Redundancy redefined: High Court of Australia clarifies redeployment rules

What you need to know

• The High Court has today clarified the scope of the Fair Work Commission's inquiry when considering reasonableness of redeployment for the purposes of unfair dismissal laws.
• The High Court has unanimously held that the FWC is permitted to inquire whether an employer could have made changes to how it uses its workforce when determining whether a dismissal is a genuine redundancy.

What you need to do

• Before making any final decision to implement terminations of employment for redundancy, employers should consider what opportunities for redeployment exist in the context of their broader workforce strategy, particularly in cases where the composition of a workforce includes employees and contractor workers, including those engaged through labour hire and other outsourcing arrangements.

Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 – Factual background

In 2020, as a result of the COVID-19 pandemic, the demand for coking coal that was processed at the Metropolitan Coal Mine operated by Helensburgh Coal Pty Ltd (Helensburgh) decreased significantly. Helensburgh decided to shift from a five crew, seven day per week operation to a four crew, six day per week model. This change in work model meant that Helensburgh would require fewer workers.

During consultation with its employees about the proposed restructure, Helensburgh was asked to mitigate the impact of its decision on its employees by reducing its reliance on the employees of two contractors engaged at the mine, Nexus Mining Pty Ltd (Nexus) and Mentser Pty Ltd (Mentser).

Ultimately, Helensburgh implemented the restructure and reduced its workforce. The number of workers engaged via contractors fell by approximately 40% and the number of employees engaged directly by Helensburgh reduced by 90. At the time that Helensburgh dismissed its employees on redundancy grounds, eight Mentser employees and around 90 Nexus employees remained engaged to work at the mine.

Procedural history

Twenty two former employees of Helensburgh brought unfair dismissal claims against Helensburgh in the Fair Work Commission (FWC), claiming that their dismissals were not cases of genuine redundancy. Helensburgh objected to the applications on the basis that the terminations were cases of "genuine redundancy" under section 389 of the Fair Work Act 2009.

Following earlier decisions, a single Commissioner of the FWC held that the terminations were not cases of "genuine redundancy" because it was feasible for Helensburgh to insource some of the work being performed by contractor workers. On appeal to a Full Bench, this decision was upheld, despite the Full Bench finding errors in it.

Helensburgh applied to the Full Court of the Federal Court of Australia for judicial review of the FWC decisions. The Full Court dismissed Helensburgh's application. Helensburgh was granted special leave to appeal the decision to the High Court in September 2024.

The statutory regime

The Fair Work Act contains a framework for the unfair dismissal of national system employees and the granting of remedies for unfair dismissal. A person is unfairly dismissed if their dismissal is not a case of "genuine redundancy".

Section 385(d) of the Fair Work Act acts as a limitation on the FWC's unfair dismissal jurisdiction where dismissals for operational reasons are concerned. However, whether an employer may rely on this jurisdictional objection depends on whether the relevant dismissal is a "genuine redundancy" as defined in section 389(2). This provides that a person's dismissal was 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 or that of an associated entity.

Key issue before the High Court

The key issue for consideration by the High Court was the correct construction of section 389(2) of the Fair Work Act. That is, is the FWC permitted to consider whether the employer could have made changes to how it uses its workforce to operate its business, when the FWC is inquiring whether it would have been reasonable in all of the circumstances for a person to be redeployed within the employer's enterprise?

A second issue also arose about whether a FWC decision that a dismissal is a "genuine redundancy" is a discretionary decision. In this article, we focus on the first and key issue.

High Court decision

In a joint decision, Gageler CJ, Gordon and Beech-Jones JJ commenced their inquiry by noting that section 389(1)(a) – whether a person's employer no longer requires the person's job to be performed because of changes in operational requirements - is a factual inquiry. Their Honours noted that it is the employer's decision to no longer require a person's job to be performed by anyone. The provision does not look to whether the employee's position, in terms of job title, was no longer required, but whether their "job", in the sense of the nature of the work they performed, was no longer required. Reasonableness is not relevant to the inquiry under section 389(1)(a).

However, unlike section 389(1), section 389(2) is qualified by a requirement of reasonableness. A person's dismissal was not a case of genuine redundancy "if it would have been reasonable in all the circumstances for the person to be redeployed…". Their Honours noted that the language of the section is broad and referred to the elements of the inquiry as follows:

• First, the employer's "enterprise" is its "business, activity, project or undertaking". It is not appropriate for the FWC to disregard the nature of the employer's enterprise. However, the nature of the employer's "enterprise" is not defined by reference to how the employer uses its workforce to operate its enterprise, or why it does so in that manner as these circumstances are not the "business, activity, project or undertaking".
• Second, the inquiry is whether it would have been reasonable in all the circumstances for the person to be "redeployed". "Redeployed" does not require there to be a vacant position. By its ordinary meaning, "redeploy" does not exclude or prohibit a change to how an employer uses its workforce to operate its enterprise that facilitates redeployment. Rather, it looks to whether there was work, or a demand for work, within the employer's enterprise or an associated entity's enterprise that could have been performed by the otherwise redundant employee.
• Third, the inquiry is whether redeployment "would have been reasonable". This directs the FWC to consider a hypothetical situation at the time of the dismissal. The inquiry is what, at the time of the dismissal, could have been done to redeploy the employee within the employer's enterprise?
• Fourth, is a "reasonableness" inquiry. This is an objective question to be determined by the FWC. Although the employer and employee's perspectives on this issue are relevant, these are not the sole consideration. Rather, it is an inquiry as to reasonableness in the context of the employer's enterprise, with regard to the nature of that enterprise.
• Fifth, the inquiry is whether redeployment would have been reasonable in "all the circumstances." Their Honours noted that these words are "unmistakably broad" and point against the existence of binding rules. Their Honours went on to note that this phrase can include the otherwise redundant employee's attributes, attributes of the employer's workforce such as procedures, business choices, decisions to terminate contracts in future and decisions regarding the nature of an employer's workforce and workforce composition and these circumstances are not directed at the size, scope or nature of the enterprise which are fixed at the date of dismissal. In this context, "the language of s 389 does not prohibit asking whether an employer could have made changes to how it uses its workforce to operate its enterprise so as to create or make available a position for a person who would otherwise have been redundant."

Because the High Court found that the FWC was permitted to make an inquiry into whether an employer could have made changes to how it uses its workforce to operate its enterprise, Helensburgh's appeal on this primary ground was dismissed.

Notably, because of the confined nature of the issue before the High Court, the court did not determine the reasonableness or otherwise of possible redeployment in Helensburgh's circumstances.

Justices Edelman and Steward issued separate reasons of judgment. Whilst both ultimately supported the majority's decision, their Honours made additional comments on what may constitute an employer's "enterprise". His Honour Justice Edelman agreed with Justice Steward that an employer's enterprise includes the "policies, processes, procedures, strategies and business choices of the enterprise, including any plans it had for the future" at least where those matters are important aspects of an employer's enterprise, but expressed the view that the FWC has no authority to consider the reasonableness of a redeployment that would involve any significant change to the employer's policies etc. Whilst Justice Steward accepted that section 389 does not prohibit asking whether an employer could have made changes to its enterprise to create or make a position available, his Honour expressed the view that it would be difficult to conclude that redeployment at the expense of another person's position would be "a very grave step to take and would be unlikely to be reasonable".

In this case, Justice Edelman commented that there were jobs "imminently available" in the context that Helensburgh's contractor workers were supplied on an "as needs" basis to do the work, without any continuing obligation to request them and that one of the relevant contracts was due to expire shortly after the employees were dismissed. This factual background appears to have had some relevance.

Key takeaways

The decision of the High Court outlines the elements that the FWC must follow when considering whether redeployment would have been reasonable in all the circumstances. For those concerned about potential unfair dismissal risk, employers are now on notice that the FWC has permission to make broad ranging inquiries into this issue. As such, before making any final decision to implement terminations of employment for redundancy employers should consider what opportunities for redeployment exist in the context of their broader workforce strategy, particularly in cases where the composition of a workforce includes employees and contractor workers, including those engaged through labour hire and other outsourcing arrangements.

Links to related article

Employment Law Update - Recent developments in managing employees in Australia (July 2024)