The Impact of the AI Act on Employers and Workplace Practices

The transformative role of artificial intelligence (AI) and digital technologies in reshaping the workforce is profound. Recent IMF analysis suggests that AI could impact nearly 40 percent of global employment, underscoring the significant influence of these technologies. In this article, Adare Human Resource Management analyses The Artificial Intelligence (AI) Act that was passed by the European Parliament on 13th March 2024 and considers the impact of the regulation on Irish businesses and HR professionals need to prepare for upcoming legislation.

What does the AI Act Establish?

The Regulation establishes a risk-based approach that categorises AI systems into four groups: prohibited, high-risk, limited-risk, and minimal-risk.

· Prohibited AI systems are those that violate fundamental rights or pose a clear threat to human rights, such as social scoring or mass surveillance.

· High-risk AI systems are those that have a significant impact on persons rights or lives e.g. as biometric identification, recruitment, health, education, justice. These systems will be subject to strict requirements, such as human oversight, data quality, transparency, accuracy, security, and conformity assessment.

· Limited-risk AI systems are those that involve some interaction with users, such as chatbots, online platforms, or video games. These systems will have to notify users that they are interacting with an AI system and provide an opt out facility.

· Minimal-risk AI systems are those that pose no or negligible risk, such as entertainment, spam filters, or smart appliances. These systems will be generally exempt from the regulation but will have to comply with existing laws and ethical principles.

When will the AI Act be enacted?

The Regulation is expected to be activated in May 2024 and will be fully applicable 2 years after its activation, with the following exceptions:

(i) bans on prohibited practices, which will apply 6 months after the entry into force date;

(ii) requirements for codes of practice which will apply 9 months after the entry into force date;

(iii) implementation of general-purpose AI rules including governance which will apply 12 months after the entry into force date;

(iv) and obligations for high-risk systems which will apply 36 months after the entry into force date.

What is the jurisdiction of the AI Act?

The Regulation includes governance at EU and member state levels; it has established the European Artificial Intelligence Board comprised of representatives from the European Commission and the Member State supervisory authorities (not yet determined in Ireland), to provide guidance, promote cooperation, and monitor the application of the Regulation.

What are the foreseen powers of the AI Act?

The Regulation empowers the Member State supervisory authorities to monitor compliance, carry out investigations, impose corrective measures and sanctions, and cooperate with other authorities across the EU.

It also provides for a system of administrative fines, which can reach up to 6% of the annual worldwide turnover of the provider or user of an AI system, for the most serious infringements of the rules.

The regulation has significant implications for the development, deployment, and use of AI systems in and beyond the EU and will require businesses to be proactive in adapting and complying with the new legal landscape.

What are the potential impacts on Employers and HR practitioners of the AI Act?

The Artificial Intelligence (AI) Act could have a notable impact on Employer obligations, introducing several protections and considerations in the workplace influenced by AI systems. Here are some examples of ways the AI Act could affect Employee rights:

1. Transparency and Disclosure: Employees will have the right to be informed when they are interacting with AI systems, particularly in contexts like recruitment, performance evaluations, and workplace monitoring. This transparency ensures that employees are aware of the role of AI in decisions that affect their professional lives.

2. Non-discrimination: AI systems in recruitment and HR processes, classified as high-risk, will be re-quired to undergo assessments for bias and discrimination. This means that the AI tools used in these contexts must be designed and operated in ways that prevent discrimination, ensuring that all em-ployees and job applicants are treated fairly regardless of their background.

3. Data Privacy: The Act emphasizes the protection of personal data, especially in the context of high-risk AI systems. Employees will benefit from enhanced data privacy protections, with AI systems re-quired to implement robust measures to secure personal and sensitive information.

4. Decision-Making Rights: Employees will have certain rights regarding AI-influenced decisions. For high-risk AI applications, such as those affecting an individual's employment status or professional progression, there will likely be provisions for human oversight and the possibility for employees to challenge or seek explanation for AI-driven decisions, enhancing accountability.

5. Workplace Surveillance: The Act prohibits AI systems that enable indiscriminate or unjustified surveil-lance or monitoring of employees. This will limit the extent to which employers can use AI for surveil-lance purposes, protecting employees' privacy and personal dignity.

6. Professional Development and Adaptation: As AI systems evolve and become more integral to various job roles, employees may have rights or access to training to adapt to these changes, ensuring they are not disadvantaged by the integration of AI into their work environment.

7. Psychological Impact: The regulation of AI systems, especially those interacting directly with employ-ees (like chatbots or performance management systems), will need to consider the psychological im-pact on employees, promoting a healthy and supportive work environment.

Overall, the AI Act aims to create a framework where AI can be used beneficially in the workplace while safe-guarding Employee rights and promoting fairness, transparency, and accountability. As the legislation is imple-mented and evolves, it will be crucial for Employers to stay informed about their responsibilities under the Act.

Adare Human Resource Management is a team of expert-led Employment Law, Industrial Relations and best practice Human Resource Management consultants. If your Organisation needs advice, support, or guidance about compliance requirements or any HR issues, please contact Adare Human Resource Management by calling (01) 561 3594 or emailing info@adarehrm.ie to learn what services are available to support your business.