Global Compliance Predictions for 2025

Michael Matherly - SVP Compliance Services at Bubty

As the Bubty Compliance Team transitions into planning and advising our customers what to expect in 2025, it is difficult not to recognize the significant impacts of market and legislative shifts set in motion during the year just ended. There are always some clear carryover events and topics of interest from one year to the next, as legislative bodies tend to lag market conditions, but as we move forward 2025 may start to feel more like a continuation of last year more so than in years past.

With that context, here is what we see on the 2025 freelance compliance radar…

1. More global legislation for classification of freelancers and tax compliance.

I know we're not really going out on a limb here, but think back to the dearth of classification legislation just 10 years ago, when the use of freelancers around the world naturally increased, but nothing compared to the hyper-growth in 2017-2019 and then the acceleration in 2020 due to the pandemic. Country lawmakers and tax authorities, which have traditionally lagged behind changes in the market, are collectively still catching up in a big way, with some governments passing new laws or legislative changes for the first time in 10 years or more. Consequently, we expect to see and hear more proposals and changes on freelancer/employee classification and tax rules from more countries and at a faster pace than previous years. We see this especially as a continuation of an active legislative year in 2024, when we heard from long-silent countries and regions such as Japan, the Netherlands, LATAM, and we have seen amendments and modifications from countries that continue to try to get it right, such as the U.K., Australia, Italy, Spain and of course the U.S. and many individual U.S. states. 

2. Greater emphasis on and scaling automation of freelancer compliance, driven by the need for improved accuracy of classifications, shorter onboarding cycle times and better talent experiences.

The demand for freelance talent will not decline in 2025. With 46% of the global workforce, the number of freelancers, currently 1.57 billion, is expected to exceed traditional employment by 2027. This global demand for freelance talent is driving demand for scalable technologies to enable more effective engagement and management practices for this segment. And because classifying freelancers is a necessary step for sustainable, compliant and penalty-free access to that talent (see prediction #1 for why), the compliance automation component becomes as important to an effective global freelance management program as talent pools and global payments. 

3. Significant growth in global freelance compliance innovation and development of strategic compliance services.

The growing field of freelance compliance and classification expertise is about to expand beyond the classification hotbeds of the US, UK and European Union. Most compliance professionals (including this author) started in the compliance domain of their home countries. Initial continuing education in international IC compliance 10 years ago usually involved crossing the Atlantic, one way or another. Even before the 2020 pandemic, however, easier and more effective online access to freelance talent became synonymous with access to global freelance talent. And we as a profession (including this author) began looking for global partnerships to gain coverage in unfamiliar markets. But it wasn't long before we collectively realized that insourcing global compliance expertise and integrating these newfound capabilities into our firm's technology was the better, more auditable and more profitable way forward. And thus was born the global freelance compliance professional whose sole focus is to develop and drive strategic progress in our field. Therefore, it is my prediction, not only for myself but for the many talented colleagues with whom I regularly compete AND collaborate, that this group, along with the necessary investment from their employers and founders, will deliver global compliance innovation that adds value in the form of segmented technology products and compliance services. 

4. Freelancer spend management, guided in part by the need for local and global IC compliance capabilities, will reach a tipping point regarding how the segmented category is managed at the enterprise level.

This prediction also requires some historical context. Before then, the use of freelancers was an often ignored channel that was rarely mentioned or seriously considered in the contingent staffing strategy for large enterprises. Usually, these people were referred to as non-agency employees or pre-identified contractors and forwarded to the program's payroll administrator. However, many enterprise programs did not have a dedicated payroll provider (aka employer of record or EOR) in the program for contingent staffing, often because the low volume of freelancers did not warrant it, so they often used one of their more trusted staffing agencies to payroll the freelancer. (As an aside, this is how many prominent global EORs got on the springboard to their current U.S. and global EOR success. Change can be a good thing). “No-1099” (or no independent contractor) policies were common more than 10 years ago (some even exist today) because the client organization, as well as many EOR firms and certainly most staffing agencies that do their clients a favor with payroll, did not have the compliance screening capability to make the classification distinction between employee and independent contractor. To round out the context underlying this prediction, many corporate CL programs were and are currently managed by managed service providers (MSPs) who also did not and do not have the ability to payroll freelancers or perform classification screening, creating a growing gap in their program management and governance capabilities. Putting all the above data together with the meteoric rise in freelance spend, we can see that a light is beginning to shine on the strategic management of the freelance spend category (or lack thereof) at the enterprise level. 

Now the prediction: The rise of freelance management systems (FMS), direct and self-sourcing, and the expansion of global agent of record (AOR) and global IC compliance capabilities, by both EOR firms and FMS providers, is creating a shift in the market toward the benefits and usability of stand-alone freelance management programs that enterprises can no longer ignore. We believe 2025 will be a tipping point where owners of contingent workforce (HR, procurement) strategies will either further integrate freelance management and compliance capabilities into their MSP and VMS (vendor management system) led business programs, or lift the freelance segment from its current sub-category status to its own strategically managed, full category status. 

Why is this prediction considered a global compliance prediction? We believe that if compliance were not an inherent necessity for all freelancers globally and the freelance channel were recognized only for its “spend,” there would be no importance or practical reason for the company to consider separating it from the contingent labor strategy. The risks of employee classification and regulatory compliance for independent contractors require expert management throughout the life cycle of freelancer hiring, from the pre-screening required unanimously in 195 different sovereign states around the world to compliance with hiring and managing the freelancer as a salaried or independent contractor. Therefore, effective management of the spending category (or subcategory) of freelancers cannot occur at any level without compliance being an integral part of the freelance management strategy. 

Would you like to follow these predictions with Bubty Services? 

You can rest assured that myself and the entire Bubty Services Compliance Team will stay abreast of all these predictions, in addition to new regulatory developments in 2025, compliance solutions and compliance-related innovations. If you would like to learn more about how Bubty Services can help your company achieve regulatory compliance, click here to book a call with one of our experts.