Should redeployment be considered before terminating staff affected by AI restructuring?

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Redeployment Must Be Considered Before Terminating Staff Affected by AI Restructuring

Employers cannot automatically justify retrenchment solely based on the adoption of artificial intelligence (AI). Legal principles governing retrenchment continue to apply, requiring employers to demonstrate genuine redundancy and that affected employees were selected based on fair and objective criteria. Before considering termination, organisations should explore opportunities to reskill, upskill, or redeploy employees to other suitable roles within the company.
Legal Precedents Highlight Redeployment Obligations

International court decisions underscore the necessity of considering redeployment. In Italy, a labour court reinstated an employee dismissed due to AI implementation because the employer failed to assess whether the individual could be transferred to a different suitable position. Similarly, a Chinese court awarded compensation to a supervisor dismissed after refusing a demotion following the introduction of AI systems, asserting that AI replacement cannot be used to bypass labour protections. These cases, while not binding in Malaysia, illustrate a crucial principle: AI adoption alone is insufficient grounds for dismissal without exploring internal job mobility.
Balancing AI Adoption with Employee Job Security

The integration of AI into the workplace necessitates a careful balance between technological advancement and the job security of employees. While AI can enhance efficiency, particularly in process-driven tasks, many roles still rely on human judgment, creativity, and critical thinking. For employers, AI should not be viewed merely as a cost-saving measure. The authors suggest that before resorting to retrenchment, employers ought to investigate whether affected employees can be reskilled, upskilled, or redeployed to other positions within the organisation.
Retrenchment as a Last Resort

Retrenchment should only be contemplated when roles are genuinely redundant and after all reasonable efforts to reskill, upskill, or redeploy affected employees have been exhausted. Even when retrenchment becomes necessary, the process must be conducted responsibly, transparently, and fairly. This approach ensures that while businesses adapt to technological changes, the fundamental principles of fair treatment for employees are upheld throughout the transition.
Evolving Employment Law and Practices

As AI's impact on the workplace grows, Malaysian employment law and industrial practices must adapt. The Code of Conduct for Industrial Harmony already mandates that employee selection for retrenchment be clear, transparent, and objective, considering factors beyond just tenure. There is a growing need to place greater emphasis on employees' skills and adaptability in the context of working alongside technology. Furthermore, a review of legal protections, including retrenchment benefits, may be necessary to adequately safeguard employees across all income levels in an AI-driven workforce.

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Should redeployment be considered before terminating staff affected by AI restructuring?

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