Are you monitoring your employees? If the answer is “yes”, or even "to some degree", a new government consultation launched on 8 July 2026 deserves your attention. It could fundamentally change the rules of the game.

The scale of the issue

Just three years ago, data produced by the Information Commissioner’s Office (the 'ICO') showed that around one in five organisations were monitoring employees' digital activity. A 2025 survey of UK managers puts that figure at one in three and rising. The tools involved are varied and evolving, from location tracking and digital activity monitoring to automated performance evaluation and continuous video surveillance. Increasingly, these tools do not merely record what workers do, they analyse patterns, generate scores and, in some cases, feed directly into employment decisions. 

Many employers want to use monitoring technology responsibly but lack clarity about how the law applies and confidence about what good practice looks like. Workplace monitoring was once largely associated with warehouse and transport sectors, where algorithmic management first attracted regulatory and public scrutiny. However, these technologies are now spreading rapidly across the broader economy, into retail, professional services and beyond.

Three options on the table

The government is consulting on three possible responses:

Option A: A statutory code of practice

A statutory code would aim to establish what responsible practice looks like when introducing and using monitoring technologies covering transparency, fairness and proportionality. It would give employment tribunals a framework to apply when things go wrong. For example, where a worker wins an unfair dismissal and/or discrimination claim and the employer’s use of workplace monitoring technology was a material element of the facts in dispute, an employment tribunal could adjust the compensation awarded by up to 25%. 

Option B: A legal duty to consult and negotiate

This option would go significantly further, using primary legislation to require employers to consult and negotiate, with a view to reaching agreement with trade unions or elected staff representatives (where no trade union is in place) before any new monitoring technology is introduced, and potentially, whenever significant changes are made to how an existing system operates or the purposes for which it is used. This would be the most significant intervention. For smaller employers without dedicated HR teams, this could be genuinely burdensome, both in time and cost, particularly given that workplace monitoring technology is frequently introduced gradually through pilots and iterative updates rather than as a single, discrete event.

Option C: Non-statutory guidance

This is the lightest touch option and would include practical guidance to help employers understand existing obligations and adopt good practice. Following it would be voluntary, and a failure to do so would not expose an employer to any penalty or give an employee any additional avenue for redress. 

The question employers should be asking themselves now

Even before any possible regulatory change, the consultation raises a question that every employer using AI or algorithmic tools in performance management should sit with: is your 'human in the loop' genuinely meaningful, or is it token sign-off?

This is not just a question of good management practice, it is already a live legal issue, and one that cuts across both employment and data protection law. 

On the employment law side, the obligation to act fairly and lawfully when using monitoring tools is not contingent on any new legislation. Where monitoring data or algorithmic outputs inform employment related decisions, such as those relating to performance, conduct, promotion or pay, those decisions must be fair, proportionate and non-discriminatory. Employers cannot pass responsibility for those outcomes to the technology. It is therefore important that a human meaningfully reviews monitoring data, checking its accuracy, understanding how it was generated and considering the fairness as a whole, before it is used to inform any decision.

From a data protection perspective, the UK GDPR and Data (Use and Access) Act 2025 also impose specific obligations on organisations where decisions that have a significant effect on an individual are made purely by automated means, without any meaningful human involvement. Where that threshold is crossed, workers are entitled to certain protections, including the right to be provided with specific information about the decision, to make representations about the relevant decision and to seek human review of or contest the decision. The line between a human supported process and a fully automated one is not always where employers think it is. If the person nominally reviewing an algorithm's output is simply rubber-stamping it without genuine scrutiny, the ICO's updated guidance on what constitutes "meaningful human involvement" may well bring that process within the solely automated decision-making rules.

It is worth noting that the ICO generally categorises 'human involvement' as involvement by a human that comes after the automated decision has taken place and which relates to the relevant outcome. Employers should consider the relevant stages of their decision-making processes and potential implications, including the range of decisions this may touch, for example, who gets promoted, how shifts are allocated and how performance is assessed. These are not minor administrative details; they are the decisions that define people's working lives and which may have legal consequences. 

Whatever the outcome of the consultation, the direction of travel is clear. The existing frameworks already impose real obligations on employers and the proposed options in the consultation, particularly Options A and B, could significantly increase the consequences for those employers who fall short.

What should employers do?

For employers who use monitoring technology, or who are considering introducing it, the consultation is a timely prompt to take stock of their current position. Those who act now are likely to be better placed legally and reputationally. At a minimum, we recommend:

• auditing existing monitoring technologies and their purposes;
• reviewing whether Data Protection Impact Assessments are in place where required;
• ensuring workers are meaningfully informed about how monitoring data may affect decisions about them;
• documenting and genuinely exercising human oversight where AI or algorithmic tools feed into people decisions.

If this is something you would like to discuss further, we would be delighted to hear from you. Please do not hesitate to get in touch with our employment law team.