AI in Employment Law – Opportunities, Risks, and Legal Challenges

When used correctly, AI can make everyday work easier for both employers and employees. For example, intelligent systems enable more precise performance tracking, which can promote more objective performance evaluations. Automated documentation of evidence or mandatory training can significantly reduce administrative workload, even in the context of compliance requirements.

AI can also offer real added value in the area of employee development. AI-supported learning systems analyze individual knowledge levels and suggest tailored learning paths. This makes corporate training not only more efficient but also more personalized.

The risks primarily lie in workplace surveillance. AI systems that analyze mouse movements, keyboard inputs, or location data can easily transition into comprehensive monitoring. In cases where wearables or apps are used for movement or performance tracking, the question arises: Is this still about safety or already about excessive control?

Such measures touch on key principles of labor and data protection law. In particular, the right to informational self-determination (Art. 2 I i.V.m. Art. 1 I GG) and the prohibition of disproportionate surveillance (§ 26 BDSG, Art. 5 GDPR) are affected. Employers are therefore required to carry out a proportionality assessment and inform employees transparently about the nature, purpose, and scope of data processing.

Another issue is the lack of transparency in AI systems. If these systems make automated decisions, such as on promotions or dismissals, questions arise about traceability and freedom from discrimination. Hidden disadvantages may occur, for example due to flawed training data or systematic bias.

The use of AI also brings new liability issues. Who is liable if a system makes a faulty decision, such as an incorrect time recording or a discriminatory evaluation? In principle, the employer remains responsible, even if the decision was technically made by an AI system.

Therefore, proper handling of AI systems is essential. Employers must ensure that their staff is trained in how to use the technology. This can even give rise to a duty to provide further or ongoing training, particularly if the use of such systems becomes a core part of the job role.

A frequently underestimated risk is the misuse or misapplication of AI systems. Insufficiently trained users may unintentionally input incorrect data or misinterpret AI-generated decisions, which can have far-reaching legal and economic consequences.

Employers who use or plan to use AI systems should take the following steps:

• Ensure transparency: Fully inform employees about the use and functioning of AI.
• Protect data privacy: Strictly comply with data protection regulations, especially when processing personal data.
• Respect participation rights: Involve the works council early, as the use of AI may be subject to co-determination ( 87 BetrVG).
• Provide training: Regularly train employees in how to use AI systems.
• Assess proportionality: Each use of AI must serve a legitimate purpose and must not result in inappropriate monitoring.

AI has the potential to enrich the world of work. The requirement is that it is used responsibly and in compliance with the law. Companies are obligated to combine technological innovation with legal diligence. Only then can the potential of artificial intelligence be harnessed without endangering employees’ rights.