Artificial Intelligence in Employment Law: Current Regulatory Landscape

As Artificial Intelligence (AI) continues to dominate news cycles and expand into seemingly all aspects of our daily lives, employment law is no exception. AI is here to stay, growing rapidly, seemingly by the day and with this comes increased possibilities but also increased risk. In this article, we will take a look at the current landscape in the UK regarding AI in employment law.

Jump to the relevant section

1. What is AI?
2. AI in Law: Current Regulatory Landscape
3. Role of Artificial Intelligence in Employment Law: Current Legal Landscape
4. Impact of Artificial Intelligence on Common Law
5. Significance of AI in Interpreting Equality Act 2010
6. What Artificial Intelligence May Impact Employment Rights Act 1996
7. Data Protection Act 2018 and the UK GDPR

What is AI?

Before we discuss AI and employment law in detail, it will be useful for the term to be defined. The ‘AI and Employment Law Research Briefing’ (published 11 August 2023), defines AI as ‘technologies that enable computers to simulate elements of human intelligence, such as perception, learning and reasoning’. 

Essentially, AI systems are fed huge amounts of data which they decipher patterns and correlations from to create algorithms based on the data it has processed.  

Some AI systems have something referred to as the ‘black box’, which relates to the inner workings of the algorithm that particular AI system uses, which Dr Pavel Klimov explained to the House of Commons Science and Technology Committee in 2018 as being an issue because “…humans may no longer be in control of what decision is taken and may not even know or understand why a wrong decision has been taken, because we are losing sight of the transparency of the process from the beginning to the end”. This can cause issues for employers, which we will touch on later in this blog.

AI in Law: Current Regulatory Landscape

Following the Government’s Whitepaper published in March 2023, which showcased the Government’s intention to lead a pro-innovation approach to AI regulation, the Government has decided to adopt what some would argue is a laissez-faire approach to regulating AI (compared to elsewhere in the world, such as the European Union), opting for a system of five non-statutory principles, implemented by existing regulators such as the Information Commissioner’s Office (ICO) and the Equality and Human Rights Commission), rather than introducing new legislation.  

The AI Law Consultancy report ‘Technology Managing People – the legal implications’, commissioned by the Trades Union Congress (TUC) suggests major alterations to existing acts such as data protection legislation and the Employment Rights Act 1996, rather than introducing a new AI Act altogether; which the EU intends to do following the June 2023 approval by the European Parliament.

The TUC has taken further action by launching a new AI Taskforce which aims to have a draft AI and Employment Bill ready by early 2024 (with the help of Cloisters Chambers), which already has some cross-party support from MPs.  

However, as it stands the current government has no intention of implementing any of these suggestions (although the mood in Parliament could be changing), whereas Labour has publicly stated it would pursue a more interventionist approach should they have the opportunity, following the next general election.  

Role of Artificial Intelligence in Employment Law: Current Legal Landscape

As it stands, there are currently no explicit UK laws that govern the use of AI at work, but some legislation may provide protection for employees. This could leave companies exposed to employment tribunal claims as we are entering into unchartered territory whilst businesses pursue AI for greater efficiency and costs reductions, evidenced by an ONS survey whereby 16% of UK businesses were using some form of AI technology and a further 13% of businesses were planning to adopt it in the future.

Recently, Labour MP, Mick Whitley, has introduced the Artificial Intelligence (Regulation and Workers’ Rights) Bill to the House of Commons which aims to regulate the use of AI in the workplace. This is a Private Members’ Bill meaning it is unlikely to become law, but by creating publicity around the issue it may help affect legislation indirectly.   

Impact of Artificial Intelligence on Common Law

In common law, the employer and employee relationship involves a mutual contract whereby the employees’ promise of work is mutually dependent on the employer’s promise to pay them.  

However, with Artificial Intelligence potentially making or informing employer’s decisions, the mutuality of this obligation could be under threat. 

Furthermore, there is an implied obligation of mutual trust and confidence at the heart of every employment relationship. The use of AI muddies the waters for employers, who are obliged to explain their decisions and justify that they were made in good faith. 

In a situation whereby an important decision has been made, such as to dismiss an employee and that decision was made by or with heavy reliance on AI, particularly in such cases where the AI acts as a ‘black box’ and the human manager has little understanding of how it reached its outputs, an employer may struggle to explain their decision as they simply do not understand how it was arrived at, possibly making said dismissal unfair.  

Significance of AI in Interpreting Equality Act 2010

There have been various high-profile events in the news, such as in 2014 when Amazon’s AI system taught itself that male candidates were preferable over female candidates, highlighting a clear risk of bias in algorithms. 

The Equality Act 2010 provides protection from discrimination and is applied to AI used in employment, meaning that employers will need to ensure the AI they use is not in breach of the Equality Act 2010. 

The use of AI could be seen as a “provision, criterion or practice” that could give rise to indirect discrimination claims if it were to have disproportionate effects on one or more protected groups

What Artificial Intelligence May Impact Employment Rights Act 1996

A major concern for employees is that AI is going to reduce the need for them to carry out their jobs and they may be ultimately replaced by AI. However, employees with over two years of continuous service have the right not to be unfairly dismissed under this legislation. 

Employees with over two years of continuous service have the right not to be unfairly dismissed under this legislation. 

In the event AI does reduce the need for employees to carry out a particular type of work, employers should still ensure an appropriate procedure is followed before dismissing any colleagues.  

Any dismissal must be for one of the five ‘fair reasons, being conduct, capability, redundancy, statutory illegality or some other substantial reason. Therefore, if AI is used in the decision-making process and it has made an error in its processing, it could result in a dismissal being unfair. For example,  eg if AI incorrectly stating stated that an employee had a period of unauthorised absence because it did not process the employee’s fit note correctly, leading which led to the employee’s dismissal, this dismissal is likely to be unfair.

Data Protection Act 2018 and the UK GDPR

The ICO has released its own Guidance on AI and data protection, although is not a statutory code. Currently, the biggest risk to employers is the accessibility to staff of generative AI technologies, such as ChatGPT which uses the data it is given to generate and create new data.  

There are clearly risks for confidential information to be placed into ChatGPT and the public domain, possibly breaching the legislation. Employers need to ensure their employees are complying with these requirements and may even consider having an AI policy in place, or specifically a ChatGPT policy, to ensure employees fully understand what it can be used for and the risks involved in a similar ilk to a mobile phone or social media policy.  

Our employment law department provides excellent services for those who are experiencing disputes within the workplace. We understand that Employment disputes can be draining, with livelihoods, reputations, careers, and money all at stake. 

Our clients include employers and employees, with the best employment lawyers in London you get peace of mind that our highly experienced lawyers will professionally deal with your case. The same law applies to you regardless of which side you are on. The vital aim for both is to resolve the situation satisfactorily and quickly as possible 

If you need help with employment disputes and settlement agreements and/or employment and industrial law services that we offer to trade unions and their members, you can call us on 020 7940 4060 or email us at mail@anthonygold.co.uk.