Genuine redundancy just got tougher

In the highly publicised recent decision of Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29, the High Court of Australia (High Court) found that the Fair Work Commission (FWC) can consider whether an employer could have reorganised its workforce when deciding if a redundancy is genuine under section 389 of the Fair Work Act 2009 (Cth) (FW Act).

This case provides importance guidance about the relevant considerations of employers when identifying redeployment options for employees whose positions are made redundant.

Facts

The COVID-19 pandemic significantly reduced the demand for the coking coal extracted at the Metropolitan Coal Mine (the Mine) operated by Helensburgh Coal Pty Ltd (Helensburgh). As a result, Helensburgh restructured its operation at the Mine by reducing its operating hours and subsequently its workforce.

During this restructuring process, Helensburgh agreed to some ‘insourcing’ to reduce its reliance on contractors but did not agree to terminate its arrangements with the contractors. This led to a 40 per cent reduction in contractor numbers and a decrease of 90 employees, including 47 forced redundancies. The affected employees were dismissed on 24 June 2020.

On 10 July 2020, 22 former employees lodged unfair dismissal claims with the FWC pursuant to section 394 of the FW Act. Helensburgh objected to those applications on the basis that the dismissals were cases of ‘genuine redundancy’ pursuant to section 389 of the FW Act.

Legislative framework

Section 389(1) of the FW Act relevantly provides that a dismissal is a case of genuine redundancy if the employer ‘no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.’

Section 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been ‘reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise.’

Decisions of the FWC and lower courts

The matter had a convoluted procedural history including four decisions in the FWC. The FWC ultimately held that the dismissals were not cases of genuine redundancy because it would have been reasonable in the circumstances for some work to be ‘insourced’ and performed by redeployed employees rather than contractors.

Following the FWC decisions, Helensburgh applied to the Full Court of the Federal Court of Australia (the Full Court) to quash all FWC decisions and prohibit the FWC from dealing further with all the unfair dismissal applications.

Helensburgh argued that the FWC had made an error by interpreting the FW Act as potentially requiring the redeployment of an employee into a position that was already occupied. In this instance, the positions were occupied by contractors.

The Full Court considered the wording of section 389(2) of the FW Act and concluded that due to the breadth of the FW Act’s language, there is no reason to exclude the possibility that an employer might free up work for its employees by reducing its reliance upon the contractors.

Consequently, the Full Court dismissed the appeal.

Decision of the High Court

Helensburgh then pursued two appeal grounds in the High Court, but this article will focus on the first ground of appeal which concerned the correct interpretation of section 389(2) of the FW Act.

The central question before the High Court was whether the FWC can consider whether an employer could have changed how it uses its workforce, such as replacing contractors with employees, in deciding if it would have been reasonable in all of the circumstances for a person to be redeployed within the employer’s enterprise.

Helensburgh submitted that the FWC does not have such power. It was Helensburgh’s view that the FWC’s role is limited to assessing whether an existing position was available for redeployment, rather than whether the employer could restructure its operations. Helensburgh contended that section 389(2) of FW Act did not permit such hypothetical analysis.

The High Court unanimously rejected Helensburgh’s submissions and held that the appeal should be dismissed, across three separate judgments.

In their joint decision, Gageler CJ and Gordon and Beech-Jones JJ made the following pertinent observations as to the elements of section 389(2) of the FW Act:

• Section 389(2) refers to redeployment in the employer’s enterprise. This is defined as its ‘business, activity, project or undertaking.’ In undertaking its assessment, the FWC cannot disregard the nature of the enterprise, but the nature of the enterprise is not defined by reference to how the workforce is used to operate its enterprise.
• Redeployment does not require a ‘vacant position’. Instead, it is sufficient that there is ‘work, or a demand for work’ within Helensburgh’s enterprise that could have been performed by the otherwise redundant employee. In his judgment, Edelman J used an example of a situation where an employee might be dismissed from an enterprise in which another employee performing an identical job was to retire the next day. In such a case, there is no ‘vacant position’ at the time of the first employee’s dismissal, but redeployment would nevertheless be reasonable.
• The words ‘would have been reasonable’ direct the FWC to consider a hypothetical situation, namely what else could have been done to redeploy the employee within the employer’s enterprise. This is an objective question to be assessed with regard to the nature of the employer’s enterprise.

• The test requires an assessment of what would have been reasonable ‘in all the circumstances’ which are unmistakably broad words. Relevant factors ‘in all the circumstances’ can include:

• employee attributes such as their skillset, experience, training and competencies; and
• attributes of the employer’s enterprise that concern its workforce, such as workplace policies, including risk tolerance; organisational plans, processes, and procedures; business decisions, such as whether to continue using contractors or terminate contracts in the future; workforce composition, for example, a mix of employees and contractors; the nature of contractor arrangements, such as whether the contractors are on a long-term commitment; practical considerations, such as whether redeployment would require further training; and anticipated changes, such as upcoming parental leave, retirement, contract expiry, or a contractor temporarily filling a role until an employee is hired.

In light of the above observations, the High Court concluded that the FWC may make an enquiry as to whether an employer could have made changes to the use of its workforce to operate its enterprise so as to create or make available a position for a person who would otherwise have been made redundant.

Notably, the High Court did not determine whether the dismissals were unfair, nor did it decide whether it was reasonable for Helensburgh to redeploy the employees into roles occupied by contractors. Those questions were left for the FWC to resolve.

Take Home Messages

This case serves as a reminder to employers that in considering whether redeployment is ‘reasonable in all the circumstances’, it is appropriate to take into account a broad range of options.

The Court has confirmed that the FWC can consider whether an employer could have reorganised its workforce when deciding if a redundancy is genuine under the FW Act. This means it is important for employers to take into account redeployment opportunities in the context of the employer’s broader workforce strategy before dismissing an employee on the grounds of redundancy, particularly one who is entitled to protection against unfair dismissal. However, this does not necessarily mean that employers must reorganise their workforce to create redeployment opportunities.

Should you wish to discuss any matters concerning redundancy, please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au, or Annabelle Narayan on +61 8 8210 1292 or at anarayan@normans.com.au, or Adarsh Jacob on +61 8 8217 1372 or ajacob@normans.com.au.