The Government “Fixed” AI Litigation. It Didn’t Fix the Problem.

The Fair Work Commission has a new set of powers. As of 7 July 2026, it can throw out claims that are frivolous, vexatious, or have no reasonable prospect of success, faster, and it can ban repeat offenders from filing again without permission. It can decide some matters on the papers instead of at a hearing.

That sounds like progress. It isn’t really.

None of it touches the reason AI-generated claims are flooding the system in the first place. It just makes it slightly easier to throw out the worst of them once they’ve already landed on someone’s desk.

What’s actually happening right now?

General protections claims in the Federal Circuit Court rose from 889 in 2024-25 to 1,314 in 2025-26, a jump of close to 50 per cent. Self-represented litigants lodging claims are up 125 per cent on the year before. Fair Work Commission president Justice Adam Hatcher has publicly warned that the Commission is being swamped by AI-generated filings, some citing case law that doesn’t exist.

Employment lawyers report that roughly half the claims they’re now seeing involve unrepresented applicants who have no intention of settling. They’re not testing the water. They’re running the process to the end, because the process barely costs them anything to run.

We’re seeing the same pattern before termination even happens. A written warning goes out, and back comes a multi-page, AI-drafted response, structured like a legal submission, disputing every line. It’s not that the employee suddenly found a lawyer. It’s that a chatbot can produce something that looks like one in under a minute.

Why is AI making this so cheap to run?

The application fee for an unfair dismissal or general protections claim is $92.70. That’s the entire financial barrier to lodging.

Under general protections, the burden of proof sits with the employer, not the employee. The employee only has to show an adverse action occurred, cut hours, a demotion, a dismissal. From there, it’s on the business to prove the action wasn’t connected to a protected right.

Compensation isn’t capped either, unlike standard unfair dismissal claims.

That imbalance existed before generative AI. AI didn’t create it. It just removed the cost of exploiting it. Drafting a claim used to take time, and usually a lawyer. Now it takes a prompt.

Will the new Fair Work reforms actually fix this?

Not in any way that moves the needle for most businesses. The reforms give the Commission better tools to deal with the clearest cases of vexatious or hopeless claims. They do nothing for the much larger volume of claims sitting just above that bar, technically arguable, AI-assisted, filed at almost no cost, with the legal risk still sitting entirely with the employer.

Employment lawyers tracking the changes have said as much publicly: the vexatious litigant powers and the “on the papers” option might help the Commission manage its own workload, but employers shouldn’t expect any real drop in the volume of low-merit, AI-assisted applications reaching them.

The structural incentive to have a crack is still there. AI just made having a crack free.

What can businesses actually do about it?

The law isn’t changing to fix this, so the response has to happen at your end, before a claim ever gets filed.

Get the paper trail right, every time.

General protections claims turn on whether you can prove an adverse action wasn’t connected to a protected right. That’s a documentation problem, not a legal argument you can construct after the fact. Every warning, every meeting, every reason for a decision needs to be in writing, dated, and specific, at the time it happens.

Don’t respond to an AI-generated submission in kind.

The instinct is to answer a 17-page letter with an equally detailed rebuttal. Resist it. Get advice on what actually needs a response and what doesn’t. Litigating on the claim’s terms wastes hours you don’t need to spend.

If you’re a small business, use the Small Business Fair Dismissal Code properly.

It’s a genuine protection if you follow it and document that you have. Half-following it is worse than not knowing it exists, because it looks like an attempt to cover your tracks.

Push for an early merits test. The Commission’s expanded power to deal with matters on the papers and dismiss weak claims faster is worth using. Raise jurisdictional objections early rather than letting a low-merit claim run all the way to conciliation.

Know the cost order power exists, but don’t rely on it.

The Commission can order costs against a party for genuinely unreasonable conduct in running a case. It’s rarely awarded and shouldn’t be your defence strategy, but it’s worth knowing it’s there if a claim is being pursued in obvious bad faith.

Frequently Asked Questions

Get advice before you respond, not after.

The businesses getting burned aren’t the ones with something to hide. They’re the ones who tried to handle a legally structured claim without anyone who does this for a living looking at it first.

AI hasn’t changed what the law says. It’s changed who can afford to test it. That’s the part worth planning for.