AI and the rise of ‘unmeritorious’ workplace claims

According to workplace lawyers, employers are facing a growing wave of claims that lack merit, at a time when the use of new and emerging technologies is growing. What can, or should, be done?

Editor’s note: This story first appeared on HR Leader’s sister brand, Lawyers Weekly.

The landscape

General protections laws have remained largely unchanged in the last decade and a half, with costs protections and the ‘reverse onus’ “long being aspects of the system”, Jewell Hancock principal Andrew Jewell said.

The Fair Work Act’s default position is that parties to proceedings must bear their own costs, save for proceedings brought vexatiously or without reasonable cause. As recently reported by Lawyers Weekly, the Fair Work Commission’s newly released annual report notes that the workplace regulator received 44,075 lodgments in 2024–25, making a 10 per cent increase on the number from the previous corresponding year.

The most common lodgment type was unfair dismissal applications, which accounted for more than one-third (37 per cent) of total lodgments, followed by general protections applications (14 per cent) and supported wage system agreements (13.5 per cent).

As reported by The Australian Financial Review, Fair Work Commission (FWC) president Justice Adam Hatcher recently told the Australian Labour and Employment Relations Association conference, hosted in Brisbane in October, that the elevated number of unfair dismissal claims in the last few years (and especially in the last few months) was pushing the workplace commission to its limits.

“This is unsustainable within our current operational, performance and funding structure,” Justice Hatcher told the industry event, the AFR wrote.

Speaking recently to Lawyers Weekly, Holman Webb partner Alicia Mataere said the greatest factor in the rise in employee claims is thanks to new artificial intelligence platforms like ChatGPT, which has become “a worker’s favourite and ‘cost-effective’ lawyer”.

“We have numerous unrepresented litigants whose claim (and correspondence) has been almost entirely drafted by ChatGPT,” she said.

“The costs of dealing with ChatGPT claims by unrepresented litigants are higher than when dealing with another legal practitioner; with businesses having to foot the bill as costs under the Fair Work Act are extremely rare.”

And while FWC has moved to crack down on paid agents, such players “have operated in the space for a long time”, Jewell pointed out, meaning that the recent uptake of AI is “far more likely” to have accounted for the increase in applications.

Here, senior workplace lawyers unpack the impact of new technologies on the volume of claims (particularly unmeritorious ones), what it means for employers, and what needs to happen to balance the scales of justice.

On this latter point, SLF Lawyers partner and national head of workplace relations and safety Elizabeth Aitken said that while improving access to justice for litigants in the age of AI is a positive step, “it also places real strain on the resources of the commission, the courts and on employers who are required to respond to claims that may have little merit”.

More ‘rubbish’ claims

While the proliferation of new technologies is, of course, not the only reason for the increase in unfair dismissal claims, there is “little doubt”, Swaab partner Michael Byrnes said, that widely available AI models like ChatGPT are “facilitating” the rise.

“Employees who are aggrieved at the termination of their employment can easily seek an initial, ostensibly authoritative view on whether they might have a claim and the merit of the claim. Of course, the problem is the opinion AI gives on the situation is often wrong, sometimes fundamentally so, and the employee then acts on that flawed advice,” he said.

Emplawyer managing principal Michelle Dawson said AI tools have made it faster and easier for individuals to lodge claims: “We have observed a rise in claims that have clearly been prepared with AI tools which require very little input by the applicant, and many such claims smack of opportunism, lack merit and/or are vexatious.”

Kingston Reid partner Christa Lenard backed this, noting that what once required legal expertise and time “can now be done in minutes at no cost, thanks to AI tools like ChatGPT”.

“Anyone can draft and lodge a claim, even one with no reasonable prospects of success. While these tools improve access to justice, they also open the door to misuse. In those cases, employers are expected to absorb the financial and operational impact of claims that are knowingly flawed,” she said.

From the perspective of Dentons partner Paul O’Halloran, tech advancements are allowing former employees to “file a whole lot of rubbish with misguided confidence”, because ChatGPT is giving them information to fill out their claim forms, whereas, he said, “if they had gone to see a decent plaintiff lawyer, they may have been discouraged from [pursuing] an unmeritorious claim”.

“These same people may have sued their former employer anyway, but they are certainly not being given the disadvantages of doing so,” he said.

“Unfortunately, AI platforms don’t give balanced legal advice to prospective claimants. It’s an echo chamber, and misguided applicant will use AI to find what they want to hear.”

O’Halloran said he is “absolutely seeing nonsense applications filed by self-representative litigants which include fake case citations. But, regrettably and occasionally, lawyers file this sort of thing as well!”

Impact on employers

Employers, Lenard said, are facing a growing wave of claims that lack merit, yet the current framework offers almost no recourse.

“Cost recovery is rare, reserved for extreme cases, and the threshold is so high that most businesses simply absorb the cost. This imbalance is fuelling a perception that lodging a claim carries ‘nothing to lose’,” she said.

“For many, it often results in a payout regardless of the circumstances. The result? A surge in unfair dismissal and general protections claims that burden both employers and the Fair Work Commission.”

Lenard pointed to a recent matter, in which an employee dismissed during probation, after demonstrating poor performance and an attitude misaligned with the business, was barred from bringing an unfair dismissal claim.

“Instead, they lodged a general protections claim, asserting their dismissal followed the making of a complaint. The overwhelming evidence showed performance issues, yet the claim shifted the burden from the employee to prove, to the employer to disprove,” she said.

“Faced with the choice of paying out at conciliation to ‘make it go away’, or incurring significant time and legal costs defending the matter in the Federal Circuit and Family Court of Australia, the employer paid.”

“An unmeritorious claim still cost them,” she said.

Justice Hatcher’s comments in October, Lenard said, are a “clear signal” that reform is overdue.

“Employers need a system that deters misuse while preserving access for genuine claims. Without sensible reform, the combination of AI-driven accessibility and the perception of ‘nothing to lose’ will continue to increase costs and operational pressure, on both the Fair Work Commission and business,” she said.

Should employers be able to recoup costs?

Employers that are dragged into proceedings that are “plainly, from the start, unmeritorious and/or commenced vexatiously” should be able to recoup their costs, Dawson argued.

“It is unfair for employers to expend time and money defending cases that lack merit and/or proper basis. Often, employers are forced to pay ‘go-away money’ to avoid the expense and effort of arbitration or other determinative processes, even when the claims are baseless,” she said.

Byrnes agreed: “Hopefully, an authority will soon be established in support of that proposition, which can then act as a caution to others. The lazy, unchecked and hubristic reliance on AI by some applicants to bring unmeritorious applications should, as a matter of policy, be curbed by making adverse costs orders in accordance with the relevant provisions (which are already in the Fair Work Act, but seldom used).”

Moreover, he went on, where paid agents or lawyers have “apparently uncritically relied upon AI to bring, or pursue, an unmeritorious claim, they should face, among other things, adverse costs orders (which can be made pursuant to section 376 of the Fair Work Act)”.

“It is bad enough when a litigant in person does it; it is inexcusable for a paid agent or lawyer,” he said.

Jewell took a slightly different approach, noting that the “more prudent (and cheaper) course may be to simply defend the claim without legal representation, relying on the apparent ‘weakness’ of the claim”.

“Costs orders may not actually discourage applicants unless they seek advice from a lawyer who can advise them of their risks regarding costs,” he said.

“So, while employers may not like responding to claims, weak or otherwise, discouraging individuals from seeking legal representation seems like a poor [way] to combat the apparent rise in claims.”

Actions to be taken

O’Halloran said he doesn’t see the no-costs provision in the Fair Work Act changing any time soon.

“Similar provisions exist in the UK; it’s unlikely that vexatious AI-generated applications will sound in a costs order,” he said.

What, then, can address the aforementioned issues?

Dawson said: “Absent introducing a triage system, which would no doubt require extensive additional resources, the FWC can only do so much in addressing this issue.”

“Some procedural reforms are already underway, though their impact remains to be seen. Legislative intervention may be necessary to implement broader changes aimed at reducing unmeritorious claims, such as increasing the application fee and/or lowering the high bar for awarding costs in the jurisdiction.”

While it would not be appropriate for FWC to actively deter claims, it would also be helpful, Byrnes noted, for the commission to put on its website or forms a general statement about the risks of uncritical reliance on AI in any decision to bring an application and the formulation of that application.

Lenard said a simpler mechanism for cost recovery in cases that are clearly without merit would go some way to restoring the balance. “The challenge is identifying those claims early, without forcing employers to incur the very costs they seek to recover,” she said.

Conciliation is another pressure point, she added: “Too often, it results in small settlements made purely to avoid disruption. Clear guidelines for conciliators discouraging settlement for expediency could help. The commission could also take a more active role in dismissing applications that rely on templated language, fail to meet statutory criteria, or show non-compliance with directions.”

There are also positive signs emerging from such developments, Aitken pointed out.

“We’ve already seen the commission strengthening early claim assessment processes. There would also be considerable benefit in clearer guidance around the use of AI in the course of proceedings and cost consequences for parties where AI is used to facilitate the pursuit of claims which are vexatious, made without reasonable cause or prospects of success,” she said.

“This would reinforce the position that the commission is not a forum for speculative claims.”

Lawyers’ role

While publicly accessible AI tools can suggest possible claims that an employee may bring, they do not provide nuanced advice regarding merits or objectives, Jewell said. Further, he continued, where an employee is jurisdictionally prevented from bringing an unfair dismissal claim (due to not meeting the service requirement or earning above the high-income threshold), an AI tool will note a general protections claim can be brought, “without noting whether it is a good idea to bring one”.

“Therefore, it would seem that legal advice, from a human lawyer, should actually be encouraged,” he said.

Lawyers, Dawson said, continue to play a vital role in representing employers and employees in FWC matters.

“While AI tools can simplify certain processes, they are ‘doers’, not thinkers, and are not yet capable of providing consistently accurate legal advice or drafting documents (let alone devising strategy) to a standard that would make lawyers redundant,” she said.

By and large, Byrnes posited, lawyers are “part of the solution rather than the problem”.

“After all, the main reason lawyers are granted permission to appear in general protections matters is because they can assist the commission deal with them more efficiently,” he said.

“Effective legal representation (on either side) enables fallacious arguments (or even, on occasion, fictitious authorities) to be called out in the conciliation or hearing of a matter.”

Alternatively, O’Halloran suggested, if you can’t beat them, join them.

Speaking to Lawyers Weekly from Dentons’ office in Glasgow, he said his Scottish colleagues have built AI software to streamline and automate the production of employer responses to the UK unfair dismissal jurisdiction, “with significant efficiency and reduced cost for our UK clients”.

“If this is the new reality, employers will need to adapt accordingly,” he said.