[AI's Impact on HR Management Series]Three Major Labor Compliance Challenges for Enterprises Redefining Work in the AI Agent Era: With a 90-Day Action Plan
AI is altering not merely work habits, but the fundamental execution of employment contracts. From a legal standpoint, this represents a qualitative shift in the "provision of labor."
When AI Agents begin drafting reports, analyzing data, writing code, and even independently executing cross-departmental workflows, the primary legal challenge facing corporate human resources is no longer "Will AI replace employees?" Instead, it is: "Can employers legally mandate that employees alter their agreed-upon manner of work?"
An even sharper question arises: If an employee cannot use AI, can an employer determine that they are incompetent and terminate them with severance?
Enterprises should prioritize redefining job scopes, providing necessary training, establishing reasonable performance benchmarks, and evaluating reassignment options before considering dismissal as a last resort.
Introducing AI tools can reshape working methods, but employers cannot assume that employment contracts and associated rights-and-obligations documents remain self-executing and immutable. Furthermore, performance after the deployment of AI tools can serve as an evaluation metric, but it cannot immediately serve as automatic grounds for dismissal.
To navigate this transformation, businesses must address three major labor compliance challenges and implement a corresponding three-phase action plan.
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Challenge 1: Changes in Job Scope — How Should Employment Contracts and Job Descriptions (JDs) Be Adjusted?
In the past, financial analysts prepared reports, software engineers wrote code, and HR professionals screened resumes. Today, AI can handle most standardized procedural workflows, shifting the employee's role toward prompt engineering, oversight, validation, exception handling, and final judgment. In essence, workplace duties are moving from "human-only execution" to "human-AI collaboration."
Under Article 484 of the Taiwan Civil Code, an employee cannot, in principle, assign a third party to render services in their place—a concept known as the "exclusivity of personal service" (勞務專屬性). An employer cannot arbitrarily reassign its claim to services, nor can an employee delegate their duties to a substitute. However, if this "third party" is an AI tool, this restriction does not apply—particularly when the employer explicitly mandates its usage.
For instance, requiring a financial analyst to leverage AI in generating reports generally constitutes an adjustment to working methodology. However, requiring that same analyst to transition into an AI systems development lead would involve a substantial reassignment of duties.
Enterprises must re-examine their Job Descriptions (JDs) to clearly define deliverables, AI collaboration expectations, manual review obligations, and necessary skill sets. Crucially, unilaterally amending a JD does not grant the employer the right to unilaterally alter the underlying employment contract.
Action Plan: Phase 1 (Days 1–30) — Work and Contract Audit
[ ] Audit tasks across all departments that have been replaced, augmented, or redistributed by AI.
[ ] Cross-examine current employment contracts, JDs, and actual daily duties.
[ ] Distinguish between reasonable managerial directives and substantial changes that require bilateral employee consent.
[ ] Establish AI-collaborative JDs that explicitly delineate responsibilities between human employees and AI systems.
Phase 1 Compliance Goal: Ensure every people manager clearly understands the legal boundaries between duties that can be adjusted under managerial discretion and those requiring formal, mutual contractual amendment.
Challenge 2: An Employee Cannot Use AI — Can They Be Reassigned, Demoted, or Deemed Incompetent?
This is rapidly becoming one of the most litigious employment issues in the workplace.
Suppose that after implementing AI, a workflow that once required ten employees now requires only three to supervise AI Agents. What happens to the remaining seven?
Can they be reassigned? Employers must first evaluate the "Five Principles of Transfer" under Article 10-1 of the Labor Standards Act (LSA), which require:
Genuine operational necessity;
No adverse changes to wage and working conditions;
Demands that align with the worker’s physical and mental capabilities;
Provision of necessary training and assistance if the new role requires unfamiliar skills; and
Consideration of the employee's family and living interests if relocation is involved.
An enterprise cannot mandate reassignments, demotions, or wage reductions solely because AI efficiency has reduced headcount demand.
Furthermore, performance evaluation systems (KPIs) must be recalibrated. For example, if an analyst previously submitted ten monthly reports, is it reasonable to raise the expectation to fifty simply because AI was introduced? One cannot rely strictly on the theoretical output metrics of an AI tool. Evaluations must take into account whether the employee received adequate training, whether suitable enterprise tools were provided, and the time required for human verification and critical analysis.
AI transformation should represent an upskilling initiative, not a pretext for constructive dismissal.
Action Plan: Phase 2 (Days 31–60) — Build Capability and Performance Frameworks
[ ] Provide appropriate AI tools, targeted training programs, and a realistic adaptation period.
[ ] Reset performance KPIs to realistic levels, avoiding benchmarks based purely on theoretical AI processing capacity.
[ ] Institute an objective capability assessment framework along with a formal performance review appeal channel.
[ ] Assess reassignment needs in accordance with LSA Article 10-1, evaluating upskilling programs and alternative internal placement opportunities.
Phase 2 Management Goal: Provide employees with a fair and reasonable opportunity to adapt to new workflows while establishing objective evidentiary records to evaluate actual job competence.
Challenge 3: AI Eliminates Roles — How Can Enterprises Legally Terminate Staff and Institute Compliance Audits?
The adoption of AI typically produces two distinct termination scenarios:
Role Elimination Due to Changes in Business Nature:
Employers often look to Article 11, Paragraph 4 of the LSA. However, the employer bears the burden of proving that the business nature has genuinely changed, that there is an unavoidable necessity to reduce workforce, and that there are no other suitable positions within the enterprise to accommodate the affected employees.
The Role Remains, but the Employee Fails to Adapt to Reasonable New Work Standards:
This triggers Article 11, Paragraph 5 of the LSA ("confirmed incompetence to perform assigned work"). Courts evaluating incompetence do not merely check whether a KPI was missed; they examine demonstrated competence, subjective willingness to perform, and whether the employer exhausted less drastic alternatives (such as coaching, training, performance improvement plans, and job reassignment) under the "principle of last resort" (ultima ratio).
The deployment of AI does not, in itself, constitute automatic legal cause for dismissal.
In tandem, enterprises must update their Work Rules and Codes of Conduct. Under Article 70 of the LSA, employers with 30 or more workers must draft Work Rules, submit them to the competent labor authority for approval and recordation, and publicly display them.
Mandatory AI usage policies, appraisal protocols, disciplinary measures, and dispute resolution procedures must be integrated into these institutional rules. Codes of Conduct should clearly govern tool authorization, personal data protection, intellectual property and trade secret safeguards, human review mandates, and final accountability. A blanket policy stating that "refusal to use AI will result in immediate termination" is legally invalid, as any dismissal must meet strict statutory prerequisites.
Action Plan: Phase 3 (Days 61–90) — Refine Policies and Dismissal Governance
[ ] Revise Work Rules, Codes of Conduct, and AI Governance Policies; fulfill statutory reporting, approval, and internal publication requirements.
[ ] Retain qualified legal counsel to verify statutory compliance under LSA Article 11, Paragraphs 4 and 5 for any contemplated redundancy or severance cases.
[ ] Finalize the human-AI collaborative appraisal system, documented PIP/warning processes, job reassignment protocols, and "principle of last resort" evaluation checklists.
[ ] Systematically archive all training logs, appraisal records, communications, PIP progress notes, and transfer attempts, compiling a labor compliance report for executive management.
Phase 3 Management Goal: Ensure every personnel decision is supported by sound factual justification, lawful procedure, and an airtight paper trail.
(Note: The 90-day framework outlined above is a recommended operational roadmap rather than a statutory compliance timeline. Businesses may execute items concurrently or expedite steps based on operational needs; under no circumstances should statutory procedural safeguards be deferred simply to meet an internal project deadline.)
[Attorney Chen Yeh-hsin's Advice]
The greatest liability during an AI transformation is not that employees fall behind, but that the enterprise's labor compliance mechanisms fail to keep pace.
In the AI era, labor compliance cannot focus solely on whether a worker executed their tasks; it must govern how humans and AI collaborate to deliver work.
For HR leaders currently finalizing strategic plans and budgets, a critical priority for 2027 should be:
Select one department currently adopting AI, gather its employment contracts, JDs, Work Rules, Codes of Conduct, and KPI scorecards, and execute a comprehensive AI Labor Compliance Audit.
Step 1: Confirm whether the nature of job deliverables and execution methods has fundamentally shifted.
Step 2: Ensure employees are provided with requisite training and evaluated against fair, objective metrics.
Step 3: Verify that any prospective reassignment, redundancy, or severance procedures are grounded in statutory compliance.
This is not solely an HR initiative; it is an executive governance imperative for chairpersons, general managers, and departmental heads.
AI can reallocate tasks, but it cannot relieve an employer of its statutory duty to manage its workforce lawfully.
When a company redefines work without updating its policies, offering training, or setting fair appraisal standards, a central question remains: Is the employee genuinely incompetent, or was the enterprise simply legally unprepared for its own AI transformation?
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