'You're fired!': Are companies letting AI lay off employees in Canada?

Canadian companies using AI to fire employees Cybersecurity expert Ritesh Kotak weighs in on a new survey showing how some Canadian companies are using AI to fire employees.

There are companies in Canada using artificial intelligence (AI) to fire employees, a new survey shows.

Capterra, a software comparison company, conducted a poll that shows how some companies are using AI in human resource departments.

The study collected data between May and June 2023 from 1,002 Canadians aged 18 to 65. The respondents worked in small to mid-sized companies (between two and 250 employees) and held various roles including full- and part-time work.

The survey examined how AI is affecting employees and found an "uptick" in the use of the technology at small companies.

Approximately eight per cent of respondents said their company is using AI when deciding to lay off employees in Canada.

"When it comes to important decisions, it's alarming to think they've been made completely by an algorithm; however, it's rarely the case that HR departments implement decisions without also considering the AI-made recommendations for themselves," Tessa Anaya, an analyst for the study, said in a press release July 20.

HOW IS AI BEING USED?

About one in five small to mid-sized companies in Canada are already using AI in HR departments, the survey says.

Anaya told CTVNews.ca the survey is meant to understand both HR software that employs AI and AI-based HR software.

At some Canadian companies, AI is engaging in "human-like activities" like learning, planning and problem-solving, she said.

"One example of how AI is being used by HR tools is for prediction: using past records and data to predict what employees' schedules and attendance will look like in the near future," Anaya told CTVNews.ca in an email. "This can save HR associates time by letting the AI function suggest ideas for staff schedules and streamline their workloads by taking care of a repetitive task automatically."

AI is helping talent managers find and shortlist candidates, write performance reviews, evaluate retention of employees and give recommendations on further learning, the study says.

Many (29 per cent) report the usage of AI in HR software, employee engagement programs (27 per cent) and analytics (24 per cent).

The tools can suggest to HR tips for improving retention and distributing raises, Anaya says.

But while about 66 per cent said they understood how AI is helping, about a third said they were "unaware" or "unsure."

'ETHICAL' ISSUES FOR AI LAYOFFS

More than half of employees are not happy with allowing AI to handle layoffs, the study shows.

About 30 per cent said they would feel "very uncomfortable" if AI could lay off someone and a further 39 per cent said they would feel "somewhat uncomfortable."

Some respondents cited "ethical" concerns about AI in this area.

Workers also indicated a mistrust in AI, saying the technology could not "judge employee performance accurately." About 75 per cent said they could not trust AI to fire someone.

Just under half (48 per cent) of respondents who were uncomfortable with the use of AI in layoff decisions said humans should be involved in letting someone go.

"What the software does not do is replace the need for human oversight. Although AI-powered HR tools can automate many of the processes involved in running an HR department, someone still needs to be at the helm of the operations," Anaya told CTVNews.ca in an email. "This can be great for smaller businesses with limited resources at their disposal, who can help alleviate the workload of their HR teams rather than automate them out of a job."

Not all employees are against allowing AI in the layoff decision, the study shows.

About 31 per cent of employees said they would be "comfortable to some degree" if HR used AI to make a layoff decision.

Of those employees, 39 per cent cited AI's unbiased nature, as it can't account for personal preferences.

Respondents also said AI could avoid decisions based on a manager's personal issues with employees (34 per cent), it relies on performance-based data (31 per cent) and 28 per cent believe decisions by AI are more accurate.

HOW AI LAYOFFS IMPACT EMPLOYEES

A majority of employees surveyed worry about how AI layoffs could impact their mental health.

Approximately 65 per cent of respondents said if AI were used in layoffs, it would raise their stress levels. About 14 per cent were unsure if it would and 22 per cent said it would not increase their stress.

"Another possible consequence of the use of AI in this type of decision-making is a change to the work habits of employees, as they may fear their performance is being measured or evaluated in new ways," the study reads.

Over a third of employees (35 per cent) said if AI was in charge of layoffs they would change their behaviour on the job.

Many (39 per cent) said they would develop new skills that could benefit the company. About (36 per cent) say they would focus on their key performance indicators and others (21 per cent) would get involved in more projects.

"Although they're beneficial ambitions, they differ enough from each other to signal some slight confusion about how exactly AI evaluates employees," the study reads.

WHERE IS AI BEST SUITED IN COMPANIES?

According to the survey, employees do not trust AI to make decisions but they do believe it can be a beneficial tool.

About 65 per cent trust AI in training, 51 per cent believe it could be beneficial in monitoring employees and 48 per cent said AI could help with recruitment.

"To reassure uneasy employees on the use of AI in HR, companies should keep their staff informed on how these tools work, what data is taken into account, and which processes HR associates are using them for," Anaya said.