Business Toolbox

Business Law WA experts look at how AI is reshaping employee claims and what businesses need to watch out for. 

The emergence of AI tools has led to a sharp rise in unfair dismissals and workplace disputes, as well as more complex submissions to the Fair Work Commission (FWC) and Federal Court 

The FWC is seeing a 70% increase in workload over the past two years, prompting employees to disclose AI use and confirm the accuracy of their materials and witness statements. 

In a recent case, the FWC dismissed an employee’s AI-assisted general protections claim, with Deputy President Nicholas Lake noting the employer had relied on inaccurate and incoherent arguments and recommended the employer make an application to recover some of their legal costs. 

This decision suggests the FWC will dismiss claims – and even order costs – where legal fees have been incurred to defend a claim where an employee has improperly used AI tools. While these are positive steps, employers still have to spend the time and effort to deal with these claims when they are received.  

The FWC can only determine whether costs can be recovered after a claim is assessed, meaning employers must still carefully consider claims, prepare responses and attend conferences and hearings.  

This process has always required a significant amount of time, effort and resources from an employer, even if they have terminated an employee for a valid reason and followed a fair process. But this process is now more resource intensive due to the length and technical information included in AI-generated applications.  

In another FWC case, an employee lodged a claim 187 days late with 53 pages of forms and submissions, including incorrect or non-existent case references.  

“…it was difficult to draw out all the relevant considerations from this amount of material, particularly in circumstances where several contentions were repeated numerous times throughout the material, and with each repetition, the submissions changed and the reasons evolved,” the FWC said. 

This is not an issue unique to CCIWA Members or WA businesses. FWC claims have increased from about 30,000 per year prior to FY22/23 (when ChatGPT launched) to an expected 55,000 this financial year, with similar growth in Federal Court matters. 

AI tools are creating unrealistic expectations, with employees often encouraged to pursue claims or expect compensation that is based on general information not always based on facts specific to their situation.  

Beyond formal claims, businesses are also seeing an increase in lengthy, AI-generated internal complaints that could potentially have been resolved by a facilitated conversation but are now requiring a mediation or a workplace investigation due to the complexity of the complaints.  

The result is a growing drain on human resources teams’ time and resources, reducing focus on improving workplace culture, productivity and employee support.  

What employers can do

While there is no simple fix, HR teams should focus on the fundamentals:  

Procedural fairness 

Follow policies and best practice to ensure consistent and fair approach to any disciplinary action and termination processes to ensure you are not breaching any laws or creating inconsistent approaches to how you handle grievance or disciplinary processes.  

Documentation 

Keep detailed, accurate and dated notes every step of the way if a dispute arises, or if an employee is being managed for performance or conduct. This will assist if the employee uses AI-generated information that is false or incorrect.  

Train and support managers 

Equip your line managers and supervisors with training in essential skills around difficult conversations and performance management. Have adequate support when going through these processes as this is where employee disputes often start. 

Avoid using AI to respond 

While AI is a useful tool in many situations and it may be tempting to utilise to quickly respond to lengthy claims, there are often a lot of incorrect assumptions or mistakes from a legal standpoint. It also removes the empathy, human element and practical experience that is often necessary when dealing with employee grievances and concerns.  

Remember, AI can’t be held accountable for technical mistakes or procedural errors if the matter goes to the FWC, but HR practitioners and employers can be. 

It is also crucial to consider the risks associated with disclosing sensitive business information regarding legal disputes through public AI tools, as such actions may compromise the confidentiality necessary for legal privilege.  

If you do not have the time or resources to respond to claims, it is better to seek professional advice and support to ensure your business is protected where possible.

How CCIWA can help

Even if you do the right thing, AI has increased the likelihood and complexity of claims. 

CCIWA Members can access general guidance and support via the Employee Relations Helpline on 08 9365 7660 or via [email protected]   

For FWC claims or other legal matters, including workplace investigations and representation in the FWC or Federal Court, contact Business Law WA, CCIWA’s wholly-owned legal practice. Email [email protected] or call 08 9365 7560 to discuss further.     

CCIWA Members receive a discount on BLWA legal services. Not a Member? We can still help you, so please get in touch.  

This article is authorised by Business Law WA, an incorporated legal practice and wholly owned subsidiary of CCIWA. The content of this article is general in nature and is not legal or professional advice and should not be relied upon as such.