A company that treats AI-driven change as an automatic redundancy may overlook opportunities to retain valuable employees, and misjudge its legal exposure. Photo by Malte Mueller/Getty Images

Article content

The most consequential employment decisions of the AI era may not be which jobs to eliminate but how to redesign the workforce.

Article content

Article content

Article content

Tasks that once justified full-time positions may soon occupy a mere fraction of someone’s day. Entire departments may be reorganized around capabilities that did not exist when their employees were hired.

Article content

Article content

For employers, the commercial imperative is obvious; the legal implications, less so.

Article content

Article content

Employment law was developed around a stable premise: an employee accepts a defined role with specified responsibilities and compensation in exchange for performing work under the employer’s direction. AI is making the boundaries of that bargain increasingly murky.

Article content

The companies that navigate this transition successfully will understand a distinction that is easy to overlook: The right to transform a business does not include the right to transform employment terms or relationships.

Article content

Consider an employee hired as an analyst. The role involves gathering information, preparing reports, interpreting results and advising management. AI can now perform much of the preliminary work in minutes rather than days.

Article content

The employer can retain the employee and expect greater output, redesign the position around judgment and strategy, combine responsibilities previously divided among several employees or eliminate the role altogether. Any of these decisions are commercially rational. None are without legal consequences.

Article content

Article content

An employer that substantially changes an employee’s responsibilities, status or compensation may face a constructive dismissal claim, depending on the circumstances and the employment agreement. Introducing new technology does not permit the employer to rewrite the employment bargain.

Article content

Article content

The challenge is distinguishing between changing how work is performed and changing the terms on which an individual agreed to perform it.

Article content

If an employee can complete in two hours what previously took two days, should the employer expect 10 times the output? My legal answer is yes, and their performance can be managed accordingly.

Article content

But what if AI completes routine assignments brilliantly but produces errors on complex ones? What if one employee adapts readily to AI while another, equally experienced, struggles?

Article content

These questions affect performance reviews, promotions, compensation and dismissals.

Article content

Employers can change how work is organized and establish legitimate performance expectations, subject to applicable law and contractual obligations. But they must still be able to explain what they expect, how performance is measured and why an employee failed to meet the standard.