Legal development

Inevitable and influential – AI in the employment life cycle 

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    What you need to know

    • The Federal Government's Inquiry into the Digital Transformation of Workplaces is currently seeking feedback on topics including: the benefits of AI for productivity and regulatory compliance; the risks and consequences of adopting AI in recruitment, job design and monitoring; the effects of AI on labour rights and discrimination; and appropriate safeguards to guide responsible implementation.
    • Public submissions in response to the Inquiry are due by 21 June 2024.

    What you need to do

    • Review your organisation's current and planned uses of AI to ensure that any workforce impacts are appropriately identified and managed. Examine the safeguards in place for any AI tools currently used, and develop policies and frameworks for the safe implementation and use of AI tools.
    • Consider making a submission to the Federal Government's Inquiry about how organisations can benefit from adopting AI while preserving employee rights.

    Rapid uptake of AI

    While AI has been around for some time, it has now become tangible for many organisations who are either using AI in their workplaces to some extent now or considering how best to utilise it in the future, while safeguarding against the risks that it presents. This Employment Alert summarises some of our employment law observations on the use of AI across the employment life cycle.

    Pre-employment decision making

    AI products are available across all stages of recruitment including advertising job vacancies, sourcing candidates, screening applications and assessing recorded interviews. These tools can save organisations significant time and resources. However, AI tools can be susceptible to bias (eg the model learning problematic bias from historical data inputs). There has been litigation overseas in relation to discriminatory outputs from AI tools.

    Organisations should ensure that appropriate governance and quality control processes are in place to mitigate these risks. Recommended strategies include:

    • performing due diligence on third party AI products (and advising procurement teams of the risks to be assessing when sourcing new tools);
    • conducting audits of outputs from AI tools; and
    • training recruiters on appropriate use of AI.

    Early career development

    Currently, AI seems best for tasks such as searching for information, reviewing documents and summarising material; all of which have typically been performed by junior employees while they build foundational knowledge.

    As AI becomes part of employees' everyday "toolkits" in the future, becoming adept at effectively using generative AI will be an important skill. Although certain tasks might be more efficiently performed by AI tools, organisations should continue to look for development opportunities for junior employees to ensure the transfer of knowledge and skills. Those development opportunities will look different when AI tools are integrated into existing practices.

    Mitigating and exacerbating psychosocial risks

    In recent years, we have seen a growing regulator focus on psychosocial risk. While there can be negative consequences of AI adoption in the workplace, employers can also harness these tools to improve staff safety and wellbeing.

    Psychosocial risk can arise from the rapid introduction of AI into workplaces as certain tasks are replaced, thereby diminishing workers' role clarity and increasing job uncertainty. Work intensity and stress levels may increase as AI frees up time for more cognitively challenging work, as well as increasing the sheer volume of that type of work.

    To reduce these risks, organisations should:

    • engage with employees during times of disruption to clearly outline expectations, and upskill employees so they can properly harness and benefit from AI; and
    • ensure risk assessments are conducted prior to implementation of AI.

    However, the introduction of AI also has the potential to have a positive impact on employee wellbeing. Employees may experience improved job satisfaction by 'outsourcing' more menial tasks to AI tools, while other AI monitoring tools can help identify signs of employee burnout and facilitate earlier intervention to promote wellbeing.

    Industrial relations

    Redundancies are likely to be a market-wide consequence of AI, as certain roles are able to be replaced, while others may see their jobs evolve to encompass substantially different tasks. These events may trigger consultation obligations and severance entitlements. Employers may see more requests to 'bake in' worker protections in industrial instruments (as has recently occurred overseas).
    Organisations should identify roles at risk of displacement by AI and consider strategies to deal with those workforce changes both at an individual and industrial level. We expect demands will be made for more favourable redundancy entitlements along with stringent retraining and redeployment obligations for employees likely to be affected. Organisations should prepare commercial and industrial strategies in this regard.

    Making submissions

    Employers with workforces potentially affected by the adoption of AI should consider making a submission to the Federal Government's Inquiry about how businesses can benefit from AI while mitigating detriment to employees.

    Submissions must be lodged online by 21 June 2024.

    Authors: Jane Harvey, Partner; Julie Mills, Counsel; Simon Moore, Senior Associate; and Max Moffat, Associate. 

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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