Such rapid evolution within the HR space begs the question: how can SMEs remain agile and stay ahead of the changes? Let’s examine some of the key developments over the last year and how HR leaders can remain on top.

DEI compliance challenges

One of the main developments HR leaders have had to tackle this year has been pushback against diversity initiatives in some markets. This has caused not only ethical dilemmas for businesses, but also compliance complications, as international employers cannot afford to roll back these policies in regions where they are legally mandated. For example, many countries enforce disability quota schemes, such as that of Portugal, where companies, depending on their size, must reserve 1-2% of positions for people with disabilities.

Organisations operating across borders must tailor their DEI strategies to meet each jurisdiction’s requirements, while remaining in line with their own best practice, company values and ethos. Enlisting legal support and in-country experts can review policies can help to ensure total compliance in each location. If struggling to maintain compliance across regions, consulting a global employment solutions provider can be a cost-effective way to ensure your company remains in alignment with all local laws.

The growing skills gap and stricter immigration pathways

Ongoing economic uncertainty coupled with the rapid development of AI intensifies the need for businesses to retain top talent, as well as to recruit skilled candidates to ensure they remain ahead of the curve as regards technological advancement. The rise of AI is reshaping job structures across industries and as automation prompts job cuts in some areas, it's also creating demand for newly defined roles.

These emerging positions require careful salary benchmarking and forward-thinking hiring strategies to attract and retain top talent. In many regions, grant schemes providing funding for training are available which can be availed of to tackle the skills gap. For example, in the UK, the Department for Science, Innovation and Technology (DSIT) this year announced a £7.4 million pilot scheme aimed at subsidising the cost of AI skills training for SMEs in the Professional Business Services (PBS) sector.

Another development of the last year that heavily impacts companies seeking to bridge a growing talent shortage in the field of AI is the tightening of immigration pathways for skilled workers and tech graduates. For example, updates to the UK’s Skilled Worker visa route, including higher salary thresholds and tighter employer sponsorship requirements, have made it harder for companies to recruit internationally and bridge the well documented skills gap.

With the recent notable move away from the fully remote working model that became the norm in the wake of the pandemic, businesses should be aware that return-to-office mandates may create friction. In today’s jobseekers' market, it is more important than ever to balance flexibility, culture, and employee engagement in order to retain a satisfied, dedicated workforce. Offering remote and hybrid work options, wellness packages, and benefits, as well as benchmarking salaries, can help to attract and retain talent.

Evolving employment law

New regulations, including minimum wage increases and employment status checks for gig economy workers, which came into force in the UK in April 2025, are putting pressure on HR teams to stay ahead of compliance. With further consultations underway to simplify the UK’s legal definition of “worker” status, more changes are expected. Further changes to UK employment law are expected in 2026, as several employment-related bills move through Parliament. Once passed, these bills will be supported by detailed regulations setting out their practical application.

As a result, HR teams need to stay up to date with all developments to employment law and apply any necessary changes to the details of their workers’ engagement. Enlisting the help of global employment professionals to ensure agility in this space can help HR teams to stay on top of complex regulatory updates and ensure they don’t get caught off guard.

The HR function is no longer just about securing and retaining talent. Today, HR occupies a much broader role within the workplace ecosystem. HR leaders are stepping into the vital strategic role of ensuring that organisations are legally and ethically equipped to operate in an increasingly fragmented and rapidly evolving working world and supporting SMEs to navigate this new era of change.