The growing integration of Artificial Intelligence (AI) into Human Resources (HR) processes has transformed the way organizations manage recruitment, performance evaluation, and employee engagement. While AI offers numerous advantages, such as improved efficiency, reduced bias, and hyper-personalization, it raises significant concerns about employee well-being, job security, fairness, and transparency. This study examines how AI shapes employee perceptions, job satisfaction, mental health, and retention. Key findings reveal that while AI can enhance efficiency and reduce bias, it also raises concerns about job security, fairness, and privacy. Transparency in AI systems emerges as a critical factor in fostering trust and positive employee attitudes. AI systems can both support and undermine employee well-being, depending on how they are implemented and perceived. The research introduces an AI-employee well-being Interaction Framework, illustrating how AI influences employee perceptions, behaviors, and outcomes. Organizational strategies, such as clear communication, upskilling programs, and employee involvement in AI implementation, are identified as crucial for mitigating negative impacts and enhancing positive outcomes. The study concludes that the successful integration of AI in HR requires a balanced approach that prioritizes employee well-being, facilitates human-AI collaboration, and ensures ethical and transparent AI practices alongside technological advancement.