Change and Consequence: What AI regulation means for HR

Sue Turner OBE, Founder and Director, AI Governance Limited investigates what AI regulation should matter to HR Professionals.

HR professionals are used to keeping up with regulatory changes but regulation on the use of Artificial Intelligence (AI) is a patchwork of progress, with concrete AI regulation in some jurisdictions whilst others offer only general intentions or broad frameworks.

In the UK, we are waiting to see the tone and scope of the new Government’s AI regulations but we expect the Government will struggle to balance their desire to regulate against AI that could be harmful to people whilst also encouraging innovation to support economic growth.  Even without specific new AI laws, HR professionals need to be involved in organisations’ discussions about using AI to ensure that data protection and equalities regulations are not compromised. 

In the meantime, the EU AI Act came into force in August 2024 and HR professionals everywhere need to pay attention for two reasons. First it designates the use of AI in employment as being high risk and requiring careful handling and second it has extra-territorial provisions so may apply to operations outside the EU.

Understanding the EU AI Act

Set to be fully enforced by 2025, the EU AI Act classifies AI systems based on their potential risks, with high-risk systems facing stringent regulations. Even for UK-based organisations, non-compliance can result in hefty fines if their AI products or services are used within the EU or impact EU citizens.

The starting point for HR professionals is to understand whether the AI tools they use fall into the ‘high-risk’ category. Many uses of AI in employment will be caught, including systems used for recruitment, performance evaluation or promotion decisions. You can still use high-risk AI systems but they are subject to stringent regulations, including mandatory conformity assessments, technical documentation and post-market monitoring.

Secondly, the Act prioritises data protection and privacy. HR professionals must ensure that any AI systems they use are designed and operated in a way that respects individuals’ privacy rights. This means ensuring data minimisation, transparency in data collection and use, and providing individuals with control over their data.

Thirdly, HR professionals need to be vigilant about the potential for AI systems to perpetuate bias and discrimination. This involves using diverse datasets for training AI models, conducting regular audits for bias, and implementing procedures to address any discriminatory outcomes.

Being transparent and explaining AI

The AI Act also calls for transparency and explainability in AI systems. Individuals should be informed when they are interacting with an AI system and have the right to understand how the system reached a particular decision. HR professionals should therefore prioritise AI tools that offer these features. Under the GDPR regulations people have the right to opt out of automated processing which could result in having to run non-automated systems alongside AI-powered tools. Some will question whether the inefficiency this builds in makes the gains of using AI systems less attractive.

Human oversight essential

Finally, the Act emphasises the importance of human oversight, particularly in high-risk scenarios. HR professionals should ensure that there are appropriate mechanisms for human intervention and review when AI systems are used to make decisions that could significantly impact individuals.

Beyond compliance for those with EU ties, the ‘Brussels Effect’ may mean that the EU AI Act becomes the gold standard for ethical and responsible AI use. By adopting its principles – transparency, fairness, human oversight – HR professionals worldwide can foster trust, mitigate risks like bias and enhance employee experience. Even in less regulated regions, adhering to these standards demonstrates a commitment to ethical AI, safeguarding both individuals and the organisation’s reputation.

To find out more you can download the free guide for UK-based businesses to the EU AI Act and take action today:

Actionable Steps for HR Professionals

• AI Audit: Assess AI systems within HR, identifying ‘high-risk’ ones and necessary compliance measures.
• Update HR Policies and Procedures: Align policies with AI Act requirements, ensuring AI use is transparent, ethical, and compliant.
• Invest in Training: Train HR teams on AI regulations and associated risks/responsibilities.
• Engage with Stakeholders: Communicate openly about AI use in HR, address concerns, and ensure fair and transparent implementation.
• Monitor Regulatory Developments: Stay abreast of AI regulatory changes in both the UK and EU, adapting practices for continued compliance.

Conclusion

HR professionals are inextricably linked to the existing and emerging AI regulations. Even in countries with a more relaxed regulatory environment, the extraterritorial nature of the EU AI Act potentially impacts HR professionals wherever their organisation is based. Understanding the Act’s implications, and proactively ensuring compliance, enables HR to leverage AI’s power responsibly and ethically. By staying informed and taking the necessary steps, HR professionals can navigate this new regulatory landscape, harnessing the benefits of AI while safeguarding both individuals and their organisations.