AI has exploded in popularity in recent years and has been increasingly adopted in workplaces across the world. With the increasing global adoption of AI technologies, the need for legislation to govern these technologies and mitigate the risks associated with them has been widely voiced. In July 2024, the European Union introduced and adopted a new landmark law to regulate AI technologies. The EU's Artificial Intelligence Act is the first law of its kind globally. But what is the EU AI Act, and how will it affect contractors and freelance professionals? We discuss.
The increasing adoption of AI:
Artificial Intelligence (AI) has been a buzzword and a popular topic of discussion in recent years, as AI-powered technologies and automation tools have surged in popularity and adoption across multiple sectors and roles globally, changing the way many people work and creating a shift in hiring trends.
Many countries across the EU have seen increased adoption of AI technologies, with a 2024 report from Amazon Web Services revealing that more than a third of European businesses have adopted the use of AI technologies. According to research from Trinity College Dublin's Business School, the adoption of AI technologies in Ireland has surged to reach 91%.
The potential benefits of these technologies are widely recognised by many, often being at the forefront of conversations on the topic; however, discussions on the negative impacts and potential fallouts from the increased adoption of these new technologies have also been increasingly highlighted. As these new technologies grow in popularity, so too has demand for talent with in-depth knowledge and skills in AI and cloud technologies.
What is the EU AI Act?
The EU's AI Act came into effect on 1 August 2024. This regulation, first proposed in 2021 and subsequently amended multiple times, was in development for many years before being enacted into law.
Believed to be one of the most detailed and rigorous pieces of law globally, the EU AI Act is expected to influence the adoption of future legislation governing AI technologies in many other regions and countries worldwide.
The EU's AI Act works by utilising a risk-based approach to regulate Artificial Intelligence technologies. This approach means that AI technologies with more risks associated with their use and practice must adhere to stricter rules under the Act.
The EU AI Act aims to mitigate the adverse effects associated with Artificial technology and promote those who adopt trustworthy, human-centric approaches. Similar to the GDPR, which was adopted in 2016, the EU's new AI Act applies to all individuals and entities that use or develop AI solutions. This AI legislation will also introduce new rules around tools like ChatGPT, which are known as "general-purpose AI models" that generate content.
While regulations concerning general-purpose AI models continue to be rolled out in 2025, the complete list of rules under the legislation is set to be in full force by August 2026 as the remaining regulations are implemented.
Risks & costs of non-compliance with the EU AI Act:
It is essential that businesses, recruitment agencies and the contractors they engage comprehend the legislation and adhere to the accountability and transparency standards set by the Act. Failure to comply with the EU AI Act can result in increased regulatory scrutiny and more substantial penalties, including significant fines.
Ensuring compliance:
Businesses and individuals who develop or adopt AI technologies must take the necessary steps to comply with the European Union's regulations governing artificial intelligence. Failure to do so can result in serious consequences such as fines and reputation damage.
Contractors and freelance professionals who work with or use AI should take adequate steps to adhere to the requirements under the EU AI Act. One should assess the AI systems they utilise and the associated risk tier. Now is the time for those who use AI to familiarise themselves with the new regulations and prepare for their rollout. Recommended steps include:
- Keeping up-to-date with regulatory updates
- Continuous compliance assessments and monitoring
- Assessing AI systems according to their associated risk tier
- Ensuring AI systems are correctly classified by keeping up to date on changes and requirements
- Implementing measures to ensure risks are mitigated, particularly regarding high-risk AI systems, and that safeguarding measures are in place.
- Engage knowledgeable talent or seek guidance from experts in AI governance and compliance.
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Opportunities for those with AI knowledge and skills:
Contractors who are well-versed in the Act could see more opportunities as organisations look to ensure compliance with the legislation while furthering their understanding and utilisation of Artificial Intelligence technologies to foster innovation and compete in an evolving market.
The demand for skilled contractors in IT and AI has increased significantly in recent years. Research published as part of the 2024 Work Trend Index Annual Report by Microsoft in partnership with LinkedIn found that 71% of business leaders indicated a preference for hiring candidates with AI skills, while job postings referencing Gen AI or related skills and terms have increased dramatically in the last year, according to research by Indeed.
Recently, we discussed whether the increased demand for contract talent in IT with in-depth AI knowledge could see higher day rates as the demand for expertise accelerates. You can check out the full article to learn more.
Your trusted global compliance partner:
Whether you are an international contractor or freelance professional or are a recruitment consultant or business engaging the services of freelancers and contract workers compliance is essential!
At 3C Global, we offer end-to-end solutions tailored to your needs!
We offer a wide range of services, including:
- Employer of Record (EOR)
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- Global Payment Solutions (GPS)
- Labour Leasing in Germany (AÜG/ANU)
- International Contractor Management (ICM)
- International Contractor Compliance Audit (ICCA)
- Advisory, Consulting & Training (ACT)
Our services are meticulously designed to remove potential risks and uncertainties associated with launching new projects, allowing all parties to focus on their core business objectives, knowing that their contracts and practices are fully compliant.
Ready to take the next step towards ensuring global compliance?
Contact 3C Global Group today to learn how we can help you engage, hire, and place contractors quickly, compliantly and competently in Germany.
Are you a contractor or freelance professional looking to take up a new contract in a new country? Our expert team are on hand to help you navigate permits, insurance, tax, contributions, invoicing, payments, compliance considerations and more!
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