Understanding the European AI Act: A Guide for Employers
Artificial intelligence (AI) is evolving rapidly and is increasingly integrated into various business operations. Recognizing this trend, Europe has introduced the AI Act, a comprehensive legal framework that all companies operating in Europe must adhere to.
The AI Act officially came into effect on February 2, 2025. Non-compliance can lead to substantial fines, making it crucial for employers to understand their responsibilities. While businesses in the UK are not required to comply domestically, those engaging with the EU market must meet these regulations by the effective date.
Key Requirements for Employers
According to legal experts, there are two primary obligations for employers under the AI Act: the establishment of an AI policy and the prohibition of certain AI systems.
1. Mandatory AI Policy
Employers are required to develop an AI policy that outlines their approach to ensure that employees are AI literate. This means that employees should understand the potential applications and risks associated with AI.
It is important to note that not every employee needs to be an AI expert; rather, all personnel involved with AI systems should have the knowledge to make informed decisions. This includes everyone from AI system providers to end users.
2. Prohibited AI Systems
The AI Act explicitly bans AI systems that undermine fundamental European norms and values, such as those that infringe on fundamental rights. For instance, AI systems used for social scoring or emotion recognition in workplaces and educational settings will be prohibited.
Employers must audit their AI systems to ensure compliance, ceasing the use of any prohibited technologies. Non-compliance can lead to fines of up to EUR 35 million or 7% of total global annual revenue from the previous fiscal year—whichever is greater.
Preparing for Compliance
As the AI Act applies to all employers in Europe, it is essential for organizations of all sizes to prepare adequately. The law encompasses any organization employing individuals who utilize AI technologies.
Member states are responsible for enforcing compliance, and fines for violations will only be clarified on August 2, 2025. Businesses are encouraged to be proactive, as fines may be retroactively applied.
The Future in the UK
Even for companies not operating within the EU, the trend of establishing domestic regulations similar to the AI Act is apparent in the UK. Organizations should prepare for the possibility of future legislation that aligns with the goals of the AI Act.
Ensuring AI Literacy
To fulfill their obligations, employers must ensure their workforce is adequately trained in AI. This may involve general training on basic AI principles, tailored to various employee roles and responsibilities. Employers should consider ongoing education, as AI literacy is not a static requirement.
Conclusion
The European AI Act represents a significant shift in how businesses must engage with AI technologies. By establishing clear policies and ensuring compliance, employers can mitigate risks and harness the benefits of AI responsibly.
