Employment Alert – AI in the Workplace
What’s happening?
Artificial Intelligence (AI) has advanced rapidly in recent years. It can bring huge benefits but also carries risks. In the employment sphere, we have seen a marked increase in employees using AI when submitting grievances and tribunal claims.
On 12 May 2026 the Data Protection Act 2018 (Code of Practice on Artificial Intelligence and Automated Decision-Making) Regulations 2026 came into force. The Regulations require the Information Commissioner to prepare a code of practice on processing of personal data using AI and automated decision making, setting out best practice.
Whilst the code of practice is not yet available, it is expected to include guidance on safeguards when using AI within HR, including ensuring transparency, requirements for human oversight and a right to contest automated decisions. The Regulations emphasise the importance of using AI responsibly and highlight key areas employers should consider now.
Why is this important?
AI has become embedded, often unseen, in the day-to-day operations of many workplaces. It is increasingly shaping how work is organised, managed and assessed.
When used appropriately, AI can be exceptionally effective. Some of the key benefits include:
- Simplifying repetitive or administrative jobs which would otherwise consume employee time. e.g. scheduling and transcribing meetings and processing invoices.
- Monitoring productivity of employees.
- Generating content.
- Comparing and summarising large quantities of information.
- Initial high-level screening of data, for example of job applications .
However, AI has limitations especially if relied on without review. Some of the key risks for HR teams using AI in the workplace are:
- The potential for discrimination – As AI is trained on historical data, it may favour one gender over another for a particular type of role, apply lower scores to non-native English speakers, filter out applicants with unusual resumes or fail to take into account medical conditions when looking at attendance data.
- Risk of unfair or irrational decision making – Managing employees requires the use of soft skills. AI cannot show emotional intelligence or reliably interpret and adapt information for different situations or caveat the response it gives. Managers need to ensure they interpret and use any resulting data appropriately to avoid irrational or unjustifiable decisions. All decisions ultimately need to be justifed under normal employment law principles.
- Risk of reliance on inaccurate data – AI has a known history of ‘hallucinating’ answers or providing inaccurate and misleading information. AI wants to give the user the answer it wants. In doing this, it has been shown to refer to fabricated legal statutes, cases and data. When challenged, AI will often admit that it made up information. AI also draws from all sources on the internet and will not necessarily reliably assess their validity or whether a source is out of date. This is a particular risk in the employment and immigration sphere where legislation and requirements are constantly changing.
- Waiving legal privilege – If an employee puts legal advice into an AI tool for comment, this could waive the legal privilege that protected the advice. This means it could be referred to in court processes. The information is also held in the AI database and could be used by AI when responding to requests submitted by different users.
- Breaches of data protection legislation – Additional safeguards apply to automated decision making under data protection legislation, including an obligation for this to be transparent and clearly set out in privacy notices.
- Escalating issues – where AI is used by employees to draft grievances, complaints or claims, this can result in AI recommending the escalation or expansion of issues, often based on inaccurate information about legal rights. There are also data protection implications when employees share confidential information regarding their employment in AI tools.
When used appropriately and with safeguards in place AI can streamline administrative processes, support HR teams and managers and help businesses thrive.
If not used appropriately in the workplace, AI could expose employers to potential grievances and tribunal claims. It could result in internal processes taking longer to complete and increase legal fees for employers when managing employee issues.
Employers need to act now to ensure AI is only used responsibly in the workplace and that any use complies with the raft of guidance being produced to support this.
What should you do?
Stay Tuned: We will keep you informed on further developments on AI in the workplace. Once the Code of Practice is introduced it will need to be followed.
Review: Consider your use of AI against the Government’s existing responsible AI content, including the specific guidance on responsible AI in recruitment – Responsible AI in Recruitment – GOV.UK and the ICO’s guidance on AI and data protection – Guidance on AI and data protection | ICO. Ensure your use of AI is compliant and clearly set out in your privacy notices.
Guidance: Introduce a clear AI policy setting out what AI can and can’t be used for in your workplace and guidelines for employees to follow. Update other relevant policies (such as disciplinary rules, data protection policies and equal opportunities policies) to reflect your requirements.
Avoid: Never put legal advice or an individual’s personal information into AI unless you are confident sufficient protections are in place to ensure it remains confidential.
Take Advice: If you require advice on how these changes may affect your business or would like support preparing for implementation, please contact [email protected] who can put you in touch with one of our specialist employment lawyers.
All comments and information were accurate at the time of publication and may not reflect current developments. They should not be relied upon without seeking appropriate professional advice.
