EU AI Act — Implications for Businesses
What SMEs and data teams should know and do next
The enactment of the European Union Artificial Intelligence Act (Regulation (EU) 2024/1689) marks a fundamental restructuring of the global digital economy. For many UK businesses, the instinct might be to assume that post-Brexit independence offers a shield against Brussels’ bureaucracy.
However, the reality is starkly different. As the world’s first comprehensive legal framework for AI, this Act does not merely introduce new compliance boxes to tick; it fundamentally alters the liability landscape for any organization developing or deploying AI technologies.
For our clients in logistics and recruitment—sectors that rely heavily on high-velocity data and automation—the implications are profound, immediate, and extraterritorial. Here is what you need to know to navigate this new regulatory era.
1. The “Long Arm” of the Law: Why UK Firms Are Affected
A critical misconception is the belief that physical absence from the EU equates to regulatory immunity. The AI Act introduces an “output-based” jurisdiction that captures entire value chains regardless of where the server or algorithm sits.
The Rule
Under Article 2(1)(c), the Act applies to providers and deployers outside the EU if the output produced by the AI system is used within the Union.
- Recruitment Example: If a recruitment agency in London utilises an AI tool to filter CVs for a client based in Paris, the output (the shortlist of candidates) is utilised within the EU, triggering the Act’s full application.
- Logistics Example: A logistics firm based in Manchester using an AI-driven route optimisation tool to direct a fleet of trucks operating in Belgium falls squarely within the scope.
If you operate cross-border, the stricter EU standards effectively become your baseline technical specifications.
2. Recruitment: The End of the “Black Box”
The recruitment industry serves as a primary target for the AI Act’s high-risk classification. Legislators have identified automated hiring tools as potential sources of algorithmic bias that can threaten fundamental rights.
High-Risk Systems
Virtually the entire modern HR tech stack is now likely “High-Risk” under Annex III, particularly systems used to:
- Place targeted job advertisements.
- Analyse and filter job applications (CV parsing and ranking).
- Evaluate candidates (e.g., skill testing platforms, gamified assessments).
The Impact: You can no longer rely on “black box” neural networks. You must ensure rigorous data governance (Article 10), meaning training datasets must be relevant, sufficiently representative, and free of errors to prevent propagating historical bias.
The “Emotion Recognition” Ban
As of February 2, 2025, the use of AI to infer emotions in the workplace is strictly prohibited.
- Red Flag: Video interview platforms that claim to analyse “enthusiasm,” “honesty,” or “cultural fit” via facial expressions or voice tone are illegal.
- Action: Audit your vendor list immediately. If a tool promises to read a candidate’s mood, deactivate it.
3. Logistics: Safety vs. Surveillance
The logistics sector faces a “dual compliance” burden, split between worker management software and physical hardware regulations.
Worker Management (Annex III)
Systems used to allocate tasks or monitor performance are classified as High-Risk.
- If your warehouse management system (WMS) dynamically routes pickers or enforces quotas based on real-time data, it requires human oversight and accuracy validation.
- Surveillance Warning: Using voice analysis on driver communication channels to detect “anger” or “stress” for disciplinary purposes violates the Article 5 prohibition on emotion recognition.
The “Driver Fatigue” Exception
There is one vital safety valve. AI systems used to detect driver fatigue or drowsiness are explicitly permitted as a “medical or safety” system, provided they are designed with clear safeguards, minimal personal data processing, and human oversight.
Published by AutomaPath • Last updated December 2025