EMPLOYMENT LAW
In a decision handed down on 10 August 2026, the Federal Circuit and Family Court of Australia found a small bathroom renovation company had breached the Fair Work Act in five separate ways, and held the company’s sole director personally liable for each of them, according to detailed reporting on the judgment by Human Resources Director Australia, which cites the published decision.
The matter centred on a chief operations officer hired in March 2025, a French citizen on a working holiday visa who had told the director before accepting the role that she wanted long-term employment and visa sponsorship. Her contract, drafted with the help of an AI tool, set a base salary of $110,000. According to the reported judgment, she was never paid. When she began chasing her salary in April, the director sent a screenshot purporting to confirm a bank transfer that the court found had been falsified; he later admitted he had lied because he did not have the funds at the time. When the worker raised the unpaid wages again in person on 11 April, the court found the director dismissed her within the hour, using a termination message he confirmed was generated with ChatGPT.
What the court found
The court found breaches of sections 323, 90, 117, 340 and 345 of the Fair Work Act, covering unpaid wages, unpaid annual leave, pay in lieu of notice, adverse action against a worker trying to enforce her right to be paid, and knowingly false representations. Rather than pursue the company itself, the worker pursued the director personally under section 550 of the Act, which extends liability to anyone knowingly involved in a contravention. The court reportedly found he was “the directing mind and will of the employer company.”
The total award reported was $33,998.60, made up of unpaid wages, accrued leave, notice pay, an amount for hurt and distress, and interest, a figure that is internally consistent with the individual sums reported for each head of claim.
A caution on AI-drafted contracts
The court reportedly took particular issue with the employment contract itself, noting it had been drafted with AI tools by both sides and describing some of its clauses as “nonsensical.” For HR and recruitment professionals, increasingly relied upon by small business clients to advise on hiring paperwork, the case is a pointed illustration of the risk in treating AI-generated employment documents as a substitute for proper legal drafting, and of the personal exposure directors carry when they are closely involved in day-to-day employment decisions.
Sources
Human Resources Director Australia, “Court orders director to personally pay $34,000 over unpaid worker’s sacking,” 12 August 2026 — hcamag.com
Federal Circuit and Family Court of Australia, decision handed down 10 August 2026, cited by Human Resources Director Australia via AustLII (FedCFamC2G 2026 1553)
