AI & Restructuring in Hong Kong – Navigating compliance and risk

AI is increasingly being used in Hong Kong.

In a 2026 survey conducted by KPMG, 67% of respondents said their organizations are adopting AI, which rose by 14% compared to 2025. These figures reflect a broader trend: organizations are using AI to determine where efficiencies can be gained, which functions can be automated, and which roles may become redundant. Yet, its use in restructuring raises legal and regulatory issues. Employers remain accountable for employment decisions under legal obligations.

Employment Ordinance obligations

Hong Kong’s Employment Ordinance (Cap. 57) continues to govern redundancy, severance payment, notice periods, and termination. Although the Ordinance was enacted long before the emergence of modern AI technologies and does not explicitly regulate algorithmic decision-making, it continues to apply regardless of how employment decisions are made. Employers must ensure restructuring decisions are transparent and procedurally compliant.

Data privacy and AI governance

Hong Kong is a leading tech hub, and the use of AI in HR decisions intersects directly with data privacy law. The Personal Data (Privacy) Ordinance (Cap. 486) applies where employers collect, use or otherwise process employees’ personal data through AI systems. Employers should comply with six Data Protection Principles (DPPs) under the Personal Data (Privacy) Ordinance.

In June 2024, the Office of the Privacy Commissioner for Personal Data (PCPD) issued Artificial Intelligence: Model Personal Data Protection Framework. This framework sets expectations for AI governance including:

• Data minimization: The privacy of individual’s personal data must be ensured.
• Purpose: Employee data must only be used for legitimate purposes.
• Accuracy: Outdated or flawed data cannot justify decisions.

Employers using AI in restructuring must implement risk assessments and provide clear justifications to affected staff.

Anti-discrimination risks

Hong Kong’s Anti-discrimination Ordinances covering sex, disability, family status, and race apply equally to AI-assisted decisions. AI models trained based on historical data may reinforce bias. Employers may remain liable for discrimination if AI outputs disadvantage protected groups. The DPPs also state that data quality ensures fair and unbiased results.

Human governance

Professionals emphasize that AI should be treated as a decision support tool rather than the final decision-maker in employment matters. Clear governance is essential, including:

• Defining approved AI use cases.
• Ensuring transparency around AI usage.
• Mandating senior review at key decision points.

As restructuring decisions often underpin court filings, creditor recoveries, and statutory determinations, errors carry significant legal consequences. Human oversight remains indispensable.

Looking ahead

AI adoption in Hong Kong is accelerating, with surveys showing rising use across industries. The shift toward AI-assisted management coincides with broader economic context in Hong Kong’s job market. In response to questions from Legislative Council members, the Secretary for Labour and Welfare revealed that full-time graduate-level job vacancies dropped 61% from 80,000 in 2022 to 31,000 in 2025, with contractions in IT, programming, and administration. Yet, regulators and courts will continue to expect employers to demonstrate accountability and compliance, as AI cannot replace legal obligations or human judgment. Organizations should combine technological innovation with governance and transparent processes to utilize AI responsibly while managing risk.