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He Used AI to Run a Fair Work Case. The Commission Was Not Impressed and awarded Costs.

AI in Fair Work Commission Cases: How Hallucinated Clauses Led to a Costs Order

The Fair Work Commission recently dismissed a case, described the legal arguments as “incoherent”, found the applicant had misrepresented what his contract said, and then invited the employer to apply for costs.

To be clear, that combination does not happen very often. Well maybe up until now.

We are going to see more cases like this. An employee used AI to help prepare his Fair Work Commission submissions. The problem was not necessarily that AI was used. The problem was that the submissions relied on contract clauses and award provisions that did not exist. The Commission was not impressed.

There are many Fair Work Commission decisions where employers lose.

There are many where employees lose.

But every now and then, a decision comes along that is less about the legal issue and more about how the case was run.

The recent decision in Reece Hoverd v M & J D Pty Ltd [2026] FWC 1013 is one of those cases.

And it contains a warning for anyone running litigation, drafting submissions, or relying on AI without checking the source material.

The Background: Reece Hoverd v M & J D Pty Ltd [2026] FWC 1013

The employee resigned after a dispute about a temporary change to shift times and being assigned labouring duties. He then filed a general protections application claiming constructive dismissal.

The employer argued he was not dismissed at all and had simply resigned.

So the Commission first had to decide a jurisdictional issue:
Was this a dismissal, or a resignation?

The Commission found it was clearly a resignation and the employee was not forced to resign.

But that was not the most interesting part of the decision.

The Real Issue: Arguments Based on Things That Didn’t Exist

During the case, the employee relied on:

  • Clauses in his employment contract that did not exist
  • Clauses in the Award that did not exist
  • Misquoted contract terms
  • Incorrect legal arguments about additional hours and demotion

The Commission found that the employee had used AI tools to draft submissions, and those submissions included terms that were not actually in the contract or the Award.

The Deputy President made a very strong finding:

Deputy President said the applicant had:

  • Displayed a disregard for facts
  • Relied on incoherent legal arguments
  • Contrived a basis to claim compensation
  • Repeatedly misrepresented what the contract said

That is an extraordinary set of findings in a Fair Work Commission decision.

This was a situation where the arguments were built on clauses and legal rights that simply did not exist.

The Commission’s View on Misrepresentations

“Ignorance of the law is one thing. But repeatedly saying the written contract says something which it does not is not mere ignorance; it is a deliberate misrepresentation.”

One of the most striking parts of the decision was the Commission’s comments about the employee continuing to rely on incorrect clauses even after being warned.

The Commission effectively said:

  • Ignorance of the law is one thing
  • But repeatedly saying a contract says something that it does not say is not ignorance
  • It is a misrepresentation

That is a very serious statement from a tribunal.

It goes directly to credibility.

And credibility often decides cases.

Then Came the Costs Warning

Normally, each party in the Fair Work Commission bears their own costs.

Costs orders are relatively rare and usually only made where:

  • The case was frivolous or vexatious
  • A party acted unreasonably
  • A party caused unnecessary costs

In this case, after dismissing the application, the Deputy President specifically said they welcomed a costs application from the employer.

That is not something you see often.

It is essentially the Commission saying:

This case should probably never have been run.

Key Takeaways for Employers and HR

This case is a good reminder of several practical points:

  1. Changing shift times is not necessarily changing hours
  2. Temporary changes and operational directions can be lawful
  3. Being directed to perform duties within your role is not necessarily a demotion
  4. Resigning too quickly can destroy a constructive dismissal argument
  5. Credibility matters enormously in Commission proceedings
  6. Running weak or misleading arguments can expose a party to costs

Our Employment Lawyers at South Geldard Lawyers have essential expertise in advising Employers on General Protections claims.

Feel free to reach out on 07 4936 9100 or via email to Jonathan Mamaril, Director at jmamaril@southgeldard.com.au.  All Employers receive an obligation free consultation.