Based on insights by Francesca Snyder, Associate, Australian Business Lawyers & Advisors

 

The promise of AI in HR is efficiency, speed and cost savings. It can take over repetitive tasks like calculating entitlements, generating letters, or filtering CVs. For stretched HR teams or small business owners juggling multiple responsibilities, the appeal is obvious.

But alongside the benefits come significant risks, particularly when AI is used to make or heavily influence decisions about people. Tools that appear objective may still produce biased outcomes, especially when the logic behind their decision-making isn't transparent. In areas like hiring, performance management or termination, this lack of visibility can leave businesses vulnerable to discrimination or unfair dismissal claims.

There are also practical risks. AI systems used to automate payroll, for example, may misclassify employees or miscalculate overtime. Without human oversight, these errors can lead to underpayment claims and potentially reputational damage.

The key message? AI can be a powerful tool, but it should support, not replace, human judgment. Business owners must understand where AI adds value and where its limitations can create serious compliance issues.

To explore this topic in more detail, including real-world scenarios and legal insights, read the full article on Business NSW: When AI Replaces HR Judgment: Are the Legal Risks Worth It?