With the recent economic climate, the number of redundancies has risen, as businesses attempt to remain viable. Employers look within their organisations for job positions no longer needed and as a result terminate employees holding those positions.
Redundancies are not to be used as a performance management tool or as a form of disciplinary process. They must be genuine.
Under section 389 of the Fair Work Act 2009 (Cth) (Act), a termination of employment will be a “genuine redundancy” if it satisfies three requirements:
- Job no longer required – The employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the enterprise.
- Consultation – The employer complies with any obligation in a modern award or enterprise agreement to consult about the redundancy.
- Redeployment – It would not have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.
- Job no longer required
A job is a collection of functions, duties and responsibilities entrusted to an employee. For a job to no longer be required, the courts will look at whether there are any functions or duty left to be performed noting that there may be aspects of a role’s duties still being performed by other roles. The test is whether the job itself that was previously performed by an employee still exists within the business. It is an employee’s ‘job’ that is no longer required to be performed, rather than the employee’s ‘duties’.
- Consultation
Modern Awards and Enterprise agreements contain consultation requirements for major work changes which includes redundancy case. Consultations should be meaningful and should be engaged in before an irreversible decision to terminate has been made. A failure to consult with employees about redundancy can mean that the Fair Work Commission may find that it was not a case of genuine redundancy
- Redeployment
A dismissal due to redundancy will not be one of ‘genuine redundancy’ if it would have been reasonable in all the circumstances to redeploy an impacted employee. Some relevant factors to consider include but are not limited to:
- Are there available alternative roles?
- If yes, what is the nature of any available roles? Where are they located? How much do they pay?
- Is the employee a suitable fit for any available role? Do they have the relevant skills, qualifications and experience? Is the role less senior/more senior than employee’s current role?
In Helensburgh Coal Pty Ltd v. Bartley & Ors [2025] HCA 29, the High Court this week held that the reasonable redeployment requirement does not only require consideration of whether redeployment could have occurred within the employer’s enterprise at the time of dismissal, based on any position vacancies that existed at that time, but also involves consideration of any changes that the employer could have made to its enterprise to create space for the employees, such as by ending current agreements with contractors.
Not meeting the above three requirements can lead to a redundancy being not genuine and thus, an unfair dismissal. If you need further information or assistance, please contact BetterHR’s experienced HR consultants, and qualified lawyers on 1300 659 563 or visit: Subscribe to BetterHR.
