Business Toolbox

A recent Fair Work Commission (FWC) decision – and a guidance note released soon after – indicates that the FWC is unlikely to look favourably upon applicants who use AI without adequate human judgement and oversight.

Case facts

Sadnan Khan was employed by ALDI as a Store Assistant from September 29, 2025 until his dismissal on March 26, 2026. He submitted an unfair dismissal application on the day he was terminated.

A sizeable portion of Khan’s submissions and correspondence with the FWC was prepared using generative artificial intelligence (AI). His Form F2 (unfair dismissal application) contained obvious AI errors, including:

“Here is your **final clean copy-paste version**, with today’s date inserted as the dismissal date:”

Two days after Khan filed his unfair dismissal application, the FWC advised that it did not have the power to deal with his application because he hadn’t served the required minimum period of continuous service (being six months in his case).

Deputy President Easton wrote to Khan on two separate occasions, explaining that his case lacked merit and advised him to discontinue the application or risk having to pay ALDI’s costs. Despite this caution, Khan continued his case and sent another two AI generated submissions that addressed the wrong termination date.

Decision

Khan was ordered to pay ALDI $1,230 for legal costs that it incurred in preparing for and attending a hearing that should never have taken place.

Although the FWC is a no costs jurisdiction, it has the discretion to make an order for costs an unfair dismissal claim. In accordance with the Fair Work Act 2009, costs can be awarded where a party objectively acts unreasonably, and this unreasonable act or omission causes the other party to incur costs it otherwise would not have incurred.

An Explanatory Memorandum to the Fair Work Amendment Bill 2012, explains that costs provisions provide a deterrent to unreasonable and frivolous conduct during proceedings and assist in the efficient resolution of claims by encouraging parties to approach proceedings in a reasonable manner.

Khan’s application was referred to Deputy President Michael Easton’s chambers, to assess whether the minimum employment period had been satisfied. Upon reviewing the evidence, the Deputy President formed the view that Khan’s case was “hopeless” because he had not satisfied the minimum employment period on his own account of the facts.

It was also determined that Khan acted unreasonably, by failing to discontinue his application after being advised by the FWC numerous times and in plain English that his case had little prospect of succeeding.

In making the costs order, Deputy President Easton said, “the making of a costs order now will deter Mr Khan, and hopefully other applicants in the same position, from acting unreasonably”.

The Deputy President acknowledged that using AI to assist drafting correspondence and submissions is not unreasonable and can be a useful tool when used properly.

However, Khan had a responsibility to properly assess if he was eligible to make an unfair dismissal claim and to consider the AI generated material and correspondence from the FWC.

Even though it was almost certain that ALDI incurred more than $1,230 in legal fees, ALDI could not claim any more than this amount, which was the maximum claimable amount under the Fair Work Regulations 2009 (Cth) in this case.

Key takeaways for employers – FWC warns against unchecked AI use in workplace claims

The guidance note released by the FWC after the ruling establishes the following requirements if AI is used in preparing a case at the FWC:

1. The FWC must be informed when and how AI was used
2. The applicant/respondent must check that the AI generated content is correct and relevant to the case, including stating on any document lodged with the FWC that they have done so
3. If the document is a witness statement or declaration, the witness must check it is based on their own knowledge, reflects their own words and is true to the best of their knowledge

“While responsible AI use will assist employees who have been genuinely wronged pursue claims they may not have been able to otherwise, these measures will hopefully prove to be sensible first steps toward in reducing the amount of unmeritorious claims,” Business Law WA Group Legal Director Ryan Martin said.

“It also empowers the FWC to make costs orders where employees relentlessly pursue claims that have no legal basis and unnecessarily cost employers their time and legal fees.”

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.