When AI shortcuts cost more than they save: Hoverd v M & J D Pty Ltd [2026] FWC 1013

Case note: Reece Hoverd v M & J D Pty Ltd [2026] FWC 1013

Jurisdiction: Fair Work Commission

Decision-maker: Deputy President Lake

Date: 21 April 2026

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Introduction

Costs orders in the Fair Work Commission are rare, so when a Deputy President expressly invites a costs application, it’s worth taking notice.

In Hoverd v M & J D Pty Ltd [2026] FWC 1013, Deputy President Lake dismissed a general protections application after upholding a jurisdictional objection, finding that the applicant had resigned rather than been dismissed. That alone would make the case a useful reminder of the constructive dismissal threshold.

What elevates it is the Commission’s treatment of the applicant’s use of AI-generated content: the uncritical reliance on fabricated contractual and award provisions, the persistence in advancing those propositions after repeated warnings, and the Deputy President’s closing invitation to the respondent to seek costs.

So, what does this mean for everyday practice?

Why this case matters

This decision is significant for two reasons:

• it reinforces orthodox principles on constructive dismissal; and

• it serves as a clear warning about unchecked reliance on AI-generated legal content, with the Commission linking that conduct directly to its willingness to entertain a costs application in a jurisdiction that is ordinarily no-costs.

For employment lawyers, it is also a timely reminder to consider the costs provisions — specifically s 611 — in the Fair Work Act 2009 (Cth) where an application has no reasonable prospects and is persisted with despite clear warnings.

What kind of application was this?

Although often described loosely as a dismissal case, this was not an unfair dismissal application under Part 3-2 of the Act.

Mr Hoverd commenced a general protections application involving dismissal under s 365. The general protections scheme under Part 3-1 of the Act prohibits a person from taking adverse action against another for a proscribed reason — most commonly, because the other person has exercised, or proposes to exercise, a workplace right (s 340). In Mr Hoverd’s case, the implicit contention was that the allocation of silt fencing work and the altered roster were retaliatory responses to his objection to the proposed roster change, and that his subsequent resignation amounted to a dismissal within the meaning of the Act.

Under s 365, an employee who has been dismissed may apply to the Commission to deal with a general protections dispute. The threshold question — whether there was a dismissal at all — is a jurisdictional one. If it cannot be established, the application falls at the first hurdle, and the merits of any adverse action claim are never reached.

The respondent raised a jurisdictional objection, contending that Mr Hoverd had resigned and had not been dismissed at all.

Key facts

Mr Hoverd was employed as an earthmoving plant operator and labourer. A dispute arose when the employer proposed a temporary roster change, extending his finish time from 4.30 pm to 6.00 pm until Christmas. Mr Hoverd objected on family and church grounds and asserted that the Waste Management Award 2020 required majority consent for work finishing after 5.00 pm.

Following the dispute, Mr Hoverd was allocated silt fencing work, which he characterised as a demotion and retaliation. He resigned immediately and alleged that the employer’s conduct amounted to constructive dismissal and adverse action. The employer denied any dismissal had occurred.

Why the application failed

The Commission upheld the jurisdictional objection and found that Mr Hoverd had not been dismissed.

Key findings included:

• the roster change was temporary, not permanent;

• Mr Hoverd’s contract expressly allowed flexibility in hours and duties;

• silt fencing work fell within the duties described in his position description; and

• Mr Hoverd chose to resign, rather than being left with no effective or real choice.

On that basis, the constructive dismissal claim failed and the application was dismissed at the jurisdictional stage.

The constructive dismissal test

The definition of “dismissed” in s 386(1)(b) provides that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. This codifies the common law concept of constructive dismissal and reflects the long-standing test developed in Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200, where the Full Court of the Industrial Relations Court held that an important feature of termination at the initiative of the employer is that the employer’s act results directly or consequentially in the termination, such that the employment relationship was not voluntarily left by the employee.

The Full Bench of the Australian Industrial Relations Commission later clarified in O’Meara v Stanley Works Pty Ltd (2006) 58 AILR 100 that it is not sufficient merely to show that the employer’s conduct consequentially led to the resignation. There must be some action on the part of the employer which was either intended to bring the employment to an end, or which had the probable result of doing so. An objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result, or that the employee had no effective or real choice but to resign.

As the Fair Work Commission has repeatedly affirmed, the line between a forced resignation and a voluntary one is narrow, but it must be closely drawn and rigorously observed. In Hoverd, the employer’s conduct — a temporary roster adjustment and a reallocation of duties, both within the scope of the employment contract — did not come close to meeting that standard.

The adverse action element

Because the application was dismissed at the jurisdictional stage, the merits of Mr Hoverd’s adverse action claim were never tested. It is worth briefly explaining what would have been required had the jurisdictional hurdle been cleared.

Under s 340, an employer must not take adverse action against an employee because the employee has exercised, or proposes to exercise, a workplace right. Dismissal is a form of adverse action. A workplace right includes the right to make a complaint or inquiry in relation to one’s employment — and Mr Hoverd’s objection to the roster change could arguably have been characterised as such.

Had a dismissal been established, the burden of proof would have shifted significantly. Section 361 creates a reverse onus: once an employee alleges that adverse action was taken for a prohibited reason, it is presumed that the action was taken for that reason unless the employer proves otherwise. The employer must establish, on the balance of probabilities, that the adverse action was not taken for the alleged prohibited reason. This is a deliberately demanding standard, and it is why general protections claims involving dismissal carry meaningful risk for respondents who cannot point to a clearly documented, lawful reason for their conduct.

In this case, those questions were never reached. The absence of a dismissal was dispositive.

Strong criticism for AI use

What sets this decision apart from a routine jurisdictional dismissal is the Commission’s treatment of the applicant’s use of AI.

Mr Hoverd admitted using AI tools to help organise and draft his materials. Deputy President Lake made clear that the problem was not the mere use of AI as a drafting aid.

The problem was the uncritical adoption of fabricated content.

The Commission found that Mr Hoverd:

• repeatedly relied on contractual and award provisions that did not exist;

• continued to advance those propositions after being warned by chambers not to provide false or misleading material;

• only conceded errors after being reminded that he was giving sworn evidence; and

• persisted in relying on non-existent award clauses even after being told during the hearing that they did not exist.

In one of the strongest passages in the decision, the Deputy President observed that the applicant chose to rely on AI to extract terms of the contract which did not exist, instead of reading the contract he had signed.

The Commission characterised this conduct as going beyond simple misunderstanding or ignorance of the law.

Why the Commission welcomed a costs application

Costs in the Fair Work Commission are governed by s 611 of the Act, which confers a discretion rather than establishing a right. The threshold is high: costs may be ordered where an application is made or conducted vexatiously, or without reasonable cause.

Here, however, the Commission drew a direct link between:

• the persistence of a case built on non-existent legal and contractual foundations; and

• the applicant’s disregard of repeated warnings.

That context explains the closing remark that has attracted so much attention: that the Commission welcomed a costs application from the respondent.

For practitioners, this is a clear signal that AI-generated content with no reasonable prospects — when advanced and maintained in the face of correction — may expose an applicant to costs risk.

Implications for practice

Constructive dismissal after Hoverd

Hoverd confirms that the constructive dismissal threshold under s 386(1)(b) remains demanding. Temporary changes to roster or duties that fall within the scope of an employee’s contract will not ordinarily amount to conduct that leaves an employee with no effective or real choice but to resign. Before advising that a resignation constitutes dismissal, practitioners should carefully assess whether the employer’s conduct was contractually authorised, whether any change was temporary or permanent, and whether the conduct was objectively likely to bring the employment to an end. A genuinely held, but principled, objection to a temporary roster change is not the same as having no choice.

The general protections framework and the jurisdictional threshold

Where an employee commences a general protections application involving dismissal and the employer objects on the basis that no dismissal occurred, the jurisdictional question is no longer a mere formality. Following Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152, the Fair Work Commission is required to determine for itself, as a threshold issue, whether a dismissal has in fact occurred before it can deal with the dispute under s 368 of the Fair Work Act. If a resignation cannot be characterised as a dismissal, the application under s 365 necessarily fails — and with it, the operation of the reverse onus in s 361 that would otherwise shift the burden to the employer. While the President of the Commission has publicly indicated support for legislative reform to permit conciliation without a final determination of jurisdiction, practitioners advising employees should not assume the availability of the reverse onus unless and until the jurisdictional foundation of a dismissal is firmly established.

AI-generated content and costs exposure

Hoverd is the first Fair Work Commission decision to directly connect AI-generated fabrications to costs risk and invite an application for costs. The Commission drew a clear distinction between using AI as a drafting tool — which it did not criticise — and uncritically advancing AI-generated content that was factually and legally wrong. That distinction matters: the conduct that attracted the Deputy President’s censure was not the use of AI per se, but the failure to verify that content against primary sources and the persistence in relying on it after repeated correction.

This is not an isolated concern. A 2025 report by the UNSW Centre for the Future of the Legal Profession identified 87 Australian matters involving AI-generated content across a range of courts and tribunals, with Australia second only to the United States in volume. The majority involved self-represented litigants — precisely the cohort most exposed to Commission proceedings. Courts and tribunals are increasingly explicit about the consequences. In family law, Mertz & Mertz (No 3) [2025] FedCFamC1A 222 raised similar concerns about the accuracy and integrity of AI-assisted filings — though notably, that case involved qualified practitioners (a solicitor and two barristers) rather than a self-represented litigant, and resulted in costs orders and referrals to professional regulators. In 2025, the first Australian lawyer was formally penalised after submitting AI-generated citations that did not exist, following a referral to the Victorian Legal Services Board. Multiple state and federal courts have now published practice notes and guidelines on the responsible use of generative AI. The Commission’s approach in Hoverd sits within that growing body of judicial and quasi-judicial response.

Practical steps for practitioners

Advising employees on constructive dismissal. Before advising that a resignation amounts to dismissal, carefully assess whether the employer’s conduct was contractually authorised, whether any change was temporary or permanent, and whether the employee was genuinely left with no effective or real choice. Apply the objective test from Mohazab and O’Meara: was the employer’s conduct of a nature that resignation was the probable result? A strong personal objection to a temporary, contractually permitted change will not ordinarily be sufficient.

Do not assume the reverse onus will be available. In general protections matters involving dismissal, the powerful reverse onus under s 361 only becomes available once a dismissal has been established. If the jurisdictional threshold cannot be cleared, the adverse action merits are never reached. Assess the constructive dismissal question carefully before proceeding.

Verify AI-generated content against primary sources. Contracts and awards must be read directly. If AI tools are used to assist in drafting or organising materials, every legal proposition, contractual term, and award clause must be verified against the original document before it is advanced in proceedings. Fabricated provisions are not a technical error — as Hoverd demonstrates, they can attract personal costs consequences and sustained judicial criticism.

Build a costs record where appropriate. Where an opponent persists with claims built on demonstrably false or fabricated foundations, ensure that any corrections are made in writing and that the record clearly documents the point at which reasonable cause could no longer be maintained. Hoverd provides authority to press for costs under s 611 where that threshold is met.

Concluding thoughts

Hoverd is, at its core, a case about shortcuts. Mr Hoverd skipped reading his contract, relied on an AI to fill the gaps, and when the gaps turned out to be fabrications, kept going anyway. The Commission noticed.

For practitioners, the doctrinal takeaways are useful. But the broader lesson is older than AI, know your material, check your sources, and never sign your name to something you haven’t read.