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Ethical AI in the Workplace: Reducing Workload, Improving Efficiency, and Managing Compliance Risks

Introduction

Artificial intelligence is reshaping the ways organisations manage the entire employment lifecycle, from screening resumes and identifying potential candidates to supporting employee development, analysing workforce skills, and assisting with HR processes. While AI offers powerful opportunities to reduce workload, improve efficiency, and transform how teams operate, its integration into the workplace also presents significant legal, ethical, and compliance challenges. Bias and discrimination risks, data processing and privacy concerns, and the rise of AI-powered workplace surveillance all require careful consideration and strong safeguards to ensure responsible and transparent use.

AI-based workforce analytics showing skill performance and employee evaluation.

The Expanding Role of AI Across the Employment Lifecycle

From recruitment to workforce development, AI can be utilised to drive efficiencies across the entire employment lifecycle. Effective use of AI can reduce workload, enable teams to focus time and energy where it’s most needed, and also transform how teams manage work. For human resource management teams, some of the ways AI can be used include:

  • Screening large volumes of resumes to extract key skills and match candidates' experience to job descriptions
  • Scanning public profiles and job platforms to identify potential company fits
  • Recommending learning paths and stretch assignments based on an employee’s role, performance, and career aspirations
  • Performing a gap analysis of organisational skills and opportunities
  • Identifying patterns in employees' performance data
  • Providing HR assistance to build policies, programs, and
  • Assisting in the payroll process

While AI is a powerful tool to aid human resource management teams, its integration into the workforce presents legal and compliance challenges.

Ethical AI and compliance concept for governance and responsible workplace technology.

In an employment space, AI has been found to perpetuate gender and race discrimination in its hiring processes and can pose risks to an organisation’s compliance with anti-discrimination, human rights, and employment law.

Bias and Discrimination Risks

Large language models (LLM) are advanced machine learning models that are designed to understand and generate human language. They are trained on a vast amount of data and derive answers based on these data inputs. While answers from LLMs can read ‘human’ and include mannerisms and language not too dissimilar from any other colleague, LLMs are incapable of self-consciousness and emotional intelligence. Answers are derived from a mathematical ‘truth’ or probability based on its dataset. This means that if there is bias within the data LLMs are trained on, they are incapable of distinguishing that bias from a factual truth. It is inevitable that any answer generated by an LLM will reflect errors and biases that occur within its training data, and it is nearly impossible to provide an adequate amount of unbiased data to an LLM. In an employment space, AI has been found to perpetuate gender and race discrimination in its hiring processes and can pose risks to an organisation’s compliance with anti-discrimination, human rights and employment laws.[1]  An organisation intending to utilise AI in its employment processes may be at risk of perpetuating bias within its organisation without adequate controls and systems in place to mitigate it.

Data Processing

From storing contracts in a locked filing cabinet to managing documents entirely through an e-filing system, the way employee data is stored and utilised in the workplace has evolved over the last two decades. An employee’s initial consent for processing and storage of their data may not extend to the use of AI. Additionally, there may be legislative, privacy, and ethical barriers to the processing and use of sensitive personal information, including health records, criminal records and information relating to criminal records, and background checks through AI. This includes the geographical location of the storage and the risk of unnecessary exposure of the information. Through using AI in the workplace without the necessary controls and consent, an employer may unintentionally be infringing on an employee’s privacy rights.

Today, AI-powered monitoring systems are a common feature of remote and hybrid workspaces.

Workplace Surveillance, Approval, and Protection of Workers’ Privacy

Compared to the days of filing cabinets and punch cards, much has evolved at work. Contemporary workplaces operate with a plethora of digital dashboards and algorithmic management systems tracking how long a worker takes to complete a task, answer emails, and even moments of inactivity. Productivity, engagement, and prediction of potentially reaching burnout are increasingly carried out through management by AI and data analytics. While these tools have also improved efficiency, they raise some fundamental questions about trust, autonomy, and how far monitoring and control need to go.

From the patterns a person types on to e-mail behaviour to biometric inputs like facial recognition or voice analysis.

Today, AI-powered monitoring systems are a common feature of remote and hybrid workspaces. The tools gather data input via everything from the patterns a person types on to e-mail behaviour to biometric inputs like facial recognition or voice analysis. Sometimes, monitoring extends into workers’ homes, blurring the line between professional and personal life. The data is then analysed in search of trends, underperformance, or predictions of disengagement. Such insights can indeed help teams work well and take care of employee well-being, but biased conclusions are also a possibility. For example, slower task completion may be perceived as poor performance, even if one is managing health conditions or caregiving responsibilities.

Beyond productivity, AI can support employee welfare. By identifying early signs of stress, anxiety, or personal challenges, employers can intervene proactively, offering support before issues escalate. When implemented transparently, AI can instil trust and engagement, shifting perceptions of monitoring from a tool of control to one of support. AI can also improve adherence to ethical and legal norms, as it can alert an employer to potential policy or regulatory breaches early on, so they don't escalate.

It's further enhanced by webcams, wearables tracking attendance, workflow, and engagement in detail, and by smart sensors. While these systems bring about operational efficiency, they also raise serious privacy concerns. Continuous monitoring would erode trust and lead to biased evaluations, as the constant flow of data would be easily misinterpreted or applied in an unfair manner.

Best Practice

The use of AI in a workplace is inevitable, and controls and best practices are vital in ensuring ongoing compliance and ethical use of AI. Preparation can be done by: 

Implementing strong AI policies in line with local and international standard frameworks
Promoting transparency and accountability in AI use
Conducting privacy impact assessments and privacy action plans
Implementing data minimisation principles
Including a human in the loop
Conducting audits for bias and accuracy
Seeking clear and informed consent for processing

Organisations should consider various key ethical principles in implementing AI and biometric monitoring responsibly. Monitoring should be proportionate to genuine business needs; employees should be informed about what data is collected and how it will be used; fairness and bias mitigation must be integral to the development of AI systems; sensitive biometric data should be encrypted and access-controlled; and human oversight must guide decisions that have significant consequences.

AI-use policies set ethical boundaries, ensure accountability, and guarantee fairness in AI-driven decision-making.

Internal policies and privacy audits form an important part of responsible data use. Policies should detail what data is gathered, for what purpose, who has access to it, and employees' rights in terms of viewing or correcting their information. Privacy audits check for compliance, find the gaps, and minimise the risks of non-compliance. In the same way, AI-use policies set ethical boundaries, ensure accountability, and guarantee fairness in AI-driven decision-making. Organisations should train employees on these policies, review them periodically, and keep them aligned with the requirements for legality and ethics.

In sum, AI-driven surveillance will enhance efficiency, support employees' well-being, and engender more trust when it is transparent and ethical. Conversely, misuse of these tools can take a devastating toll on morale, compromise privacy, and harm organisational culture. This deliberate, human-centred approach means having clearly articulated policies and regular audits to review workplace monitoring's balance of technological innovation with respect for employee rights, privacy, and wellbeing.


[1] Yang Shen and ZXIuwu ZHanng, ‘The impact of artificial intelligence on employment: the role of virtual agglomeration’ (2024) 11 Humanities and Social Sciences Communications 122, Leonardo Nicoletti and Dina Bass, ‘Humans are Biased. Generative AI is Even Worse’ Bloomberg Technology (Report, 9 June 2023) <https://www.bloomberg.com/graphics/2023-generative-ai-bias/>.

This blog & whitepaper have been written and developed by:
Valentina Howlett, Content Developer – Financial Services, LexisNexis® Regulatory Compliance
Priya Narasimhalu, Content Development Editor, LexisNexis Regulatory Compliance


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