The rollout of artificial intelligence in Australian workplaces requires stronger regulation and worker protections, according to a landmark parliamentary report.

The House of Representatives Standing Committee on Employment, Education and Training's inquiry into workplace digital transformation has recommended classifying AI systems used in employment decisions as "high-risk" and implementing mandatory guardrails for their development and use.

The report, titled "The Future of Work," comes amid growing debate about AI's impact on jobs and working conditions. It makes 21 recommendations, including banning the use of AI for final decision-making without human oversight, especially in human resources decisions.

Committee Chair Lisa Chesters MP said the government needs to act quickly to ensure AI benefits both businesses and workers. "While technology in the workplace is not new, there have been changes in how technology is being developed and applied. Employers are increasingly using emerging technologies to automate not only tasks but decisions traditionally made by humans."

The report calls for amendments to the Fair Work Act to ensure employers remain liable for AI-driven decisions. It also recommends banning high-risk uses of worker data and prohibiting the sale of workers' personal information to third parties.

Business groups have pushed back against some recommendations, warning of potential impacts on innovation. Business Council of Australia Chief Executive Bran Black said while the BCA recognizes the need for "sensible guardrails," the recommendations risk "union overreach and duplicative regulations, which would deter investment in technologies like AI due to more red tape."

The Australian Chamber of Commerce and Industry labeled the report's recommendations as "unbalanced and impractical." ACCI CEO Andrew McKellar said: "After months of input, the Committee has completely disregarded the realities faced by business. The recommendations would create heavy-handed obligations on AI deployment in workplaces."

However, unions have welcomed the findings. ACTU Assistant Secretary Joseph Mitchell supports the push for greater oversight, saying "Too often, we have seen AI used by multinational giants to undermine workers' wages and conditions. Whether it's workplace surveillance or using algorithms to sack workers, bosses should be accountable for decisions made using AI models and tools."

The report highlighted particular concerns about worker surveillance and data privacy. It found that 60-70% of workplaces now use digital surveillance to collect worker data, raising questions about privacy and workplace dignity.

A key recommendation calls for meaningful consultation with workers before, during and after the introduction of new technology. The committee also emphasized the importance of maintaining human oversight of AI systems, particularly in high-risk settings.

The report acknowledges AI's potential benefits, including productivity gains and job creation, but stresses these must be balanced against worker protections. It particularly noted risks to marginalized groups, including women, cultural minorities, and workers with disabilities, who may face increased discrimination through algorithmic bias.

The government is now considering the recommendations as part of its broader AI regulatory framework, with Industry Minister Ed Husic expected to respond in coming months.

The full report is available online HERE