Why Your Company Needs an AI Literacy Policy in 2025
With the explosive rise of AI technology, an AI Literacy Policy is essential for any organisation. A clear AI Literacy Policy reduces compliance and privacy risks, and it helps employees in any sector understand the use of AI that is allowed and what puts the company at risk.
Key Takeaways
• AI tools are widely used across all sectors, but most organisations lack clear internal guidelines.
• Without a policy, companies risk data breaches, legal issues, and the misuse of unethical AI by employees.
• A workplace AI policy promotes trust, establishes clear boundaries, and ensures employees use AI responsibly.
Why companies need an AI policy
The use of Artificial Intelligence (AI, including both generative and analytical AI) continues to gain significant momentum. With the launch of Openai’s Chat GPT in late 2022, we’re constantly witnessing new advancements and improvements in the capabilities of different AI tools. Since 2023, AI-generated content has been at the forefront of the (social) media discourse, while different platforms gain momentum and an increasing number of users for personal and professional purposes.
According to a McKinsey survey, nearly all US employees (94%) and C-suite leaders (99%) report having some level of familiarity with Gen AI tools. Nevertheless, business leaders often underestimate the extent to which their employees are using Gen AI. C-suite leaders estimate that only 4% of employees use Gen AI for at least 30% of their daily work, whereas the actual percentage is three times greater.
But what does this mean for organisations that want to understand and manage the use of AI at work?
This means you need a detailed AI Literacy Policy that sets out the rules and principles of responsible and compliant use of AI tools in your company. Get GDPR Local’s free template.
What Do You Get From A Workplace AI Policy?
• How are the employees using AI today?
• How would you like employees to utilise AI in the future?
• How can sensitive data be protected from AI tools?
• What are the most significant risks AI presents to your organisation?
You need something that’s both practical and enforceable. A good policy doesn’t overwhelm with jargon but instead gives people a real sense of what’s allowed, what’s not, and why it matters. It should be adaptable to new tools, clearly communicate risks, and be directly tied to your existing data protection efforts. Most importantly, it must be understandable to the people expected to follow it.
Key Workplace AI Policy Components
Transparency and Fairness
Employees should be aware of when AI is used, understand its purpose, and recognise how it may impact them or others. The policy should outline how the company communicates its use of AI internally and externally, for example, by updating staff during compliance briefings or including AI-related disclosures in the company’s Privacy Notice. Any AI-driven outcome, particularly one that impacts individuals (such as hiring or profiling), should be explainable and subject to human review.
Ethical Standards
The policy must clarify that AI should not be used to cause harm, manipulate users, or reinforce unfair biases. AI use should reflect your organisation’s core values. That includes avoiding deceptive content, preventing discrimination, and ensuring decisions made with AI uphold fairness and integrity.
Roles and Responsibilities
Everyone has a role in using AI responsibly. The policy should list who is responsible for what, from reviewing and approving new tools to monitoring daily usage, training staff, and responding to incidents. This typically includes roles like the Data Protection Officer, Information Security Lead, and HR or Compliance teams. Having these roles clearly defined makes oversight and accountability much easier.
Approved Tools and Prohibited Use
The policy should contain or link to a living log of approved AI tools (such as Chat GPT for drafting or Fireflies for meeting transcription) and clearly state what is off-limits, including the use of AI for automated decision-making without oversight or the entry of sensitive data into public tools. It should also be clear that exceptions must go through a formal review process.
Risk Assessments
Before using any new AI tool, the company should perform a review, ideally a DPIA (Data Protection Impact Assessment) or a more tailored AI risk checklist. This process helps identify whether the tool might pose legal, ethical, or security risks. Formal approval should usually be obtained from a designated team or committee.
Data Protection
Since AI often processes personal data, the policy must align with the GDPR. This involves defining a lawful basis for data processing, minimising unnecessary data inputs, establishing contracts that hold AI vendors accountable, and setting clear data retention policies. Special categories of data require even more caution, with safeguards in place.
AI Incident Reporting
The policy should include a process for reporting any misuse, data breach, or unexpected behaviour of AI tools. These incidents must be recorded in an AI Incident Register, assessed for impact, and escalated if needed. This helps your organisation spot patterns, learn from mistakes, and demonstrate compliance when required.
Related Policies
AI use doesn’t happen in isolation. A good policy aligns with existing policies, such as your Data Protection Policy, Acceptable Use Policy, Bring Your Own Device (BYOD) Policy, or Employee Code of Conduct. The AI policy acts as a bridge between these documents, creating a more coherent compliance framework.
Policy Ownership, Review & Acknowledgement
The policy should specify who is responsible for it (e.g., your Data Protection Officer, AI Governance Lead, or Legal Counsel) and how frequently it’s reviewed, typically once a year or after major incidents or regulatory changes. All employees using AI tools should be required to read and formally acknowledge the policy.
Implementation
Implementation isn’t just about posting the document in a shared drive. This involves training staff, reviewing processes, updating guidance materials, and ensuring the policy is visible and accessible. Every department utilising AI should integrate the policy into its day-to-day operations.
EU AI Act: Mandatory AI literacy
Under Article 4 of the EU AI Act, organisations must implement proper risk management, human oversight, and documentation when deploying high-risk AI systems. The regulation emphasises transparency, accountability, and governance, even for non-high-risk tools. An AI Literacy Policy isn’t just helpful, it’s a foundation for staying compliant. It prepares your teams to use AI responsibly and gives your organisation a paper trail that proves you’re meeting the expectations of EU regulators.
Significant Risks of Not Having an AI Policy
AI systems, even the most advanced ones, aren’t foolproof; they generate content based on patterns that are not understood. Tools like ChatGPT or Gemini can produce inaccurate, biased, or misleading outputs. Without clear internal guidance, employees may easily trust AI results or misuse them in critical tasks.
Sensitive company or customer data entering public AI tools also poses a serious risk of privacy breaches. What appears to be a harmless prompt could actually lead to a data leak, reputational damage, or regulatory issues.
As AI regulation continues to evolve, particularly with the AI Act in Europe, businesses that lack a formal policy may struggle to stay compliant. From copyright concerns to data protection failures, a lack of structure around AI use introduces risks that most companies can’t ignore.
A clear policy doesn’t eliminate every issue, but it puts up guardrails where they’re needed most.
Conclusion
AI use in the workplace isn’t slowing down. However, without structure, the risk outweighs the reward. A well-written AI Literacy Policy in 2025 is a must. It clarifies AI use for your teams, builds a culture of responsible innovation, and controls your company as new tools emerge. Don’t wait for a regulatory issue or a public misstep. Check our free AI Literacy Policy Template.
FAQ’s
1. Is AI policy only for tech companies?
Not at all. If your team uses tools like ChatGPT or Gemini, even occasionally, this policy applies to you, regardless of industry.
2. Does this help with GDPR compliance?
Absolutely. The policy includes sections that directly support GDPR obligations, particularly in areas such as data protection and accountability.
3. What happens if we don’t have an AI policy?
Without one, you risk misusing AI tools, violating privacy regulations, or allowing employees to use unvetted tools that could harm your data or reputation.