The HR Dept, the UK’s largest independent network of HR professionals, is cautioning small and medium-sized enterprises (SMEs) on the developing trend of using Artificial Intelligence (AI) to draft employment contracts.
While AI tools such as ChatGPT, Gemini, and Copilot give users information that can appear authoritative, these platforms often lack legal accuracy — and that poses significant risk to small businesses.
With a network of over 200 HR specialists that supports more than 6,000 SMEs throughout the UK, The HR Dept has raised concerns that some SMEs looking for ways to reduce their operational costs are turning to AI to generate complex legal documentation.
However, as The HR Dept points out, AI models often draw data from non-UK jurisdictions, such as the Republic of Ireland and United States. This, they warn, could see employment contracts that are not only unenforceable in the UK but can be potentially damaging for the business from a financial and reputation perspective.
Kim Hunter, Director, The HR Dept. said, “Using AI to write a contract is like following a satnav without looking at the road. While the route appears to be ideal, the reality is very different. By the time you realise the contract is not fit for purpose, the business is already trapped in a legal bottleneck that could be costly to navigate your way out of.
“AI can be a powerful tool in HR, but its real value is unlocked when it supports qualified professionals rather than attempting to replace them.”
The HR Dept points to several key risks for businesses relying on AI-generated documentation:
Jurisdictional errors
AI frequently incorporates Ireland and US legal concepts (like ‘at-will’ employment) that do not exist in UK law and will not stand up in the case of an employment tribunal.
Outdated information
UK employment law is seemingly ever-changing. AI models often rely on data that predates the latest legislative reforms or simply fails to account for delayed implementation dates when proposed changes are pushed back due to further consultations or some other delay. This can confuse AI and result in inaccuracies.
Privacy breaches
Inputting sensitive personal data into public AI tools can lead to significant GDPR violations, as the information is often used to further train the global model.
Kim continued, “Critically, the UK judicial system will offer no leniency to employers who present flawed AI-written documents.
“Tribunals will not accept ‘ChatGPT said so’ as a valid defence for a breach of employment rights. If a contract is missing mandatory statutory information or includes unlawful terms, the business owner is 100% liable and what was considered a ‘free shortcut’ could quickly turn into a five-figure legal bill. Not to mention a damaged reputation and employer brand.”
The HR Dept is urging UK business owners to seek professional HR advice to ensure their contracts are bespoke, compliant, and reflective of the specific needs of their sector.
For more information on the risks of AI in HR or to request a contract review, visit: hrdept.co.uk.
Pictured above: Image by THAM YUAN YUAN from Pixabay
