AI-driven job automation is on the rise, and according to a new study by the Institute for the Future of Work (IFOW), it’s set to deepen inequality in the UK. The three-year research project warns that without targeted government support, rapid automation through AI could intensify economic disparities, particularly affecting lower-paid, routine jobs. The report highlights that while AI can enhance productivity, the way firms implement it will determine its impact on job quality, worker stress, and social mobility.

The automation divide: Who’s at risk?

The research shows that sectors reliant on repetitive tasks—think retail, logistics, and manufacturing—are most exposed to automation. With AI-powered systems taking over inventory management, customer service chatbots replacing human agents, and autonomous vehicles reducing the need for drivers, entire categories of jobs could be lost. Meanwhile, professionals in finance, law, and technology are more likely to benefit from AI as a tool to enhance productivity rather than replace jobs altogether.

Christopher Pissarides, a Nobel laureate economist and lead author of the IFOW report, emphasises the need for policies that ensure AI enhances productivity without worsening inequality. The study recommends setting up regional science centres and giving unions a greater role in supporting training and digital access to help workers transition into new roles.

What does this mean for in-house legal teams?

Legal teams will need to be proactive, ensuring that automation strategies align with employment laws and ethical considerations. Here’s where the focus should be:

• Fair redundancy processes: If AI is driving job cuts, businesses must follow due process, including proper consultation and fair selection criteria. Failing to do so could result in legal challenges and reputational damage.
• Discrimination risks: AI decision-making isn’t immune to bias. If automation disproportionately impacts certain groups, legal challenges could follow. Algorithms trained on biased datasets may unintentionally disadvantage certain demographics, leading to claims of indirect discrimination.
• Reskilling and upskilling obligations: Employers may face pressure—from regulators, policymakers, and the public—to support affected employees with training and redeployment. The IFOW report suggests that without such measures, social divisions could deepen as automation expands.
• Ethical AI governance: Transparency is key. Companies need clear policies on how AI is used in hiring, performance management, and redundancies. AI systems should be regularly audited to ensure they are making fair, unbiased decisions.

The broader implications for businesses and society

Beyond the legal risks, there’s a broader ethical and economic challenge. If automation continues to widen the gap between high and low earners, businesses may face scrutiny from regulators and the public. Policymakers are already exploring ways to address this - such as taxation on AI-driven efficiencies to fund re-skilling programs - but companies must also take responsibility. 

Investing in workforce development now could future-proof businesses against economic instability down the line. Companies that embrace a people-first approach - adopting AI responsibly while providing opportunities for employees to adapt—will likely maintain stronger reputations and workforce morale. 

The road ahead

AI is changing the employment landscape, but businesses that take a responsible approach—balancing efficiency with fairness - can mitigate risks and even build a competitive advantage. For legal teams, this means staying ahead of evolving regulations and championing ethical AI use. Ensuring AI is deployed fairly and transparently will not only protect companies from litigation but also foster a more sustainable future for the workforce. 

Want to ensure your organisation is prepared? We’re here to help navigate these challenges. Let’s chat!