Metaverse vs employment law: the reality of the virtual workplace

In December, 43-year-old doctoral researcher Nina Jane Patel put on a headset and entered Meta’s virtual world to see what was happening that day. “Within seconds of being there, there were three avatars near me,” she says. “Suddenly they were taking selfies . . . I couldn’t see at first that they were groping the avatar’s upper body . . . They were yelling at me, ‘Don’t pretend you don’t like it, this is what you came for.’”

The incident took place in the metaverse — an immersive virtual world accessed via wearable technology — in which tech groups expect us to spend a far greater proportion of time in the future, both playing and, crucially, working.

When it comes to employment laws, however, it is unclear what rules of engagement apply in a universal digital realm. What counts as harassment in the metaverse? Can an avatar be discriminated against, or worse? Will national legislation protect employees or does working in the metaverse require a new rule book altogether?

Lack of legal framework

The global workforce has grown far more accustomed to working remotely in the past two years because of the Covid-19 pandemic and companies have already started experimenting with virtual reality in the workplace. Hilton hotel group, for example, uses it to train staff on how to handle guests. And last year Microsoft, in its first step towards blending the physical and digital worlds of work, began rolling out a plan to enable workers to appear on its Teams collaboration software as avatars.

But the metaverse takes hybrid working a step further, and brings with it a host of thorny employment law issues. These range from practical challenges, such as how are employees paid, to more philosophical ones, like whether avatars have a legal identity. “The legal conundrums are about as diverse as the possibilities of the metaverse itself,” says Jonathan Newman, managing associate at law firm Simmons & Simmons.

The physical world of work is regulated by national legal frameworks. In California, for example, workers can be fired with no notice, while in Holland, employees generally cannot be sacked without approval from the court or Dutch employment agency. In the metaverse, however, the national employment law that applies is not immediately obvious.

“In one sense, the metaverse is just another platform. And the fundamental tenets of an employment relationship hold true regardless of platform,” says Jonathan Chamberlain, a partner at Gowling WLG. “Arguably, in the era of Teams and Zoom, many of us are already in it.

“But the employment relationship has until relatively recently been largely geographically fixed . . . employment law is still largely country or state specific. You often cannot opt out of your country’s statutory employment protection regime even if you — or your boss — wanted to.”

So far, no one has decided what legal framework should apply to a decentralised digital workspace, in which workers may be itinerant, and geographically disconnected from each other and the company they work for.

“There are no national boundaries in the metaverse, so the first question is, ‘Where is the jurisdiction with the greater connection to the work?’” says Newman. “It could be the law of the country where the company owning the platform is . . . it could be the law of the country where the servers are based, or where the employee is . . . no one has reached an agreement on that.”

Worker participation in the metaverse also raises important questions about privacy and data security, given the scale of personal data that companies such as Meta expect to gather and monetise.

A Financial Times investigation in January analysed hundreds of Meta’s applications to the US Patent and Trademark Office. While these do not mean the tech will be built, it highlighted Meta’s plans to harvest a vast array of biometric data from eye twitches to nose scrunches and body movements. Such data will help the company ensure the digital environments they build are realistic, but it also revealed the extent of its plans to cash in on the metaverse including using deeply personal data to sell ads in more targeted ways.

In the physical world, in the UK and Europe, the General Data Protection Regulation (GDPR) governs what information employers can and cannot collect and store about their workers, including medical and personal records as well as things such as appraisals. As a result, companies that want to occupy the metaverse will have to consider how to protect workers’ data while requiring them to participate in a virtual world.

“Existing laws do not account for new paradigms being created in immersive technology,” writes Brittan Heller, a technology lawyer and fellow at US-based think-tank Atlantic Council in a discussion paper published in 2020. “Many questions prompted by the new technology bring us beyond current frontiers of the law: How are scans of user data collected? How is the information stored? How often is the information updated? How long is data retained?”

Hidden dangers

Patel, who was subjected to what she called a sexual assault in the metaverse, is a doctoral researcher at the University of Reading studying the “psychological and physiological impact” of experiencing these immersive, virtual worlds. She knows better than most how violating a digital interaction can feel.

“In the virtual space it seems to be acceptable to behave in a way that people would not in real life,” she says, creating potential issues for policing conduct in a metaverse workplace. “The comments I’ve received in response [to a blog about her experience], show that there are people who think this behaviour is appropriate in virtual environments.”

Are employers going to say your avatar has to bear resemblance to you? To what extent would we be allowed freedom of expression?

Nor do the laws that protect employees from harassment and discrimination map neatly on to a world in which users operate digitally. Holding an avatar accountable for acts such as harassment would mean attributing a legal persona to it so it could be sued or prosecuted.

“Recently there have been reports of sexual harassment in the metaverse . . . which begs the question whether a digital being can have rights, and if so, do the existing protections for harassment extend to that avatar?” asks Newman.

Current UK laws also prevent workers from being discriminated against on the basis of nine protected characteristics including sex, religion and race. But do such laws still apply in a world where people can present themselves as anything they like, including in some cases animals or robots?

Issues of self-expression could prove legally and ethically difficult. Chamberlain says: “What if I wanted to present myself in the metaverse as a young black woman? Should I be able to do that? Are employers going to say your avatar has to bear resemblance to you? And to what extent would we be allowed freedom of expression?”

Pause for thought

In a blog post last year, Meta said the “metaverse won’t be built overnight by a single company,” adding, “Many of these products will only be fully realised in the next 10-15 years.” But Meta founder Mark Zuckerberg has pledged to spend $10bn a year over the next decade on the metaverse, while other big tech groups are snapping at his heels.

Microsoft agreed to buy gaming company Activision in January in a $75bn deal intended to “provide building blocks for the metaverse”, according to the company. Indeed, speaking to the Financial Times recently, Microsoft’s chief executive Satya Nadella, said: “You and I will be sitting on a conference room table soon with either our avatars or our holograms or even 2D surfaces with surround audio.”

Meta’s blog acknowledged that the wait for the technology is “frustrating for those of us eager to dive right in, it gives us time to ask the difficult questions about how they should be built”. Workers expected to inhabit the metaverse might be glad of that.