We are pleased to continue our Employment Law Update series, reporting on recent legislative and case developments that have provided employers with guidance in navigating complex workplace challenges.
In this edition, we discuss developments that employers should keep in mind to ensure legal compliance and best practice. Topics include whether refusing to adopt AI may amount to misconduct, recent trends in flexible work arrangement refusal cases and workplace investigations, and what Australia's safety regulators are targeting in 2026.
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Use it or lose it: When refusing to adopt AI may amount to misconduct
In brief
- As artificial intelligence becomes embedded in many workplaces, a question arises: at what point does an employee's refusal to adopt AI amount to misconduct? The UK Jurisdiction Taskforce's Legal Statement on Liability for AI Harms describes AI as a tool at a professional's disposal, and suggests that misconduct can involve not only misusing AI, but also failing to use it at all.
- In Australia, professionals owe a duty to exercise reasonable care and skill in carrying out their work. Judged against this standard, it is possible that a professional may be found to be negligent not only for using AI inappropriately, but also for failing to use AI where a competent member of their profession would have done so. What counts as "standard practice" will evolve, but the fundamental principle remains the same: employees must act with reasonable care and skill when conducting their work.
- Where an employer issues a lawful and reasonable direction to use AI, an employee's refusal may constitute serious misconduct. However, as the decision in Lee v Superior Wood [2019] FWCFB 2946 illustrates, an employer cannot simply mandate the use of new technology for its own sake - the direction must be lawful, genuinely connected to the competent performance of the relevant role, and consistent with the employee's contractual duties.
- Where AI use has become integral to performing a role productively and to the required standard, employers may be able to establish it is an inherent requirement of the position. Failure to perform that inherent requirement may provide a valid reason for dismissal, constitute industrial action under the Fair Work Act 2009 (Cth) or even amount to repudiation of the employment contract.
- Employers must consider whether employees have legitimate grounds for reluctance to use AI, including disability, age-related unfamiliarity, or genuine concerns about privacy and accuracy, and whether reasonable adjustments or accommodations are required.
On what grounds? Recent trends in flexible working arrangement refusal cases
In brief
- Employers who refuse flexible working arrangement (FWA) requests continue to face heightened scrutiny by the Fair Work Commission. This remains the trend we are seeing since our September 2025 publication (accessible here).
- Employers must show role-specific and evidence-based "reasonable business grounds" for refusing an FWA request under s 65A(3)(d) of the Fair Work Act 2009 (Cth).
- The four pre-conditions for a refusal under s 65A(3) are cumulative. If one is not met, the refusal will be invalid.
- Where fairness requires it, the Commission will use its broad discretion under s 65C to order compromises (eg return-to-office plans and trial periods), even where reasonable business grounds are made out.
Under the microscope: What Australia's safety regulators are targeting in 2026
In brief
- Safety regulators across Australia are increasing their regulatory oversight and enforcement action, with convergence on key priority areas.
- Common hazards and risks that are the subject of regulatory focus are psychosocial risks, falls from heights, hazardous substances (particularly crystalline silica), and mobile plant and vehicles.
- The construction industry appears in every jurisdiction’s priority list. In the ACT, it accounts for 54% of all workplace inspections, and in Victoria the construction industry represents 17% of workplace fatalities. Construction industry businesses should expect heightened regulator scrutiny regardless of the jurisdiction in which they operate.
- Psychosocial risk has emerged as the most significant regulatory shift in WHS in recent years, with every jurisdiction now identifying it as a regulatory priority. Many jurisdictions have also invested significantly in dedicated psychosocial safety inspectors to monitor compliance.
- From a national perspective, Safe Work Australia’s Australian Work Health and Safety Strategy 2023–2033 seeks a 30% reduction in worker fatalities and no new cases of accelerated silicosis by 2033.
Recent trends in workplace investigations
In brief
- Recent Fair Work Commission and other decisions continue to highlight the need for thorough, impartial and timely workplace investigations. In particular, investigators should carefully consider the appropriate scope for any investigation, identify and interview relevant witnesses and test competing or inconsistent accounts.
- The decisions also show the importance of considering how to obtain witness evidence, avoiding both undue delay and excessive speed in investigations and meaningfully engaging with an employee's response in show cause processes.
- The investigation process itself can also exacerbate the impacts on workers of the investigation process (for example) through delay, while the rise of AI creates both challenges and opportunities for the conduct of workplace investigations.
Authors: Melanie Taylor, Counsel; Amanda Wu, Senior Associate; Eshani Mendis, Senior Associate; Greta Avis, Lawyer; Tarryn Sorour, Graduate; Christina Chiaverini, Graduate; Alicia George, Graduate; Sofia Basso Betancourt, Graduate
