Artificial intelligence is shaping the future of work and as more companies adopt algorithmic decision-making, concerns around transparency, bias and legal gaps are growing.

Imagine a delivery rider in Kuching suddenly deactivated from the delivery platform with no explanation and no person in the company to whom to appeal. The decision was made by artificial intelligence (AI) without any human input.

While this kind of algorithmic control is often associated with gig platforms, it is increasingly a part of the decision-making process in Malaysia companies, from hiring to firing.

From Gig Work to White-Collar Workplaces

The tools used to manage gig workers, which include data tracking, algorithmic performance reviews, and automated decisions, have been steadily making their way into the broader Malaysian workforce in the past several years.

As Malaysian businesses embrace digital transformation, AI systems are being harnessed to monitor productivity, manage recruitment, calculate performance bonuses, and determine contract terminations. This ‘smart management’ is the way of the future and is largely available today.

Hiring: Bias In, Bias Out

According to Moka Recruiting, a firm that serves over 2,000 businesses, including global corporations, 17% of employers in Malaysia currently use AI in recruitment, with another 29.8% planning to adopt it in the near future.

With recruitment being one of the fastest-growing uses of AI, care is needed. While resume-screening tools and automated screening of candidates promise greater efficiency and objectivity, these systems often rely on historical data sets that may reflect biased or exclusionary patterns.

For example, if previous hiring decisions favoured a particular gender, ethnicity, or educational background, AI systems trained on such data may duplicate such preferences, thus screening out competent and qualified potential hires.

In the Malaysian job market, characterised by racial, linguistic, and regional diversity, how AI is being used in decision-making processes is an important issue. AI recruitment tools may exclude candidates from rural areas, non-English-speaking backgrounds, or those with atypical work histories, such as mothers who have taken a career break to have children.

Thus, transparency and nuanced contextual information is needed to ensure that employment is inclusive and does not create barriers for certain sections of the population.

Also of concern is that employees themselves may not understand how they’re being evaluated for vacant positions. They may assume that a human resources (HR) manager reads and assesses their suitability for employment when it could have been an AI tool instead!

The Legal Gap

Malaysia’s current employment law is found in the Employment Act 1955 and in the Labour Ordinance in Sarawak. These pieces of legislation pre-date the data revolution of recent years. Despite recent amendments to these laws, which have extended maternity leave and included provisions addressing sexual harassment, the legislation is ill-equipped to handle developments driven by the use of AI tools.

Globally, some jurisdictions are taking steps to address issues of employment in an era of AI. The European Union’s AI Act proposes strict rules for the use AI, including the right to be informed when AI is used in making workplace decisions. Australia is considering a framework for the ethical usage of AI in HR decision-making. It is timely for Malaysia to consider amendments to the existing legislation, or the introduction of dedicated laws specifically addressing the usage of AI tools in the workplace.

Key Takeaways for Employers

Take time to understand the AI tool you have decided to use in recruitment, performance evaluation, or dismissal, and audit these tools for potential bias. Training HR teams in AI literacy goes a long way to maximise the advantages of AI tools while identifying potential issues.

It is important to note that AI recruitment tools trained on non-Malaysian datasets may disadvantage some sections of the workforce. AI tools should be localised and tailored to the multicultural Malaysian workforce.

Let job applicants and employees know when AI is used to make decisions about hiring, promotion, or termination. Lack of transparency can damage trust and could lead to future legal risks.

There is currently a lacuna in Malaysian law when it comes to the management of workers via AI tools. However, it is anticipated that with more firms utilising AI tools, legislators will turn their attention to providing legal guidance. Knowledge of developments in other jurisdictions now will pre-empt drastic workplace changes when Malaysia does introduce protective laws.

There is little doubt that AI will play a pivotal role in defining the future workplaces of Malaysia. To ensure that hiring, dismissal, and performance evaluations remain fair, human oversight must remain at the core of decision-making. This approach will enable employers to advance operational efficiency while maintaining a strong commitment to equity.