The release of AI programs, like ChatGPT or DALL E, has sparked intense public debate about the use and limitations of AI. Despite this rather recent public development, in many companies, the use of AI is already well established. In the context of HR, common areas of application are seen in the search for candidates, the initial screening of job applications, the performance of initial job interviews, and even the assessment of a candidate’s likely fit with the existing team through a comparison of criteria of the applicant with respective criteria of current employees. Outside of the recruitment area, AI is used to plan day-to-day tasks of employees; for example, the preparation of shift plans, or the calculation of the best delivery route for the day. Given the current pace of development, it is easy to predict that additional and even more advanced technologies will be introduced soon. Respectively, the use of AI will become more and more important for companies to gain and maintain a competitive advantage. Against this background, it is ever more important for employers to know and understand legislative restrictions regarding the use of AI.

From a German law perspective, there are at least two aspects which need to be distinguished: The independent use of AI by employees at the workplace and the introduction of AI for the employees’ use by the employer. This post will provide a short overview of some relevant legal aspects of both scenarios under German law.

Independent use of AI by employees

Given the wide range of possible use cases of AI at the workplace, employees in all areas could be tempted to use AI to facilitate their day-to-day tasks without the explicit knowledge of their employer. Against this background, employers are well advised to set up guidelines and rules for the use of AI by employees at the workplace. Respective policies could either prohibit the use of publicly available AI programs for all work-related purposes. If employees are supposed to be allowed to use AI for work-related purposes, the policy should provide instructions on which AI programs can be used, the kinds of tasks the programs can be used for and most importantly the terms and conditions under which the programs should be used. In particular, the employees’ obligations when using AI for work-related purposes should include a tight review process by the employees, the protection of confidential information, but also the employees’ obligation to inform the responsible manager about the fact that a certain work product was produced, or a task was performed with the help of AI.

From a legal perspective, depending on the individual content of such policy, directing employees on the use of AI should generally be covered by the employer’s right of direction according to Sec. 106 Trade, Commerce, and Industry Regulation Act (Gewerbeordnung, GewO). This would have the result, that even if a works council is established, the direction on the use of AI could be issued and changed unilaterally by the employer, typically by way of a company policy. This allows for the necessary flexibility of the employer to be able to adapt to the changing environment and technical developments in the field of AI. As the (non-)applicability of a co-determination right of the works council could depend on details of the given directions, such policy should be reviewed by legal counsel prior to its implementation.

Introduction of AI by the employer

Given the potential to increase efficiency and therefore to reduce costs, in many cases it is the initiative of the employer to implement the use of AI into the operations of the company. If a works council exists at the affected establishment, the implementation of AI is very likely subject to the co-determination of the works council according to Sec. 87 Works Constitution Act (Betriebsverfassungsgesetz, BetrVG). This means that the introduction of the AI system is subject to the negotiation and conclusion of a works agreement. Depending on the level of concerns of the works council, such negotiations can be lengthy. To avoid protracted discussions, it is often helpful to provide the works council with sufficient information on the use and potential but also the risks of the intended AI system.

Apart from this long-established co-determination right, a recent change of the BetrVG has brought additional clarifications on the rights of the works council regarding AI. Specifically, the legislator has clarified that the works council is to be notified about and consulted with if the employer plans to introduce AI. This entitlement takes effect already at an early stage so that the works council can influence the decision-making process of the employer. Furthermore, Sec. 80 BetrVG now clarifies that the works council is entitled to call upon the advice of an expert when the works council is required to assess questions related to AI. While the expert needs to be selected consensually by the employer and the works council, the costs for the expert are born by the employer. As in many cases a well-informed works council facilitates negotiations for a works agreement, these additional costs are often well spent, particularly if the parties engage an expert who can explain the chances and risks of AI in a neutral and understandable way. Finally, the consent of the works council is required if AI is used for setting up guidelines for the selection of employees for recruitment, transfer, regrading, and dismissal.

Please reach out to us should you have any questions on the implementation of AI under German employment law. We are happy to assist.

For further and cross-practice information on AI in the Entertainment and Media sector, please refer to the Reed Smith Entertainment and Media Guide to Artificial Intelligence which can be found here.