AI and Employment Law: Time to Update Your HR ‘To Do’ List?
AI and Employment Law: Time to Update Your HR ‘To Do’ List?
AI presents enormous opportunities for organisations ready to embrace it but it also raises significant legal and ethical challenges, particularly around how employees are managed, assessed, and supported.
There are currently no specific UK laws designed solely to regulate the use of AI in the workplace. Instead, employers must navigate existing employment and data protection laws many of which were drafted long before AI became part of daily working life. This creates uncertainty and places a greater responsibility on employers to act ethically and transparently.
Below are six key areas employers and HR leaders should consider when assessing the impact of AI on their workforce.
1. Fairness and Bias in AI-Driven Decisions
AI is increasingly used in recruitment, performance reviews, and other HR processes. While it promises to make decisions more data-driven and objective, experience shows that AI systems can unintentionally replicate or even amplify bias — sometimes despite built-in safeguards.
If AI produces a discriminatory outcome, it’s ultimately the employer, not the technology provider, who faces legal liability. Beyond legal risk, biased algorithms can also damage reputation and trust amongst the workforce.
Employers should maintain robust oversight over AI tools used in HR decisions. Regular audits, human review mechanisms, and the ability for employees to appeal decisions can all help ensure fairness and compliance with equality law.
2. Building Trust Through Transparency
AI will only succeed in the workplace if employees trust how it is used. That trust can quickly erode if staff don’t understand how AI influences decisions about recruitment, performance, or promotion.
Employers should be open about how AI tools are used and ensure accountability for AI-led decisions. Developing a clear AI policy that explains the purpose, scope, and safeguards of AI use in HR is essential for transparency and engagement.
3. Managing Data Responsibly
AI relies on large volumes of data often including personal or sensitive employee information. Employers must ensure that the collection and use of this data complies with data protection laws such as the UK GDPR.
Review your data protection policies, employee privacy notices, and data-sharing agreements to confirm that the use of data for AI purposes is lawful and transparent. Where AI systems are supplied by third parties, check the contract terms carefully to prevent data being used for other clients or unintended purposes.
4. Preparing for Workforce Change
One of the most visible impacts of AI is job automation. As AI takes over certain functions, some roles may diminish or disappear altogether.
Employers should plan ahead by investing in upskilling and reskilling initiatives to help employees adapt to new technologies. At the same time, consider how automation affects talent pipelines if entry-level roles are reduced, organisations will need new ways to develop future leaders.
5. Rethinking Employment Relationships
AI may also prompt fresh questions about what it means to be an “employee.” As more tasks are automated or performed collaboratively between humans and machines, traditional definitions of “personal service” may evolve.
In parallel, the growth of the gig economy and flexible work models could accelerate if workers increasingly manage or interact with AI systems across multiple employers.
Monitor how employment case law develops and be ready to adapt contracts, policies, and engagement models to reflect the changing nature of work.
6. Embedding Ethics in AI Use
Until there is formal regulation, employers must develop their own principles for the responsible use of AI. This means not only asking whether a particular use of AI is legally permissible, but also whether it is fair and consistent with the organisation’s values.
- Is it appropriate to use AI for this specific task (e.g. recruitment, disciplinaries, or performance reviews)?
- Does the use of AI respect employee dignity and align with our ethical principles?
- Are our existing policies and procedures sufficient, or do they need updating to reflect AI use?
Balancing Innovation with Integrity
AI will undoubtedly change the world of work but how it does so depends on the choices employers make now. By combining innovation with fairness, transparency, and ethical leadership, businesses can use AI to enhance rather than undermine trust in the workplace.
Now is the time for HR leaders and employers to review their policies, update their training, and ensure they are ready for the new world of work shaped by AI.
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At Springhouse Solicitors we offer a range of services, so please contact our friendly customer services team to discuss further via hello@kilgannonlaw.co.uk or 0800 915 7777.
Disclaimer
The above provides a general overview of areas in employment law and is not intended nor construed as providing specific legal advice. This article is for information purposes only and is correct at the time of publication. It does not constitute legal advice.
11.11.25
