AI use in Disciplinary Processes: Lessons from QTR v BXD
The recent Employment Relations Authority determination of QTR v BXD [2025] NZERA 716 highlights the growing tension between AI use by employees and the confidentiality and privacy risks caused by its use in the workplace.
Background
The case involved an employee (QTR) who was dismissed by their employer (BXD). In addition to the initial disciplinary allegations, the employer alleged that during the disciplinary process, the employee uploaded confidential company information into an open-source AI programme to prepare responses for the disciplinary process. The Employer applied to the Employment Relations Authority for a compliance order to prevent the employee from uploading further confidential information.
Decision
The Authority concluded, on the balance of probabilities, that the employee had uploaded information into the AI programme. The Authority found that by doing so the employee had disclosed the employer’s confidential information including internal documents, personal details of team members and technical information. This was in breach of the confidentiality provisions in the employment agreement (which survived the termination) and the employer’s AI policy.
A compliance order was issued, prohibiting the employee from uploading any further confidential information into any open-source AI platforms. The Authority also reminded the parties of the guidelines prohibiting entry of private or privileged data into generative AI tools in making submissions to the Authority.
The Authority noted that should the employee fail to comply with the compliance order, the employer had the ability to seek a penalty.
Key Takeaways
While employees may view AI as a useful tool, its use introduces potentially complex confidentiality and privacy risks. This is because open-source AI programmes often retain inputted information for training purposes. This creates a risk that confidential information is stored, repurposed or even exposed beyond the employee and employer’s control.
Employers should have confidentiality that impose obligations both during and after the termination of employment.
This case highlights the importance of having robust confidentiality provisions in their employment agreements. With the growing use of AI, employers may also wish to consider introducing AI policies, setting out specific expectations around the use of AI.
Special thanks to Partner Alastair Espie, Senior Associate Julia Hurren, and Solicitor Sally Hitchcock for preparing this article.
If you have any questions, please don’t hesitate to reach out to our national employment team for assistance.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
