No winners in employee’s failure to address key legal issue: FWC orders employee to pay costs after pressing on with AI generated unfair dismissal argument
A recent decision in the Fair Work Commission in a matter involving ALDI and an unfair dismissal applicant, demonstrates that the Commission can take the rare step of ordering an employee to pay some of their employer’s legal costs where the employee has unreasonably persisted with an application that on the facts has no prospects of success, and highlights the risks for parties seeking to navigate the legal system by relying on AI generated materials that don’t grapple with the relevant legal issues.
The decision is also a useful reminder for employers and employees that the minimum employment period in section 383 of the Fair Work Act 2009 (Cth) (FW Act) is calculated by reference to the date an employee is notified of their dismissal, not the date the employment ends after any paid notice period, or payment of notice in lieu.
Background
The applicant commenced employment on 29 September 2025 and was notified of his dismissal on 26 March 2026, three days short of the six-month anniversary of his commencement date. Later the same day, the applicant filed an unfair dismissal application.
Two days after the applicant filed his application, Commission staff sent him an email informing him that the Commission may not have the power to deal with his case, because on the information the applicant had provided about the date he was notified of his dismissal, he had not met the six-month minimum employment period1 to pursue unfair dismissal remedies. Despite this, the applicant proceeded with his application, and the matter was eventually listed for hearing on 5 August 2026.
In the week before the hearing, Deputy President Easton wrote to the parties informing them that, based on the uncontroversial evidence filed by the parties, his preliminary view was that the applicant had not served the minimum employment period. The applicant was asked to consider discontinuing his application, or to provide further submissions about the basis on which he believed he had met the minimum employment period, in light of the information he had been provided. In the correspondence, the Deputy President drew the applicant’s attention to section 400A of the FW Act, which provides that the Commission may make an order for costs against a party for costs incurred by the other party to the matter, where the Commission is satisfied that the costs were caused because of unreasonable conduct in relation to the conduct or continuation of the matter.
The applicant replied promptly to the Commission’s email, but his response did not address the fundamental legal issue regarding the correct date for the purpose of calculating the minimum employment period, and simply rehashed his previous, plainly AI generated, arguments.
Despite receiving further correspondence from the Commission, the applicant ultimately continued to press his case up until after the commencement of the hearing, at which point he discontinued the application after finally accepting he was not eligible. ALDI then made an application for costs.
Why were costs awarded?
Section 400A of the FW Act permits a costs order where:
- a party has engaged in an unreasonable act or omission in connection with the conduct or continuation of the matter; and
- that unreasonable act or omission caused the other party to incur costs.
Whether an act is unreasonable is informed by its context, and requires an evaluative assessment of all the circumstances.
In finding for ALDI in the costs application, the Deputy President agreed with ALDI’s submissions that it was unreasonable of the applicant to continue with his unfair dismissal claim after the point at which he was squarely on notice from the Commission that there was no substantial prospect of success, and that the continuation of this claim would put him at risk of a costs order.
The decision acknowledged that the applicant was entitled to disagree with the description of the evidence or to argue that the words of section 383 should be interpreted in a different way; however, the issue was that the applicant did neither of these things and continued to rely on AI generated materials that focused on a different and irrelevant date for the purpose of his unfair dismissal claim (i.e. the date he believed the dismissal took effect).
In making the order, the Deputy President accepted that ALDI’s costs were directly caused by the continuation of the matter – specifically, the costs of preparing for and attending a hearing that should not have occurred, and held that it was appropriate for the Commission to exercise its discretion to compensate ALDI in this regard.
While satisfied that ALDI was likely to have incurred significantly more in legal costs, the Deputy President ultimately ordered the applicant to pay a portion of ALDI’s legal costs in the amount of $1,230, describing the losses for both parties as “utterly preventable”.
Risks of adopting AI as quasi legal advisor
The Commission did not need to decide whether it was unreasonable for the applicant to rely on AI generated submissions prior to the date the Deputy President first wrote to the applicant, because ALDI did not seek costs for that period.
However, the applicant was strongly criticised for his subsequent conduct in “blindly” submitting AI generated outputs as his own material, without properly assessing whether what he was submitting adequately grappled with the key legal issues in the proceedings.
Practical takeaways
- Continuing with an unfair dismissal application that has little to no prospects of success, can waste valuable time and resources and lead to a costs order;
- AI as a drafting tool is not a problem if used properly, and in accordance with relevant FWC requirements etc. However, parties are responsible for ensuring that the information they submit is accurate and responsive to key legal issues in the proceedings, and
- For the purposes of calculating the minimum employment period for the purpose of unfair dismissal remedies, the relevant end date is the date the employee is notified of the dismissal, not the date the employment ends.
If you have any concerns or questions, the team at Emplawyer are ready to help.
1 6 months if the employer is not a small business employer; 12 months if the employer is a small business employer (s. 383 FW Act)
Citation
Sadnan Khan v Aldi Pty Ltd [2026] FWC 3144 (Deputy President Easton, 19 August 2026).
