The new employment law risk to be on top of
In February, the President of the Fair Work Commission, Justice Adam Hatcher, ran a live test in front of the Victorian Bar Association. He told ChatGPT he had been dismissed, gave it a few basic facts, and asked what he could do. In under 10 minutes it handed him a ready-to-file application and a witness statement containing, in his words, a substantially invented story. It told him he could expect $15,000 to $40,000. On the facts he had given it, the case had no reasonable prospects of success.
That tool is open on the phone of every employee you have. Lodging the claim it writes costs them $89.70. Making it go away can cost you thousands, and merit barely comes into it. A weak claim costs you time, stress and legal fees from the moment it is lodged, same as a strong one.
We are seeing the rise on our own desk, and the national numbers say it is everywhere. Claims to the Commission have grown more than 70% in 3 years. Last financial year set a record at 44,075 lodgments. This year the Commission is bracing for up to 55,000. Dismissals have not surged to match, and Hatcher was clear about why: the old link between hiring, firing and claims has broken down. What is driving the numbers is how cheap and fast AI has made lodging a claim, even a hopeless one.
The flood will not ease in time to help you. The claim that arrives next month is yours to deal with, so the job is to be ready now.
This matters even if you are not letting anyone go
If you are making changes to your workforce right now, a restructure, a redundancy, a performance exit, this is live for you today. Get the process wrong and you are an easy target.
If nothing is on the cards, the protection still has to be in place before a dispute, because there is no building it after one arrives. Plenty of owners are watching the economy and quietly wondering whether hard calls are coming in the next 6 to 12 months. If that is you, get your contracts, policies and processes in order now, while it is calm.
Should you use AI to make dismissal decisions?
Not on its own. The same tool the employee is using to build a claim is sitting open on your team’s screens too. We are starting to see employers run their own workforce decisions through ChatGPT. Should we performance-manage this person. Can we make this role redundant. Is this conduct serious enough to dismiss.
Be very careful here. As Gina Bozinovski, our Special Counsel, puts it:
The AI will give you the extreme position, because you don’t understand the questions to interrogate it with, and you’re not coming at it from an independent perspective. And that then undermines the independence of the company and anyone involved in the investigation.
That last part is what can impact you later. When a dismissal is challenged, one of the things examined is whether your process was fair and independent. If the record shows the decision was effectively handed to a chatbot, you have damaged the very thing that would have protected you.
How do you protect your business from a Fair Work claim?
Anyone can lodge a claim, with or without grounds. Your protection is being able to show, when one arrives, that you did everything correctly. The process is the protection.
We acted recently for an employer who handled a difficult exit by the book. They ran a genuine process, a support person available throughout, reasonable time to respond at every step, and great record keeping. The decision was challenged anyway, however our client was prepared. They were saved because they could show, hand on heart, that the process was followed.
Here is what is at stake if you can’t do that. Unfair dismissal compensation at the Commission can run up to 6 months’ pay or half the high income threshold, $91,550 this financial year. For someone on $100,000, that is up to $50,000 before you have paid a cent in legal costs. General protections and adverse action claims are not capped the same way and can run far higher. The businesses that come through these claims well have good records and a clear process behind every decision. The ones that struggle made the call from the hip and have nothing on paper to show what happened or why.
The cheapest insurance is a quick conversation, early
Most of this risk is preventable, and it is preventable for very little. The mistake we see is business owners trying to manage it themselves, staying quiet because they are not sure how much a call will cost, and only ringing us once the decision is made and the damage is done.
There are 3 easy ways to get ahead of it:
- A consultation with one of our employment lawyers, to talk through a concern you have right now and work out what to do about it.
- A Legal Health Check, where we look across your employment contracts, policies and processes and tell you where the gaps are before anyone exploits them.
- The Legal Line, a subscription that gives you as many short calls as you need, so the cost of picking up the phone is never the reason you didn’t.
Not sure which one fits? Book in a free consultation to get started, and we will work out the best approach with you. If you are about to make a call on someone’s role, conduct or contract, or you think you might have to before the year is out, that conversation is the cheapest part of the whole exercise, and it is the part that changes the outcome.
And if you are an accountant or adviser to a business you know might be facing some of these conversations in the coming 12 months, the cheapest move is the same one: a conversation for them before the decision is made.
