AI in the Workplace: Why Every Employer Needs a Policy

Love it or hate it, AI is becoming as disruptive as the hype promised – for better and for worse.

Tools like ChatGPT, Grok, Claude and CoPilot offer businesses a new route to boost productivity, however, they also bring new and unexpected risks.

Grievances

One such risk is employees increasingly turning to AI to seek “advice” on their legal rights.

This can lead to AI-generated grievances which are not the short, factual complaints HR teams may be more used to handling. They can often be lengthy and include complex legal arguments and case law references. Furthermore, AI tools can “hallucinate” and invent false or exaggerated legal conclusions.

Resultingly, employees may then believe they have powerful claims with high compensation prospects because the AI has framed their situation in the most favourable terms. AI is designed in a way that lends itself to prioritise comfort and support above difficult truths and will ‘take your side’ even if you say something that is objectively wrong or immoral.

This can make it harder for employers to understand the real factual concerns, which in turn makes it more difficult to resolve matters.

The Employment Tribunal system is already under pressure with rising case volumes and delays. AI‑generated claims are inevitably adding to this, as claimants now feel confident enough to represent themselves and even draft legal applications to the court, using only AI support.

Data Protection

AI grievances also carry a quieter risk around data protection.

To draft AI generated complaints, employees may upload sensitive information directly into public AI platforms. Unless the individual using the AI actively ‘opts-out’, AI tools by default will use these inputs to train their future models. That means employees may be inadvertently disclosing data or confidential information to the internet and the AI may then use this information in its future outputs to third parties.

Some AI tools have protections included to handle confidential data differently and can protect against this but employees will rarely consider this. Employees will simply use the tool they are familiar with without regard for Data Protection breaches or verifying the validity of the information they have been presented with.

This is becoming one of the most significant emerging trends in modern workplace relations.

Why an AI Policy is now a necessity

An AI workplace policy is no longer a “nice to have”, it is essential and recommended; especially for employers that permit their employees to use AI as part of their duties. A strong AI policy does not need to be heavy‑handed or overly technical. In fact, a good one is simple and clear.

An effective ‘AI in the Workplace’ policy should:

• make clear which AI tools are authorised and safe to use and set out the rules for using them;
• explain that employees must not upload personal data or confidential business information into public AI platforms without appropriate protections; and
• set the context that AI‑generated content may be inaccurate or incomplete and needs a human-touch to check and verify any outputs.

A well‑designed AI policy gives everyone clarity. If your organisation does not have an AI policy,   now is the time to put one in place.

If your organisation is considering implementing an AI policy, or would like to review its existing contracts, policies and procedures to address the risks associated with workplace AI, seeking legal advice early can help ensure appropriate safeguards are in place. For expert guidance, contact Farleys’ Employment Law team on 0333 920 1093, email us, or use the online chat below.