BrightHR warns AI workplace policies risk legal gaps

BrightHR has warned that Australian employers are using generative artificial intelligence to draft workplace policies that may expose them to legal risk, particularly small and medium-sized businesses without in-house HR or legal teams.

AI-generated HR documents can appear complete while missing key legal protections under Australian employment law. BrightHR said the risk is greatest when employers use free AI tools to create policies covering absence management, performance, conduct and disciplinary procedures.

According to the company, the legal exposure often lies not in what an AI-written policy says, but in what it leaves out. Those omissions can include statutory employee rights, procedural safeguards, and obligations linked to awards or workplace agreements.

Australian employment law can vary depending on the workplace relations system involved, the state in which a business operates, and the awards or agreements that apply to staff. As a result, a generic policy drafted by a public AI tool may not reflect the rules governing a specific employer.

"AI can produce a workplace policy in seconds, but that does not mean the policy is legally compliant in Australia, appropriate for the business, or safe to rely on. Employment law is highly dependent on which workplace relations systems it is governed by, which state the business operates in, and any specific awards or agreements that apply to the business or its employees," said Mollie Eckersley, associate director of operations, ANZ, BrightHR Australia.

Businesses may only discover weaknesses in AI-generated policies when a complaint or formal dispute arises. In that setting, a polished-looking document may offer little protection if it does not reflect the statutory framework that applies to the employee or workplace issue.

"Employers may only discover there are critical omissions from a workplace policy they used AI to create when facing a grievance, disciplinary matter, or Fair Work claim," Eckersley said.

Absence policies

BrightHR said its internal analysis found significant weaknesses in AI-written absence management policies, including shortcomings in employee notification processes, return-to-work procedures, recognition of statutory rights, and guidance for managers handling individual circumstances.

Absence management can raise a range of legal issues for employers, including personal leave entitlements, protection from adverse action, and anti-discrimination obligations. Broad template wording can make those issues difficult to address properly.

An oversimplified policy may also shape day-to-day management decisions. If managers follow generic instructions that do not reflect Australian legal requirements, the policy itself can become part of the problem in a later workplace dispute.

That risk is especially relevant for smaller businesses, which often lack dedicated HR staff and may rely on templates or automated drafting tools to handle administrative work. AI may be attractive because of its speed, but speed does not remove the need for review when employee rights, leave, discipline, or dismissal are involved.

Role of AI

Generative AI still has a place in HR administration when used to summarise information or organise workflows, BrightHR said. Its warning focused on using AI as a substitute for legal or HR judgment when drafting policies that affect employment rights and workplace decisions.

Employers should check such documents against current Australian workplace relations law and seek professional review before putting them into use, according to the company. It said technology should reduce exposure to compliance problems rather than create new gaps.

"The issue is not whether businesses should use AI, but whether they understand where AI stops being a productivity tool and starts becoming a legal risk. A policy that takes five minutes to generate could ultimately cost a business significantly more if it contributes to a dispute or an unlawful workplace decision," Eckersley said.

BrightHR provides cloud-based HR and workforce management software to small and medium-sized businesses in Australia and New Zealand. It is part of Peninsula Group.