, products and technology international.

Are you considering expanding into new jurisdictions? Are you aware which foreign laws and legal issues matter most? Have you prepared a detailed statement of facts, plans and questions for counsel?

The latest edition of our Field Guide to Going Global helps you examine foreign law issues for taking business models, products and technology international. Our guidance should be helpful whether you are working for a start-up company or a large multinational enterprise that is broaching new frontiers.

The Guide covers export control and sanctions considerations, intellectual property rules, data privacy and cybersecurity frameworks, franchise and competition law, employment and global equity regulations, tax compliance and planning issues, corporate development matters and more.

Click here to access the guide.