The Artificial Intelligence and Data Act (AIDA) and Quebec’s Law 25 now impose specific obligations on the use of automated systems in hiring and workforce management decisions.
These changes are not just about legal compliance. They represent an opportunity to strengthen trust with your employees and improve your HR practices. Penalties for non-compliance can be substantial, making proactive compliance essential starting now.
Key Takeaways
- AI systems used in HR (ATS, CV screening tools) may be classified as “high-impact systems” under AIDA
- You must conduct an Algorithmic Impact Assessment (AIA) for automated recruitment tools
- Quebec’s Law 25 and Canada’s Bill C-27 govern the management of employee personal data
- Preventing discriminatory algorithmic bias is now a legal obligation
- A phased compliance approach in 2026 helps protect against regulatory sanctions
- SMEs have the same obligations as large organizations, even when using third-party tools
AI in Recruitment: From Performance to Compliance (AIDA/LIAD)
Using artificial intelligence in recruitment is no longer just about efficiency. It has become a regulatory issue that requires close attention.
High-Impact Systems: Is Your ATS Compliant?
A high-impact AI system in HR is a tool that automates or significantly influences employment-related decisions, such as candidate screening or performance evaluations.
If your applicant tracking system (ATS) automatically ranks CVs, assigns candidate scores, or recommends profiles, it likely falls into this category. Under AIDA, you must then:
- Document how the system operates
- Conduct an algorithmic impact assessment before deployment
- Maintain records of compliance evaluations
- Inform candidates that automated decision-making is being used
Quick Verification Table:
| HR Tool function | Likely classification | Required action |
| Automated CV screening | High impact | Full impact assessment |
| Candidate recommendations | High impact | Bias audit |
| Automated email sending | Low impact | Basic documentation |
| Interview scheduling | Low impact | Data review |
Preventing Algorithmic Bias: The New Role of HR Professionals
Certified HR professionals now have a direct responsibility for overseeing AI systems. You must ensure your tools do not reproduce discrimination based on age, gender, origin, or other protected characteristics.
How to proceed:
- Request bias audit reports from your software vendors
- Test systems using diverse candidate profiles to identify imbalances
- Train HR teams to recognize signs of algorithmic discrimination
- Establish human review processes for all significant decisions
Bias prevention is no longer just best practice. It is now a legal requirement subject to review by the AI Commissioner.
HR Data Governance: Law 25 and Bill C-27
Protecting employee and candidate personal information becomes stricter with the combined application of Quebec’s Law 25 and Canada’s Bill C-27.
Privacy Protection: Auditing Employee Data Flows
Every piece of data you collect must have a valid purpose. You must now clearly map:
- What information you collect (CVs, evaluations, performance data)
- Where it is stored (local servers, cloud, third-party vendors)
- Who has access (HR, managers, automated systems)
- How long data is retained
Law 25 requires clear consent for certain data uses, especially when shared with HR technology providers. Privacy policies must be written in plain, accessible language.
If you use data to train recruitment algorithms, you must inform individuals and give them the option to opt out.
Toward Full Transparency in Automated Decisions
Employees and candidates now have the right to know when decisions affecting them are made by automated systems. This includes:
- Application rejections based on algorithmic screening
- Performance evaluations calculated by systems
- Automatically generated training recommendations
You must be able to explain the logic behind these decisions. Responding with “the system decided” is no longer acceptable. You must identify the criteria that influenced the outcome.
This level of transparency requires close collaboration with software vendors. Ensure they can provide clear explanations of how their algorithms work.
SMEs: What You Need to Know
You Are Not Exempt from Regulatory Obligations
Many Quebec SME leaders believe AIDA and Law 25 apply only to large organizations. This is false. Whether you have 10 or 1,000 employees, the same rules apply once AI systems are used in HR processes.
The Hidden Risk of SaaS Tools
Your SME likely uses online recruitment platforms, payroll software, or attendance management systems. These tools often include AI features you may not be aware of. A system that automatically sorts applications using predefined criteria is using AI, even if the vendor does not explicitly market it as such.
The issue: you remain responsible for compliance, even when a third party manages the technology. In the event of an audit or discrimination complaint, your organization is accountable.
Your Contract Clauses Are Your First Line of Defense
Before signing with an HR software vendor, verify these critical elements:
- Algorithmic transparency: Can the vendor explain how decisions are made? Request clear documentation of criteria.
- Bias audits: Does the vendor conduct regular discrimination testing? Ask to review audit reports.
- Shared responsibility: Who is liable in case of non-compliance? Contracts should clearly define vendor obligations.
- Data access: Can you easily retrieve your data if you change vendors? You must retain control of employee information.
- Regulatory updates: Does the vendor commit to adapting the software to evolving legal requirements?
Concrete Actions for SMEs
If resources are limited, start with these steps:
- Inventory all HR tools that process data or make automated decisions
- Contact each vendor to request information on compliance measures
- Review current contracts and add protective clauses if needed
- Appoint a compliance lead within your team, even part-time
- Document your processes and decisions, even in a simplified form
You are not alone.
Professional HR associations, chambers of commerce, and specialized firms offer SME-focused guidance.
Compliance is not just a constraint. It can become a competitive advantage. Candidates and employees increasingly value data protection and fairness. SMEs that demonstrate compliance stand out positively in the market.
The 5 Pillars of Employee Experience in 2026
Beyond regulatory compliance, HR trends in Quebec in 2026 emphasize a human-centered approach in an increasingly technological environment.
1. Work Flexibility Adapted to Local Realities
Hybrid work remains the norm, but employees now seek greater scheduling flexibility. Compressed workweeks and customized schedules are gaining traction.
2. Mental Health and Burnout Prevention
Employee assistance programs are evolving. Teams expect proactive support, including manager training to detect early signs of distress.
3. AI Skills Development
Employees want to understand how AI impacts their work. Offering training on responsible AI use builds confidence and future readiness.
4. Personalized Recognition
Generic recognition systems are losing impact. Employees value recognition tailored to their preferences, whether public acknowledgment, time off, or professional development.
5. Transparent Communication About Change
Amid regulatory and technological transformation, clarity is essential. Explain how AI regulations protect employee rights and improve fairness.
Implementation Guide: Conducting Your Algorithmic Impact Assessment (AIA)
An algorithmic impact assessment is not a theoretical exercise. It is a practical tool to identify and mitigate AI-related risks.
Step 1: System Inventory
List all tools using automation in HR processes, including recruitment, performance management, training platforms, and any system handling employee data.
Step 2: Risk Classification
Assess each system’s impact level on decisions affecting individuals. A training recommendation tool has a different impact than a CV screening system.
Step 3: Feature Documentation
Describe how each system operates. What data is used? What criteria are applied? Who can adjust settings? This documentation is required in audits.
Step 4: Bias Testing
Evaluate whether systems produce equitable outcomes across different groups. Compare selection rates, scores, and recommendations across varied profiles.
Step 5: Corrective Measures
Identify adjustments to reduce detected biases, such as modifying criteria, adding human review, or changing vendors.
Step 6: Continuous Review
Your AIA is ongoing. Schedule regular reviews, especially when systems change or new features are added.
AIDA Compliance Checklist for 2026
Here are the concrete actions you should take immediately to bring your HR practices into compliance with the new AI regulations:
- Identify all AI systems used in HR processes
- Determine which systems are “high impact”
- Conduct algorithmic impact assessments for high-impact systems
- Document HR data governance processes
- Update privacy policies in line with Law 25
- Train HR teams on transparency obligations
- Establish human review processes for critical automated decisions
- Maintain a compliance evaluation registry
- Prepare responses to explanation requests from candidates or employees
- Review contracts with HR technology vendors
How Fed Group Can Help
Regulatory deadlines cannot wait. If you need to implement an algorithmic impact assessment or review recruitment processes, you need the right people now.
That’s where we come in. Our network of qualified professionals allows us to quickly present relevant candidates. We apply rigorous evaluation methods to ensure each candidate truly meets your needs.
At Fed Group, we do not replace your compliance strategy. We support your recruitment needs. In a context of changing rules and rising expectations, having the right people in the right roles makes all the difference.
FAQ: AI Compliance and HR Trends 2026
What is the difference between Law 25 and AIDA for HR departments?
Quebec’s Law 25 governs the collection, use, and retention of personal data. It applies to all information related to employees and candidates.
AIDA (the Artificial Intelligence and Data Act), also known federally as LIAD, focuses on the specific risks associated with AI systems. It requires organizations to assess and document the impact of automated tools on employment-related decisions.
The two laws are complementary and must be addressed together in your compliance strategy.
Is my recruitment software legal under AIDA?
That depends on how it operates and how you ensure compliance. If your software automates hiring decisions, screens applications, or evaluates skills, it is likely classified as a “high-impact system.” To remain compliant, you must conduct an algorithmic impact assessment, verify the absence of discriminatory bias, and document your governance processes. The software itself can still be used, but transparency and fairness obligations must be respected.
What evidence must be provided during an AI Commissioner audit?
You must be able to provide algorithmic impact assessments for each high-impact system. This includes documentation on how your tools function, bias testing results, corrective measures, and decision records. You must also demonstrate that affected individuals were informed about the use of automated systems and that human review processes are in place. Contracts with technology vendors and their audit reports should also be retained.
Do I need to stop using AI in my HR processes?
No. The goal of the new regulations is not to prohibit AI, but to ensure its responsible use. You may continue using automated tools to improve efficiency, provided you comply with transparency, fairness, and data protection requirements. AI remains a major advantage for managing large volumes of applications and identifying talent, as long as its use is properly supervised.
How can I check whether my ATS contains discriminatory bias?
Start by analyzing your system’s outcomes over several months. Compare selection rates based on gender, apparent age (derived from years of experience), educational institutions, and other characteristics. If you notice significant disparities that cannot be explained by job requirements, your system may contain bias. Request audit reports from your vendor and test the system using diverse fictitious CVs to observe its behavior. If necessary, engage an external expert for an independent evaluation.
Does my SME really have the same obligations as a large company?
Yes. Company size does not change your legal obligations regarding compliance. Whether you have 5 or 500 employees, if you use AI systems to make HR decisions, you must comply with both AIDA and Law 25. The difference lies in the resources available to achieve compliance, not in the requirements themselves. Fortunately, SME-friendly solutions exist to support compliance without mobilizing large teams.
