What's driving the rise in individual employment claims

There has been no shortage of commentary on the sharp rise in individual employment claims over the last 12 months. Indeed, the President of the Fair Work Commission has spoken publicly[1] about the scale of the increase and the pressure this is placing on the Commission, with unfair dismissal and general protections applications now at record levels, a sign of the impact of artificial intelligence (AI) on the work of the Commission.

What has received less commentary more broadly is what this increase in AI-generated individual claims signals for employers about how psychosocial risks are both emerging and being experienced within their organisations.

These risks are real, predictable in hindsight, but genuinely difficult to detect and manage in the moment, especially under pressure.

Individual employment claims rarely arise in isolation, even accounting for the advent of AI tools. More often, they surface after pressure has already been building inside an organisation, through stressors such as periods of heightened workload, prolonged uncertainty, perceived unfairness, inconsistent treatment or application of workplace standards, or even communication gaps during difficult processes or decisions.

By the time a claim is filed, the contributing psychosocial factors have often existed for some time. That observation matters, with psychosocial hazards now firmly embedded within Australian work health and safety laws, to ensure that they are eliminated or otherwise controlled using the same approach as risks to physical health and safety.

Viewed this way, the rapid increase in individual claims is better understood as a lag indicator of upstream risk, rather than a sudden increase in opportunistic behaviour. Put simply, employees who feel psychosocially safe at work don’t spend their time escalating grievances or drafting claims purely because AI makes it easier to do so.

Psychosocial risk does not arise evenly across the organisation. It tends to cluster around identifiable moments, particularly where routine people or change processes intersect with periods of heightened stress, uncertainty or power imbalances- for example, performance management, workplace investigations and restructuring programs. Not because there is anything inherently unlawful in those processes, but because they are typically conducted under time pressures, resource constraints and potentially competing organisational demands.

The emerging lessons from recent legal developments is not that employers should avoid these (often unavoidable) workplace processes. Rather, it is that the way decisions land (and how that impact is managed), has become as important as the decisions themselves.

The design of Australia’s workplace relations system may also play a role in intensifying this dynamic. General protections claims, in particular, offer substantial leverage: no qualifying period (unlike unfair dismissal), a reverse onus of proof and uncapped damages for non economic loss. Combined with relatively low filing costs in the Commission and the increasing availability of AI to generate applications quickly and typically at little to no cost (setting aside whether those claims have merit), the practical barrier to contesting decisions has largely disappeared.

For employers, the economics are difficult to ignore. Defence costs frequently exceed typical settlement values, even where claims are unmeritorious. As a result, many organisations at least consider their appetite for an early settlement, not because they accept fault, but because rational risk and cost mitigation point in that direction.

That response, however, has consequences. Over time, it reinforces the perception that organisational decisions are contestable by default and that formal escalation is the most effective means of challenge.

For employers, the rise in claims may reflect a workforce more willing to formalise disputes when decisions are experienced as opaque, rushed, insufficiently explained, or unfair. And while the availability of artificial intelligence may help explain how more claims are being brought, it does not explain why employees are choosing to take this step.

It doesn’t require too long a memory to recall the COVID 19 era, a time marked by heightened psychosocial strain across society, through prolonged periods of isolation, shifting public health and social distancing rules and disrupted ways of working. Even beyond that backdrop, periods of economic or even broader geopolitical uncertainty have the ability to permeate organisations, both structurally as well as culturally.

In responsive conditions, organisational decisions are often made quickly and may even be delegated lower in the organisation. It is in these moments where psychosocial risks can take hold and escalate. Processes can unintentionally become rigid or compressed and decisions that are defensible in substance may nonetheless be experienced by individuals as threatening or overwhelming.

Enter generative AI.

Increasingly, we are seeing legal outcomes turn on process (for example, in the context of workplace investigations). Regulators and ultimately the courts and tribunals, are scrutinising whether psychosocial risks were foreseeable, whether consultation was genuine, whether adjustments were made when warning signs emerged, and whether decision making was documented.

The presence of workplace policies alone is no longer sufficient. What matters is whether they are applied consistently, thoughtfully and responsively, in real time.

The current rise in individual employment claims should not be seen as a downstream legal problem to be managed reactively, nor attributed solely to the availability of AI tools to individual litigants. Whilst there is no doubt an element of unmeritorious claims, taken more wholistically, this data represents one of the clearest indicators available that psychosocial risk is being experienced before it is being addressed.

This is not to suggest that employers have ignored risk. Rather, it reflects the challenge of idiosyncratic responses to psychosocial hazards, which are inherently difficult to detect (and in turn, assess and control), especially during periods of uncertainty or sustained organisational pressure.

However, that reality does not diminish the responsibility of the employer. But it does underscore why the rise in claims deserves a closer inspection ‘under the hood’, to investigate whether there are systems and governance challenges that warrant further introspection. Because by the time these claims are made (and to be sure, they are unlikely to abate in the medium term), the real governance challenge has already been present for some time.

References:

[1] Link to presentation to the Victorian Bar Association by Justice Adam Hatcher, President of the Fair Work Commission, February 2026: A disrupted future: Artificial intelligence and the Fair Work Commission

For more insights from the Kingston Reid team on the workplace law issues facing organisations in 2026, head to our Publications page to access our 2026 Workplace Insights report.

The views expressed in this article are general in nature only and do not constitute legal advice. Please contact us if you require specific advice tailored to the needs of your organisation.