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Chapter six: Technology in employment

  • United Kingdom
  • Global
  • Employment law
  • Technology, Media and Telecoms

08-06-2022

“Businesses worldwide are seeking a competitive edge and digitalizing at breakneck speed, a trend that has been accelerated by the global pandemic.” - Shaping the future of digitalization report, March 2022

Technology, including digital tools, was seen in almost every aspect of the immediate response to the pandemic, bringing the importance of technology to the fore. Coupled with the heightened need for business agility and competitive advantage, the ongoing rapid integration and development of new and enhanced technology in all areas of a business looks set to continue for the foreseeable future.

The introduction of new and updated technologies within global workplaces is, however, often not straightforward. For multi-national employers, different laws and practices dictate the ease of implementation, local laws impact process requirements and timing and data privacy regulation governs how the data, that is often crucial to the success of new tools, can be gathered and used. In addition, as our recent Shaping the future of digitalization report highlights, corporate digital responsibility (CDR) is a significant factor, with businesses risking adverse reputational damage and the erosion of significant value if there is a misalignment between technology strategy and approach to CDR.

Following on from the previous global briefings in this series of materials focusing on considerations for HR strategists on topical issues (Chapter one: Global workforce mental health protection, Chapter two: Global diversity data, Chapter three: Speaking up - whistleblowingChapter four: business protection- the global use of restrictive covenants in employment and Chapter five: Wage transparency), in this briefing we consider the employment aspects of technology. In particular, some of the key strategic considerations when planning the introduction of new or updated technologies.

Digital transformation in practice

Digitalization, being the application of digital technologies to transform business activities, processes, competencies and models, continues to grow, with businesses forecast to spend $9.1 trillion during the next four years on digital transformation. This represents an 82% increase from the past four years1.

for our respondents, the technologies that are most frequently targeted for investment, acquisition and partnership are cloud, cybersecurity, apps/websites, AI and payments”2

Our Shaping the future of digitalization report highlights the key findings from a survey of 700 senior executives from around the globe. That survey found that the enhancement of efficiency and productivity remains the main objective of organizations using digital technologies, with cloud and cybersecurity solutions technologies being in the highest demand. The use of artificial intelligence (AI) and advanced machine learning (ML) is expected to grow most significantly, with 47% of respondents planning to use AI and ML technology within the next three years, compared with current usage of just 33% 3.

Digitalization has for many years been progressively seen in workplaces, often aimed at automating processes and maximizing productivity and efficiency. More recently, advanced digital solutions, AI and ML tools and robotics have emerged, including technologies in specific response to new working arrangements and workplace challenges.

Strategic planning – key considerations

Existing and developing laws

With the ever-developing nature of workplace technologies and the strive to keep pace, it is easy to see how the legal aspects associated with the implementation and upgrading of such tools can be overlooked. In particular, in some jurisdictions, there may be legal restrictions on the use of certain technologies and process requirements for their implementation.

For example, many jurisdictions have regulated the use of biometric technologies, either through existing legislation or specific new laws. Although what constitutes “biometric” varies across jurisdictions, data privacy and other laws often regulate the use of tools that rely on such technology. Further, there is often legislation that imposes additional restrictions around the secondary use of biometric data, including a prohibition against selling or otherwise profiting from an individual’s data.

There is also a raft of new and proposed laws and guidance around AI and ML across the globe. Again, the definition of AI differs by jurisdiction, as do the penalties for breach, which can be substantial in some jurisdictions. For example, the proposed EU Regulation of AI could impose liability for fines of up to 6% of annual worldwide turnover or 30 million euros for breaching the prohibition on unacceptable-risk AI systems or infringing the data governance provisions for high-risk AI systems. Such systems include those intended to be used in the workplace, including for recruitment, selection, monitoring or evaluating performance. With the EU Regulation proposed to have extraterritorial reach, the potential impact on businesses is extensive.

Data privacy

“Cross-border data protectionism is really rising up the agenda, especially for an investment bank like us that has offices and clients in China and the US. We constantly look at the evolving regulation around international data transfer and factor it into decisions about investing in technology and any acquisitions we might make.”4 Marco Chung | Group Head of Legal, CLSA, the international arm of CITIC Securities

Particularly in Europe, data privacy laws restrict how personal data can be collected and used and will therefore be a key part of any planning process for those technologies that rely on the processing of employee data. Certain types of personal data, including data revealing racial or ethnic origin, concerning health or sexual orientation or biometric data used to uniquely identify (or confirm the identity) of an individual, is classified as a special category of personal data, meaning that the data benefits from additional protections.

Employers must consider whether the processing of the data is appropriate and proportionate to achieve the envisaged objective, but must also identify an appropriate “lawful basis” that can be relied on for its use. A data protection impact assessment may be mandatory, to balance the objectives of the organization, identify the least intrusive way of achieving those objectives whilst best upholding the rights of the affected individuals.

Even outside Europe, the strategic planning, implementation and use of data-driven technology is increasingly impacted by data privacy laws in areas not previously affected. For example in the UAE, where a federal data protection framework has recently been enacted for the first time. Remaining compliant with laws that exist globally, that are often rapidly developing, can be a major challenge to global technology strategies.

Skills

“27% anticipate employee/skills shortages as a result of the organization’s use or provision of digital technologies”5

Our Shaping the future of digitalization report survey found that 27% of respondents anticipate employee/skills shortages, suggesting that these employers believe that their current workforce does not have the necessary skill set to deliver on their digitalization strategy. As part of any strategy, employers will therefore need to consider the skills required by the proposed implementation and use of the new technology. Employers will need to identify any skills gaps early to ensure that effective training can be put in place and recruitment efforts started in good time.

Discrimination and bias

The potential for discrimination risks associated with the introduction of new technology in the workplace should also be considered in any strategy. Along with employee relations and litigation risks, there are also increasing expectations from stakeholders regarding CDR, of which non-discrimination is a component part.

Data collection, choice of data, data cleansing, how data is tagged and how technology is trained, including through the use of algorithms, can all have the potential to create bias or discrimination. Where bias and discrimination already exists, it also has the potential to further exacerbate such issues. Organizations designing and implementing new and enhanced technology should be mindful of such potential. Further, bias and discrimination can go beyond the technology itself. Increasingly, there are challenges around the diversity of workforces appointed to work on the development of technology and those that have access to its use.

Examples of recent cases where discrimination has been claimed based on technology includes a race discrimination claim in the UK where a number of workers brought claims of race discrimination where they suffered detriment when face recognition technology failed to recognize workers with darker skin tones. Also, a religious accommodation claim that was brought in the United States, where it was successfully claimed that the implementation of a biometric hand scanner violated the employee’s sincerely-held religious beliefs. The court in that case found that the employer had unlawfully refused a religious accommodation request and awarded the employee $600,000 in damages.

Information and consultation

Information, consultation and sometimes consent obligations may also be triggered by the implementation of new or updated technologies. Where such obligations exist, they can often be one of the most challenging parts of implementing new technology. However, with the development of new and enhanced technology in all areas of a business expected to continue for the foreseeable future, including through partnerships with specialist technology companies, it is an unavoidable part of any global technology strategy and an area that organizations will need to grasp.

“65% of our survey respondents plan to form a strategic partnership with a digitalization-focused technology company in the next two years6

For example, in Germany, Works Councils have co-determination rights in respect of technical devices that have the ability to monitor performance or behavior. In Australia, an obligation to inform and consult will apply at the point where a company makes a decision to introduce major changes in organization or technology that are likely to have significant effects on employees. And in Hungary, employers must ask for the opinion of the Works Council at least 15 days prior to passing a decision in respect of any plans for certain actions affecting a large number of employees, including introducing new technologies (or upgrading existing ones).

Collective obligations on implementation of new technologies*– sample jurisdictions

*assumes no associated terminations

Where information and consultation obligations apply, time lines and formalities for consultation in different countries will often vary. Usually, such consultation must be carried out before a decision to implement the new technology is taken. Formal notifications may require original “wet signatures” and specific signatories or powers of attorney, which can impact the timing if not properly planned in advance. The interaction between any European works council, local works councils, unions or other employee representative bodies must also be considered and planned for.

Strategic decisions on the detail and timing of information and consultation and how to deal with upgrades to technology can have a significant impact on the process too. Thought should be given to how much information should be provided to employees and representatives, whilst ensuring cross-border consistency. Too little information and the consultation may not stand up to challenge, too much and the process could be prolonged by detailed scrutiny or concerns.

In terms of the timing, consideration will need to be given to whether additional resources and funding will be allocated to achieve an early agreement. Particularly where more stringent requirements with employee representative bodies apply and resistance to the use of the new technology is anticipated to be high, such strategy can be key to ensuring that commercial and HR priorities remain aligned. Further, it should be considered whether consultation should start in all countries simultaneously, even if they are then likely to conclude at different times, or alternatively take place at different times in different countries. Often, the difficulty with the latter option is the risk of starting consultation too late in some countries and/or creating uncertainty locally where consultation has not yet started.

The possibility of future technological upgrades should also be built into the planning stage. In particular, in many jurisdictions where there are employee representative obligations triggered by the implementation of new technologies, those obligations may again be triggered at the point of upgrades to that technology. Although often limited on what future arrangements can be agreed or what obligations can be waived, agreeing with the employee representatives a framework for future upgrades can help smooth any future process requirements.

Even in those jurisdictions where information and consultation obligations are not triggered by the implementation of new or updated technologies, if it is proposed that such implementation will result in a workforce reduction, statutory information and consultation obligations may in any event be invoked.

Getting the strategy wrong – the risks

Companies that take steps, without careful planning, to incorporate the rapidly advancing technology into their strategic framework and business models run the risk of workforce challenge, delay, potential litigation and reputational damage.

A plethora of new laws are being introduced across the globe to ensure that technologies are developed and used responsibly. Many of these laws carry significant negative consequences for non-compliance. In certain jurisdictions, directors can be held personally liable for non-compliances and may even face criminal prosecution and potential imprisonment for deceptive practices or significant breaches of law.

Where data privacy or obligations with employee representative bodies apply, failing to comply with the requirements can have a considerable impact on the implementation process. The timing of implementation may be hindered and financial penalties, reputational damage and employee relations issues may be incurred. For consultation breaches, injunctive relief may also be available to stop the implementation of the new technology altogether and there may even be criminal sanctions.

There are also wider communication and trust issues to consider. From an employment relations perspective, regardless of any information and consultation obligations, maintaining the trust and commitment of the workforce by ensuring transparency in respect of plans and maintaining effective communications with the employee representative bodies will be critical. Particularly for the implementation of new technologies that are likely to have a significant day-to-day impact on how work is carried out or potentially impact workers’ privacy, the strategy should include a well-constructed communications plan, with associated supporting training and materials to help managers steer through the process.

Highlighted by a growing backlash against companies perceived to be using technology or data irresponsibly, there are communication and trust issues to consider in respect of other stakeholders too, including customers and investors. Such influences have the ability to cause significant reputational damage, particularly where it is perceived that the use or misuse of technology or data leads to bias, discrimination, mistreatment, data breaches or damage to society or the environment. Our Shaping the future of digitalization survey found that 87% of consumers would not do business with a company if they had concerns about its security practices and 71% would stop doing business with a company if it gave away sensitive data without permission7.

Strategic planning – technology implementation checklist

A carefully-crafted planning and implementation strategy will often be key to the successful realization of technology transformation plans, including ensuring that the alignment between business and human resource strategies are optimized and that the trust and confidence of all stakeholders is maintained.

The following key points should be considered:

  • Set up a cross-jurisdictional team who can devote the necessary time and management commitment to the project.
  • Establish the business case for the proposed implementation of the new or updated technology and the scope of how that technology can and will be used in the workplace.
  • Understand the legal and practical issues in each jurisdiction to ensure that the business develops and deploys technology solutions in a way that is legally compliant for its current and future uses. Do not forget to consider consultation obligations with employee representatives; data privacy obligations or restrictions; any local rules around the use of specific technologies; and any current and upcoming sectoral/industry guidance.
  • Devise a consolidated and coordinated global plan and follow a detailed project plan per country. Do not forget to include CDR considerations, including the existence of governance and oversight processes.
  • Ensure that a communications strategy forms part of the plan and that managers are provided with support to implement the process.
  • Engage early with employee representatives to properly explain the purpose and impact of new technologies and to address and accommodate any concerns.
  • Consider any skill gaps raised through the implementation and use of the new technology. Put in place effective training and identify any recruitment need.
  • Ensure that processes are in place to review ongoing responsible, ethical, sustainable and well-governed use of the technology deployed. Such review should continue throughout the whole of the lifecycle of the technology and should dovetail with the organization’s values.
  • Ensure that processes are in place to monitor changes in the law regarding the use and implementation of the businesses’ chosen technology portfolio.

Our extensive global footprint means that we are well placed to help employers, wherever they have a presence. Our teams across the world have significant experience of supporting employers to steer through the legal, regulatory and practical implications associated with the implementation of new technologies in the workplace. Our teams are also increasingly being asked to help businesses understand and shape their approach to their ethical responsibilities.

Listen to our podcast, as Partner Hannah Wilkins and Principal Associate Jennifer Mann talk through some of the key Employment related findings of the Eversheds Sutherland Digitalization report: Digitalization soundbites: Episode 2 - Employment

 


[1] International Data Corporation Worldwide Digital Transformation Spending Guide
[2] Shaping the future of digitalization, Eversheds Sutherland, March 2022, page 17
[3] Shaping the future of digitalization, Eversheds Sutherland, March 2022, page 17
[4] Shaping the future of digitalization, Eversheds Sutherland, March 2022, page 20
[5] Shaping the future of digitalization, Eversheds Sutherland, March 2022, page 32
[6] Shaping the future of digitalization, Eversheds Sutherland, March 2022, page 17
[7] Shaping the future of digitalization, Eversheds Sutherland, March 2022, page 36

 

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