Legal Aspects of Using AI in HRM - Blog 08

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The rapid advancement of Artificial Intelligence is reforming human resource management, providing tools for streamlining recruitment and employee engagement. As a recent application to the processes, the legal implications are yet to develop concerning the impacts. 

Organizations must negotiate a challenging legal environment as AI continues to change the workplace to maintain ethical standards, assure regulatory compliance, and safeguard employee rights.  The existing Data and privacy laws are reformed.


Important Legal Aspects of AI-Powered Human Resources

    1. Discrimination and Bias

Biases may be unintentional or reinforced by AI-driven hiring and performance review processes. Employers must make sure AI doesn't discriminate against people based on their gender, age, or other characteristics following legislations like the Equal Employment Opportunity Act (EEOA) and the General Protection Regulation (GDPR), risks can be reduced by regular audits and openness in AI decision - making.

    2. Data Privacy and security

AI systems are engaged in processing large volumes of candidate and employee data, which raises security and privacy issues. Organizations must get the required consent to handle personal data and should be responsible for establishing strong cybersecurity measures in place to avoid data breaches to comply with regulations like the California Consumer Privacy Act (CCPA), the General Data Protection Regulation (GDPR), and other data protection legislation. 

    3. Transparency

Since many AI algorithms function as "black boxes," it might be challenging to comprehend how choices are made. Laws that require businesses to provide an explanation for AI-driven hiring decisions are emphasizing the need for openness more and more. 

Some other factors to be considered are as below.

4. Workplace Surveillance and Employee Monitoring

AI-powered HR solutions are frequently used to track worker communications, behavior, and productivity. Excessive surveillance, however, might undermine confidence and breach privacy rules in the workplace. Employers must strike a balance between worker rights and productivity targets, making sure AI-based monitoring conforms with workplace regulations and national labor laws.


5. AI-generated content and intellectual property Work
AI tools are being used more and more for workforce planning, content production, and talent development. To avoid authorship and usage rights issues, organizations need to make clear who owns AI-generated work and make sure that intellectual property (IP) regulations are followed.


6. Automated Decision-Making and Fair Compensation AI is being included into benefits administration and compensation planning. Businesses may be sued for salary discrimination if AI-driven pay judgments lead to unfairness.

Legal Implications to AI  and HR in Sri Lanka


Businesses are applying AI-driven HR tools and Personnel Management systems, so Sri Lanka is embracing AI in HR recently. 

But since there is no particular AI legislation in the nation, companies must follow current labour laws and international best practices and methods.

Companies need proactively create AI policies, even though the Right to Information Act and Personal Data Protection Act offer some guidelines on data protection. 

AI implications will be covered by the future legislation, therefore HR professionals will need to remain knowledgeable and ready for compliance.

Best Practices for HR leaders


           


AI is transforming HR activities, but firms must exercise caution to maintain legal and ethical compliance. To construct equitable, open, and responsible AI-driven HR solutions, HR professionals must work with legislators, legal professionals, and tech developers as legislation changes. Businesses can use AI to its full potential while safeguarding employee rights and promoting a responsible workplace by aggressively resolving legal issues.



References

·        Brynjolfsson, E. and McAfee, A. (2017). Machine, Platform, Crowd: Harnessing Our Digital Future. W. W. Norton & Company.

·        European Commission (2021). Proposal for a Regulation Laying Down Harmonised Rules on Artificial Intelligence (Artificial Intelligence Act). Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021PC0206

·        Kim, P.T. (2017). Data-Driven Discrimination at Work. William & Mary Law Review, 58(3), pp.857-936.

·        Kuner, C. (2020). The European Data Protection Regulation: A Commentary. Oxford University Press.

·        U.S. Equal Employment Opportunity Commission (EEOC) (2022). Artificial Intelligence and Algorithmic Fairness in Employment Decisions. Available at: https://www.eeoc.gov/




Comments

  1. Shemini DharmaratneApril 4, 2025 at 7:58 AM

    The use of AI in Human Resource Management (HRM) raises several legal considerations, primarily around data privacy, discrimination, and transparency. HR departments must ensure that AI tools comply with data protection laws like GDPR, safeguarding employees' personal information. Moreover, AI systems should be carefully monitored to prevent bias or discrimination in recruitment, promotions, or performance evaluations. It's essential for organizations to maintain transparency in how AI decisions are made and ensure they adhere to ethical guidelines to protect employees' rights and ensure fairness.

    ReplyDelete
  2. Samadhi PathirageApril 4, 2025 at 9:09 AM

    Excellent post! Understanding the legal aspects of AI in HRM is crucial to ensure ethical use, protect employee rights, and comply with regulations. A balanced approach will lead to more responsible AI integration.

    ReplyDelete
  3. Shankanee IllangarathnaApril 4, 2025 at 6:14 PM

    The use of AI in HRM must navigate legal risks such as potential bias, lack of transparency, and violation of employee privacy rights. AI algorithms can unintentionally discriminate if trained on biased data, leading to legal liabilities. To stay compliant, organizations must ensure AI systems are explainable, fair, and aligned with labor laws and data protection regulations.

    ReplyDelete
  4. Chalani ThilakaratneApril 4, 2025 at 7:51 PM

    Just to add my opinion, In Sri Lanka, AI use in HR is growing, but there are no specific laws yet. Companies must follow current labor laws and be ready for future regulations. HR leaders should work with legal and tech experts to ensure AI is used responsibly while protecting employees' rights.

    ReplyDelete
  5. Evans NanayakkaraApril 4, 2025 at 11:48 PM

    well written article with many important facts.

    ReplyDelete
  6. Malsha PereraApril 5, 2025 at 6:04 AM

    By adhering to legal frameworks and maintaining transparency, organizations can harness the benefits of AI in HRM while mitigating potential legal risks and protecting employee rights.

    ReplyDelete
  7. Udara DananjayaApril 5, 2025 at 6:21 PM

    As AI reshapes HR functions, organizations face growing responsibility to ensure legal and ethical compliance

    ReplyDelete

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