Australia's industrial relations tribunal has taken the rare step of ordering a dismissed worker to pay his former employer's legal costs after he pursued a doomed unfair dismissal case built on artificial intelligence advice, according to reporting from ABC News.

Sadnan Khan, a former ALDI employee, was ordered to pay $1,230 toward the supermarket giant's legal fees after Fair Work Commission deputy president Michael Easton found he had used AI as a "quasi-legal advisor" to challenge his dismissal, despite repeated warnings that his case had "no substantial prospects of success." For more context on this story, see our ongoing AI trends.

"I have taken the very rare step of ordering him to pay some of the employer's legal costs, because his unreasonable conduct caused his former employer to incur those costs unnecessarily," Easton said in the tribunal's decision.

How the Case Unfolded

Khan told the ABC he had used a paid version of ChatGPT to help him decipher the legal cases the tribunal and ALDI cited against him. "They're quoting me cases, right … and I as not a legal personality have to go somewhere to do the study," he said.

His mistakes became part of the record — including one that will be familiar to anyone who has reviewed AI-assisted filings: he forgot to remove the AI chat instructions from his own submissions before filing them. "The way we communicate things and the legal way of communication … things are different," Khan said, adding that he believed comprehension barriers affected the prompts he fed the chatbot. "The main problem, which I realised after the hearing, was that I was thinking oranges were apples."

Undeterred, Khan told the ABC he now plans to use "two or three" different AI agents to help him appeal the decision.

A Tribunal Grappling With an AI-Driven Caseload

The ruling lands amid a significant shift in the tribunal's workload. Research commissioned by the Fair Work Commission found its case numbers have recently grown by 40 percent, with generative AI use by litigants identified as one contributing factor.

In response, the commission will require applicants to disclose their use of AI in filings from October 20, and has implemented a template designed to help AI-dependent litigants structure their claims.

Not a Blanket Rejection of AI

Notably, the tribunal did not treat AI use by applicants as inherently problematic. It acknowledged that generative AI is improving access to justice for applicants with genuine, meritorious claims "who might otherwise have been deterred" from pursuing them, and observed that sophisticated users had approached AI critically as "one tool among many."

One such user featured in the ABC's reporting: Gregory Baker, a computer science lecturer at Macquarie University who this month became the first person to successfully challenge Australia's casual employment laws using a team of AI agents.

Baker's claim began when he asked ChatGPT for career planning options after the university denied his request to be converted from a sessional to a permanent employee. "I treated it basically as a software development project," he told the ABC. "I created a repository for my source code."

The contrast between the two litigants illustrates the line the commission is now drawing. Khan, representing himself, treated the AI's output as authoritative legal advice and pursued a case the tribunal had repeatedly flagged as hopeless. Baker, a computer scientist, treated the same technology as a tool to be directed, tested, and verified — and won.

A Signal for Courts Everywhere

The decision is one of the clearest examples yet of a court or tribunal attaching financial consequences to AI-driven litigation misconduct, rather than merely warning about it. Costs orders against self-represented litigants are uncommon in the Fair Work Commission, which is designed to assist unrepresented applicants — making the signal to AI-assisted filers unusually sharp.

It also arrives alongside a disclosure requirement, meaning AI's role in building a claim will no longer be invisible to the tribunal. From October 20, litigants who lean on AI will need to say so, and the commission will at least formally know what it is reviewing.

The timing is not accidental. AI chatbots have made it trivially easy for anyone to generate a demand letter, a complaint, or a tribunal filing in minutes, and courts in several countries have already reported instances of AI-fabricated citations appearing in filings. What makes the Fair Work Commission's response notable is that it pairs enforcement with accommodation: rather than banning AI outright or letting unchecked filings clog the docket, it is regulating disclosure while building a template specifically for litigants who depend on these tools to navigate the system.

For employers, the ruling offers some reassurance that AI-fueled weak claims can be stopped and priced. For employees, the lesson from both cases is the same: AI can help you understand a legal system, but the tribunal expects you — not the chatbot — to know the difference between a claim worth bringing and one that is, in the commission's words, plain wrong.

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