AI and Employment Law: What Employers Need to Know in 2025
AI is increasingly being adopted by small and medium-sized businesses to improve efficiency, reduce administrative burdens and streamline processes. From automated CV screening and employee monitoring tools to AI-driven performance management systems, these new technologies offer clear operational benefits.
However, if AI systems are used to make or influence decisions about recruitment, performance or dismissal, employers must ensure they comply with UK employment and data protection laws. Failure to do so could expose your business to legal claims.
Under UK employment law, employers are responsible for ensuring that any technology used must comply with key legislation such as the Equality Act 2010 and the General Data Protection Regulation. This is in aims to protect individuals from discrimination and to ensure fair processes of personal data.
Key Risks of AI in the Workplace:
- Discrimination: AI recruitment tools trained on biased data can disadvantage applicants based on their protected characteristics, such as age and gender, potential leading to unlawful discrimination claims.
- Unfair dismissal: decisions about performance or termination based on automated tools, without human oversight, is likely to raise issues of fairness.
- Lack of transparency: employees have the right to understand how decisions affecting them are made, particularly when data has been collected by AI.
How to Mitigate the Risks:
Employers should be cautious to ensure fairness when implementing AI into workforce management.
- Conduct impact assessments before introducing AI systems
- Maintain human oversight of key decisions
- Ensure transparency and fairness in how data is used
- Regularly review AI tools for bias and accuracy
How Can We Help at Schofield & Associates?
Our Legal and HR services can support employers in navigating AI and employments law. We can provide:
- AI policy reviews to ensure compliance with UK legislation
- Risk assessment for AI tools in recruitment, performance and monitoring
- Training for staff and managers on ethical AI use
- Legal support with discrimination and unfair dismissal claims linked to automated decision making
Conclusion
As AI continues to share the modern workplace, it's essential for SMEs to strike the right balance between innovation and compliance. Ensuring that your use of AI aligns with employment and data protection laws is not just best practice, it's a legal necessity.
Here at Schofield & Associates, we're here to help you navigate these challenges with confidence.
If you're looking for advice, then we're here to help. Contact us at:
Eileen Schofield for Employment Law advice on eileen.schofield@schofieldandassociates.co.uk - 01564 334614
Derri Moran for HR advice on derri.moran@schofieldhr.co.uk - 07508 741505
To visit our main website pages, follow:
https://www.schofieldandassociates.co.uk/
https://www.schofieldandassociates.co.uk/hr