AI is fuelling Unfair Dismissal Claims
As headlines continue to spotlight the risks of artificial intelligence (AI), it’s clear that awareness alone is no longer enough. While many businesses remain vigilant about external threats, few stop to consider the direct operational, financial and reputational risks AI poses within their organisation.
As AI tools become more deeply embedded in everyday workflows, the level of exposure grows with them. And while some businesses consider “banning AI” in attempt to reduce risk, the approach is neither realistic nor sustainable – especially when AI plays a central role in automating processes, improving efficiency, enhancing decision‑making, and supporting day‑to‑day operations.
Removing AI won’t eliminate risk; instead, it creates new challenges. Employees inevitably look for workarounds, shadow AI use increase, productivity slows and businesses risk falling behind competitors. In today’s landscape, the question isn’t whether to use AI, it’s how to use it responsibly and mitigate risk with the right protections in place.
Willis Temby provides specialist commercial and corporate insurance solutions backed by deep industry experience and a comprehensive understanding of modern risk landscapes. With a strong focus on strategic risk management, we help businesses safeguard themselves against a wide range of financial exposures, from operational vulnerabilities to emerging threats such as cyber risks and AI‑driven disruptions.
Here are our key considerations across insurance and risk management to help protect your business against rapidly evolving AI-driven risks and trends impacting businesses today.
Employment Practices Liability
Fair Work Commission President Justice Adam Hatcher recently labelled ChatGPT as the main cause of a dramatic 70% influx in workplace claims. In conversation with the Australian Financial Review, Hatcher explained a significant increase in fabricated and embellished dismissal stories, with AI ‘glossing up’ claims for self-represented litigants and arming them with misleading advice about their prospects.
In one test, Hatcher fed ChatGPT a realistic hypothetical dismissal scenario and within minutes, the tool produced an unfair dismissal application with a substantially invented story and informed him that $15,000-$40,000 in compensation could be achievable.
This misinformation could be considered a key driver behind the spike in claims, as former employees gain a false sense of validation and proceed to lodge applications in far greater numbers. The result is a rapidly escalating burden on the Fair Work Commission, one that Justice Hatcher warns is reshaping the landscape of workplace disputes in Australia.
From an insurance standpoint, Employment Practices Liability (EPL) remains a key safeguard for organisations. It is commonly included within Management Liability policies and can also be added to Directors & Officers Liability cover (as an optional extension), providing essential protection when employment‑related allegations are made by current, former or prospective employees.
Willis Temby works closely with businesses to ensure these protections are structured appropriately and reflect the realities of today’s workplace environment. Our team helps clarify coverage options, align policy terms with organisational risk, and support leadership with insurance solutions designed to strengthen resilience in the face of increasing employment‑related scrutiny.
Cyber Insurance
AI is rapidly reshaping the cyber threat landscape, driving an escalation in both the volume and sophistication of attacks. Threat actors are now using AI to automate phishing attacks at scale, craft highly personalised messages, and deploy deepfakes that convincingly mimic trusted executives, all of which dramatically increase the likelihood of a successful breach.
Phishing alone has surged by 856% in recent years due to the use of large language models, enabling attackers to create more authentic‑looking communications while slashing the cost of executing campaigns by up to 95%.
In addition, AI‑powered deepfake scams have already resulted in substantial financial losses globally, including incidents where employees were deceived into transferring millions based on falsified video and audio calls.
Businesses are also facing a new class of AI‑driven cyber exposures that go far beyond traditional threats such as ransomware or credential theft. Emerging risks include adversarial attacks, data poisoning, and compromised AI systems capable of producing incorrect outputs, manipulating internal processes, or escalating privilege inside networks. Recent real‑world examples illustrate these impacts: AI‑powered phishing breaches affecting major financial institutions, deepfake‑driven misinformation campaigns, and compromised AI systems within healthcare and e‑commerce organisations leading to operational disruption and reputational damage.
At the same time, cyber criminals are increasingly deploying autonomous or semi‑autonomous malware and leveraging AI to probe misconfigured cloud assets, exploit vulnerable APIs, and rapidly test defensive gaps. These methods operate at machine speed, meaning attacks can unfold faster than human teams can respond. As a result, cyber incidents today are more complex, more interconnected, and more difficult to contain, especially as many organisations still overestimate their resilience or misunderstand the scope of their existing cyber cover.
This is where Willis Temby plays a critical role.
Our team specialises in navigating the rapidly evolving cyber insurance landscape, helping businesses make sense of complex policy language, emerging AI‑driven exposures, and the widening protection gaps seen across the market. We work closely with clients to identify vulnerabilities specific to their operations, ensure their coverage accurately reflects modern threat patterns, and structure programs that address both known and emerging risks, including AI‑accelerated phishing, deepfakes, data breaches, business interruption, and system compromise.
