AI fuels Australian workplace disputes, report finds

Citation Group has published research on artificial intelligence in Australian workplace disputes, finding that employees are using AI tools to prepare complaints and claims.

Based on a survey of 510 Australian business owners and managers, the report points to a widening gap between the spread of AI in workplaces and the systems businesses have in place to manage the risks. AI is being used by 48% of small businesses, 65% of medium-sized businesses and 73% of large businesses.

At the same time, fewer than a third of businesses already using AI strongly agreed it was being used safely and beneficially for their organisation. The report put that figure at 29%, suggesting many employers are adopting the technology faster than they are setting rules for its use.

The study focuses on a shift in who is using AI in workplace matters. Employers are applying it to tasks such as scheduling, policy drafting and payroll analysis, while employees are using the same tools to check entitlements, identify underpayments and draft formal grievances.

That shift is feeding into Australia's workplace dispute system. Citation Group said the Fair Work Commission has linked a 70% rise in workload over three years partly to employees using AI tools to lodge claims more quickly.

According to the report, those claims are not always reliable. Many AI-assisted complaints include legal mistakes, invented case references or facts that do not match the circumstances, yet still require employers to spend time and money preparing a proper response.

Rising pressure

Brittany Byrne, Partner and Solicitor at Citation Legal, said businesses were facing a new challenge as AI tools lowered the barrier for staff and former staff to frame workplace disputes in formal legal language.

"AI is giving employees faster access to information about their rights and entitlements. That doesn't mean every AI-assisted complaint is valid, but it does mean every complaint needs to be handled properly," Byrne said.

Businesses with informal decision-making and weak records were likely to face the greatest strain when responding to detailed grievances, she said.

"The businesses most exposed are not necessarily those doing the wrong thing deliberately. They're the businesses relying on informal processes, verbal conversations and undocumented decisions in an environment where employees are increasingly informed and empowered to act," Byrne said.

The report argues that the issue is not only the content of AI-generated claims, but also the confidence and presentation they bring. A complaint that appears polished and legally structured can be difficult for managers to assess, especially in smaller organisations without dedicated HR or legal teams.

That concern is reflected in the broader findings on internal processes. Although 97% of business owners and leaders said they felt confident managing workplace responsibilities, 44% of businesses had no clear approach to managing HR and people.

Among small businesses, 38% said HR was handled on an ad hoc basis. The figures were 14% for medium businesses and 11% for large businesses.

Payroll risk

The report also highlighted payroll as a key area of exposure. While 87% of businesses said they believed their payroll was accurate, 42% said they had identified a payroll error at some point and 18% had found one in the past year.

Those figures carry added weight because wage theft is now a criminal offence in Australia. In that context, AI tools that help employees compare awards, payslips and entitlements could increase scrutiny of long-standing payroll practices.

Michal Roucek, Partner and Solicitor at Citation Legal, said AI was changing how quickly employees could identify possible failings in workplace systems.

"Employees using AI are quickly exposing weaknesses in contracts, policies and payroll compliance - from underpayment claims to unfair dismissal. It's now more important than ever for businesses to get the right advice from a human expert," Roucek said.

AI was making it easier for concerns to move rapidly from internal discussion to formal dispute, he said.

"The new reality in employment relations is that AI makes it easier for employees and former employees to identify gaps, challenge management decisions and escalate concerns before a business even realises it was exposed," Roucek said.

Citation Group said common signs of AI-assisted workplace claims included unusually formal or repetitive language, US spelling or legal terminology, inaccurate references to legislation or case law, and arguments that sound confident but do not fit the facts.

Missing details and inconsistencies in the chronology of events could also indicate that a complaint was assembled with the help of a generative AI tool rather than written from direct knowledge alone, the report said.

For employers, the study points to a more contested workplace environment, where access to legal-sounding language and procedural knowledge is no longer limited to those who can afford professional advice. The pressure falls heaviest on businesses that remain reliant on undocumented conversations, inconsistent policies and manual payroll processes.

The survey found AI adoption in workplaces is already widespread, but governance remains uneven, with only 29% of current users strongly agreeing the technology is being used safely and beneficially for their business.