key takeaways
Overview
A recent report from the House Standing Committee on Employment, Education and Training has recommended significant legislative changes to address the increasing use of AI in Australian workplaces. Employers are on notice to consider their responsibility for ensuring compliance with proposed AI transparency and fairness obligations. With increase scrutiny on AI-driven employment decisions, businesses must act now to assess their AI systems, implement safeguards, and prepare for evolving regulatory requirements.
Key recommendation from the report
The Committee's final report, tabled on 11 February 2025, calls for statutory prohibitions on employers using AI and automated decision-making (ADM) systems for final human resources (HR) decisions without human oversight. It highlights concerns about AI-driven hiring, performance management, and termination decisions that lack human judgment and accountability. The inquiry into the digital transformation of work highlights the need for enhanced regulatory frameworks to protect workers’ rights, privacy, and workplace fairness in the face of rapid technological advancement.
To ensure transparency and fairness, the report recommends amending the Fair Work Act 2009 (Cth) to mandate that employers disclose their reliance on AI and ADM systems to both current and prospective employees. Further, it advocates for safeguards to protect worker privacy and data security, proposing updates to the Privacy Act 1988 (Cth) and amendments to modern awards to reflect the impact of AI-driven job redesign.
The report also highlights the risks of algorithmic bias and discrimination, which can disproportionately affect certain demographic groups. The Committee specifically recommends that the Australian Government require developers and employers to implement measures against algorithmic bias, including:
The role of the Fair Work Commission
Recognising the profound impact of AI on job roles and employment conditions, the Committee has urged the Fair Work Commission (FWC) to review the National Employment Standards (NES) to mitigate potential adverse effects. This includes strengthening provisions for flexible work arrangements and modernising workplace entitlements to align with evolving technological realities.
Additionally, the report suggests that the Federal Government collaborate with Safe Work Australia to develop a Code of Practice addressing work health and safety (WHS) risks associated with AI. This would involve establishing clear limits on AI's role in decision-making to prevent psychosocial harm and other workplace hazards.
Broader implications for Australian workplaces
The report echoes concerns previously raised by unions and advocacy groups about AI's potential to undermine workers’ rights and wages. These recommendations align with broader legislative efforts, including a parallel Senate inquiry into AI regulation. The Senate Select Committee on Adopting Artificial Intelligence has similarly called for a positive duty on employers to minimise AI-related risks, reinforcing the need for comprehensive regulatory intervention.
What this means for employers
For HR professionals and business leaders, these proposed reforms signal an urgent need to assess and revise AI-related workplace policies. Employers must prepare for potential legal obligations requiring AI disclosures, human oversight in decision-making, and enhanced consultation with employees regarding technological changes.
With the government considering the classification of AI-driven HR tools as "high-risk" under proposed mandatory guardrails, businesses using AI in employment-related decisions should proactively review their compliance frameworks. Transparency, accountability, and worker engagement will be critical in navigating the evolving regulatory landscape.
how can mcw help?
As AI continues to reshape the workplace, businesses must take proactive steps to ensure compliance and fairness in their evolving workplace. The Employment team at McInnes Wilson Lawyers can help employers navigate these emerging regulatory requirements by offering tailored advice, policy development, and compliance reviews. Employers must stay informed and engaged in the regulatory process to ensure fair and responsible AI integration in the workplace.
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