Artificial intelligence (AI) is transforming the modern workplace, and employment law is no exception. From AI-driven recruitment platforms to automated performance monitoring and predictive HR analytics, technology is rapidly changing how employers make decisions about hiring, managing, and terminating employees. While AI offers significant benefits in terms of efficiency and objectivity, it also raises serious legal and ethical concerns.
This article explores the key benefits and disadvantages of AI in the context of employment law, focusing on the risks, opportunities, and evolving legal landscape.
The Benefits of AI in Employment Practices
1. Increased Efficiency and Cost Savings
One of the most attractive features of AI is its ability to automate repetitive and time-consuming tasks. In recruitment, for example, AI tools can sift through thousands of CVs in seconds, identify candidates who match the job description, and schedule interviews. Similarly, AI can assist with onboarding, performance reviews, absence management, and workforce planning.
This increased efficiency reduces the administrative burden on HR professionals and can lower operational costs.
2. Consistency and Objectivity
AI systems, when properly designed and monitored, can promote greater consistency in decision-making. Unlike human managers, AI does not suffer from fatigue, emotion, or unconscious bias—at least in theory. By applying the same criteria to all candidates or employees, AI can help reduce subjective variation and the risk of discriminatory decisions based on protected characteristics.
This objectivity can be particularly valuable in recruitment, where AI may help minimise the influence of stereotypes or gut instinct. Similarly, AI can help flag performance or conduct issues in a uniform way, ensuring fairer treatment across the workforce.
3. Predictive Insights for Workforce Planning
AI is increasingly used to analyse patterns in employee behaviour, predict future outcomes, and guide strategic HR decisions. For example, predictive analytics can identify which employees are most at risk of leaving the organisation, allowing employers to take proactive steps to improve retention.
AI can also assist in identifying training needs, forecasting labour shortages, and modelling the impact of policy changes. These capabilities enable employers to make more informed, evidence-based decisions.
The Disadvantages and Legal Risks of AI in Employment
Despite the benefits, AI presents a number of legal and ethical challenges—many of which directly engage employment law principles.
1. Algorithmic Bias and Discrimination
Perhaps the most pressing concern is the risk of unlawful discrimination. While AI is often perceived as neutral, it is only as unbiased as the data it is trained on. If historical data reflects discriminatory practices or societal inequalities, AI systems may replicate or even amplify those biases.
Under the Equality Act 2010, employers must not discriminate directly or indirectly on the basis of protected characteristics such as race, sex, age, disability, or religion. If an AI system disadvantages a particular group—intentionally or not—the employer may be held legally liable, even if the decision was automated.
3. Surveillance and Privacy Concerns
AI is also used in employee monitoring, from tracking keystrokes and screen time to analysing emails and video footage. While such monitoring may improve productivity or detect misconduct, it raises significant privacy concerns.
Under the Employment Practices Code and UK GDPR principles, employers must ensure that monitoring is proportionate, necessary, and transparent. Employees should be informed about what data is being collected, why it is being used, and how it is being stored.
4. Responsibility and Accountability
Another challenge is identifying who is responsible when AI makes a mistake. If an algorithm produces a discriminatory outcome, is the liability with the software provider, the HR department, or the employer as data controller?
Under current legal principles, employers are generally held accountable for decisions made within the course of employment—even if those decisions are made by machines. This means employers must carry out due diligence when procuring AI tools and ensure they are used lawfully and ethically.
Certain roles, such as dealing with employment disputes, line management of employees, or negotiating settlements (among many others) should realistically only be dealt with by a human – it would be difficult to have productive without prejudice communications between a human employee and AI because of the range of variables, factors and emotions that a human has to take account of when dealing with such conversations.
Best Practices for Employers
To manage the legal and ethical risks of AI in employment, employers should adopt the following best practices:
- Conduct Equality Impact Assessments: Before implementing AI systems, assess whether they could disadvantage any protected groups and take steps to mitigate those risks.
- Ensure Human Oversight: Avoid fully automated decision-making in employment contexts. Include meaningful human review in all significant employment decisions.
- Be Transparent: Clearly inform employees and candidates when AI is being used, and explain how decisions are made.
- Monitor and Audit: Regularly review AI systems for accuracy, fairness, and compliance. Be prepared to explain and justify AI-driven decisions.
- Train HR and Managers: Ensure those using or overseeing AI tools understand the legal framework, including discrimination and data protection laws.
- Involve Stakeholders: Consult employee representatives, trade unions, and legal advisors before deploying new AI technologies in the workplace.
Conclusion
Artificial intelligence holds real promise for improving efficiency, fairness, and strategic decision-making in employment. However, its use is fraught with legal pitfalls, particularly around discrimination, data protection, and transparency. Employers who fail to understand or manage these risks may find themselves on the wrong side of the law.
Redmans Solicitors are employment solicitors and settlement agreement lawyers based in London
