An Australian worker could face a significant legal bill after relying on inaccurate, AI-generated information in a case before the Fair Work Commission (FWC).

The worker alleged he was “constructively dismissed” by his employer but his case was thrown out by Fair Work Commission (FWC) deputy president Nicholas Lake, who invited the company to apply for a rare costs application.

Applicants to the FWC are typically protected from having to cover the legal costs of the other side, even if they lose the case.

But Lake found that the employee’s use of AI to rely on completely made-up information was so egregious that he may now face having to pay for his former employer’s legal costs.

“I welcome a costs application from the respondent for this matter,” Lake said in his findings.

“The applicant has repeatedly displayed a disregard for facts and has relied on incoherent legal arguments in order to contrive a basis to claim compensation.”

AI assistance

The case was brought by Reece Hoverd, a former employee of Queensland earthmoving firm M & JD, who alleged the company had taken adverse action against him.

Hoverd began working for the firm in early September last year as an “earthmoving plant operator / labourer”. The dispute arose when the company attempted to shift his working hours by 90 minutes.

He said he could not accommodate the change due to family and church commitments, and claimed – incorrectly – that the relevant Award required both parties to agree to any finishing time beyond 5pm.

After being reassigned to silt fencing work, which he viewed as retaliation for refusing the new hours, Hoverd resigned on 26 November, arguing this amounted to constructive dismissal.

He soon filed a claim with the FWC and later admitted using “AI tools to assist in organising and drafting” his submissions, while maintaining that the underlying material was based on his own knowledge and documents.

However, Lake found Hoverd had “consistently relied upon provisions of his contract and the Waste Management Award 2020 which do not exist” to support his claim.

Despite being warned about providing false or misleading evidence, Hoverd continued to rely on the incorrect clauses. He only conceded the errors after being reminded he was giving sworn evidence.

“Even after being told the clause in the Award did not exist, he continued to argue that it did and relied on the non-existent clause in closing submissions,” Lake said.

Lake also found that extracts of Hoverd’s employment contract submitted as evidence contained multiple inaccuracies.

“None of the clauses are accurately represented…but the egregious misrepresentations include changing the position title to omit labouring and suggesting that the Applicant had set contractual hours of 6am–4.30pm Monday to Friday when he did not,” he said.

“Ignorance of the law is one thing.

“But repeatedly saying that the Applicant’s written contract says something which it does not say is not mere ignorance; it is a deliberate misrepresentation.”

FWC determined the proposed shift change was not permanent, required only one week’s notice under the Award, and that Hoverd had alternatives to resigning.

Lake dismissed the application and encouraged the employer to pursue legal costs.

Fighting an AI battle

The case highlights a growing concern raised by FWC president Adam Hatcher about the misuse of AI in legal filings, with some applicants submitting claims that are inaccurate and unlikely to succeed.

The commission has seen a sharp increase in cases in recent years, with AI tools giving weak claims a “sheen of legal plausibility”, Hatcher said.

The decision follows a separate recent case in which a Sydney-based software developer – dismissed after becoming “ungovernable”, partly due to his reliance on AI in workplace communications – also failed in an unfair dismissal claim.

In that matter, the Commission found the developer’s AI-assisted messages were “dense, repetitive and often rambling”, and frequently “demanding and overbearing”.