Artificial intelligence is rapidly transforming HR — from recruitment and performance management to workforce planning. But with opportunity comes risk. Employment use cases of AI are increasingly under regulatory scrutiny (the EU AI Act even labels them “high risk”), and tribunals are already seeing cases where automated tools have produced discriminatory or unfair outcomes.
For HR leaders, the challenge is clear: harness the benefits of AI while protecting employees, the organisation, and your own credibility. That starts with a robust, joined-up policy and governance framework.
Here’s a practical roadmap for HR professionals to use AI responsibly and compliantly.
1. Governance and Scope
AI needs ownership. Define who is accountable — typically HR working alongside legal, IT security, and the Data Protection Officer. Set approval gateways for new tools and publish an explicit “approved AI tools and use-cases” list. Any use outside those boundaries must be pre-authorised.
Run an AI risk audit across your organisation, including third-party tools embedded in HR platforms. Align your AI policy with existing frameworks — data protection, equality, recruitment, disciplinary, and confidentiality policies.
When procuring tools, interrogate suppliers: ask how models were trained, what explainability they provide, and how they mitigate risks like bias, security, and intellectual property. Avoid “black box” solutions you can’t justify in a tribunal.
2. Data protection and decision-making
AI almost always involves processing personal data. Map what data you’re using, identify lawful bases, and complete Data Protection Impact Assessments (DPIAs) before deployment. Update privacy notices to reflect employee rights.
Avoid solely automated decisions with significant effects (such as hiring, dismissal, or promotion). Instead, use AI as decision support. Maintain meaningful human oversight, ensure employees can request explanations, and provide routes to challenge outcomes.
In recruitment, follow ICO and Government guidance: regularly audit for bias, assess risks of digital exclusion, and document your testing and mitigations.
3. Equality, fairness and accessibility
AI can unintentionally discriminate if trained on skewed data. Audit datasets and outcomes for bias in hiring, performance scoring, and redundancy. Ensure reasonable adjustments for candidates or employees affected by automation (e.g., scheduling or online assessments).
Embed fairness checks into processes like performance management and redundancy selection. Record your rationale so that if challenged, you can demonstrate compliance with Equality Act duties.
4. Confidentiality, security and shadow AI
Ban the use of public AI tools for confidential or personal data. Require human review of outputs and mandate enterprise-grade, approved solutions with appropriate safeguards.
Combat “shadow AI” — staff using unapproved tools — with clear rules, training, and technical controls such as data loss prevention and access restrictions.
5. Intellectual property and content risks
Clarify ownership: work created with AI in the course of employment belongs to the employer. Update contracts with staff, contractors, and vendors to reflect this.
Reduce legal and reputational risks by requiring human fact-checking of AI-generated outputs, especially in rights-sensitive areas like legal advice, marketing, or code. Train teams to recognise and correct AI “hallucinations.”
6. Recruitment and selection
Be transparent with candidates about how AI is used. Always keep a human in the loop for significant hiring decisions, and provide a right of review.
Avoid unexplainable tools like facial recognition or opaque CV ranking algorithms. Test systems for bias, maintain auditable records of outcomes, and keep recruitment fair and defensible.
7. Grievances, disciplinaries, and employee submissions
Decide whether employees may use AI to help draft submissions. If allowed, set safeguards: no confidential inputs, mandatory human redrafting, and clear attribution.
Tackle AI-related misconduct explicitly — from deepfakes to harassment via AI filters. Update disciplinary policies to reference AI misuse. At the same time, consider reasonable adjustments where AI may support neurodiverse or disabled employees.
8. Redundancy, performance, and workforce planning
Keep AI as decision support only. Ensure transparent, explainable criteria and document human oversight to reduce risk of unfair dismissal claims.
If monitoring workers, ensure processing is proportionate, respect Article 8 privacy rights, and provide full transparency. Document the human rationale behind any AI-assisted scoring.
9. Training and culture
AI isn’t just a tool — it’s a cultural shift. Provide AI literacy training for all employees, covering prompt design, bias awareness, data protection, and confidentiality.
Reinforce the principle that AI augments, not replaces, human judgment. Require human checks before external publication or high-risk internal use. Embed this through onboarding, refresher training, and accessible FAQs.
10. Monitoring, enforcement and audit
Define proportionate monitoring for compliance. Establish clear incident-reporting routes for AI misuse or breaches, and apply consistent disciplinary outcomes.
Maintain a central register of AI systems, risk assessments, bias audits, and approvals. Keep auditable records of how AI contributed to employment decisions, alongside the human rationale. Schedule regular policy reviews to capture new risks and regulatory changes.
11. Keep ahead of regulation
The EU AI Act and UK developments show regulation is evolving quickly, especially in employment use cases. Build flexibility into your AI policy, track regulatory changes, and ensure vendors can provide the transparency and assurances you’ll need.
Final Thought
AI is already embedded in HR platforms and processes — whether you’ve authorised it or not. The most effective HR leaders won’t just adopt AI tools; they’ll put the governance, safeguards, and culture in place to use them responsibly.
Handled well, AI can streamline HR operations, improve fairness, and free professionals to focus on the human side of people management. Handled poorly, it risks regulatory breaches, tribunal claims, and reputational damage.
The choice lies in how you act today.
This article was created with insights from Lex HR - your always-on HR legal assistant. Lex HR helps HR professionals navigate complex employment law with confidence, providing real-time, reliable advice tailored to your needs. Try it free today and see how much easier compliance can be.
