Generative AI in the workplace

Since Chat GPT was launched in November 2022 there has been much discussion and debate about how it will impact the professional working landscapes of the future.

One of the topics for discussion at the CIPD Scotland Annual Conference 2024 on 12 March in Edinburgh is ‘AI – what does it mean for HR?’. It is clear that HR functions in particular have embraced the use of AI. In a report by Eightfold: ‘The Future of Work: Intelligent by Design’[1], the majority of the 250 HR leaders who responded to the survey said they are already using AI across HR functions such as employee records management (78 per cent), payroll processing and benefits administration (77 per cent), recruitment and hiring (73 per cent), performance management (72 per cent), and onboarding new employees (69 per cent). Using AI to transform these processes allows employers to save both time and money when it comes to one of the most important functions within their business.

However, a recent First-Tier Tribunal (FTT) Tax Chamber judgment, which is one of the first domestic judicial judgements addressing AI, has highlighted – very clearly – the potential risks of its use.

In Harber v The Commissioners for His Majesty’s Revenue and Customs [2023] UKFTT 01007 (TC), the Appellant (Mrs Harber) disposed of a property but failed to notify HMRC of her liability to Capital Gains Tax. HMRC then issued a ‘failure to notify’ penalty of £3,265.11. The Appellant appealed the penalty on the basis that she had a reasonable excuse arising from her mental health condition. The FTT dismissed her application as they did not consider that Mrs Harper had a reasonable excuse for failing to notify HMRC of the payable capital gains tax.

The case itself was a run-of-the-mill tax appeal. What is of note, however, is that during her appeal Mrs Harber presented summaries of several legal judgments to support her position. She advised the Tribunal that these had been provided by a friend with a legal background. HMRC’s representatives initially raised concerns as they were unable to locate full copies of any of the judgments referred to by Mrs Harper. The Tribunal ultimately found that the judgments submitted by Mrs Harper did not exist and were likely created by generative AI. In coming to this conclusion, the FTT identified several elements of the judgments including that:

• None of the cases were available on the FTT website or other legal websites.
• Several of the cases had similar names or facts to real FTT cases but there were certain differences including names, dates and when the Tribunal had heard the case.
• The FTT noted that the fabricated cases had found in the Appellant’s favour but when they identified the real cases to which the facts related the Appellant in those cases had lost their appeal or the real case related to an entirely different tax issue.

While this case specifically addresses the use of AI in a legal context, it serves as a pertinent reminder to employers to exercise care when embracing AI as not all generated content may be accurate, potentially resulting in what is known as ‘AI hallucination.’

HR functions are using AI to adapt to the evolving workplace, but it is imperative to avoid overreliance and remain alert to the associated risks. While AI can serve as a valuable prompt or starting point for HR in drafting employment documents such as handbooks or policies, the output is unlikely to be entirely accurate or not be fully compliant with UK employment law. Therefore, it is always recommended that employers using AI implement policies or processes for its use within the workplace, with an emphasis on transparency. Employers should also ensure there is a process in place for diligent fact-checking of the work produced, including verifying any sources produced including any laws or statutes.

Scott Milligan, Partner; Kate Sutherland, Senior Associate; and Laura Brennen, Senior Solicitor, from our Employment Team, will be attending the CIPD conference on 12 March 2024 and will be available at the Harper Macleod stand on the day. We’d be happy to discuss how we can assist your organisation with any employment law issues, whether created by AI or otherwise.

[1] https://eightfold.ai/wp-content/uploads/2022_Talent_Survey.pdf