Industrious Conversations: Managing redundancy processes in Australia in 2025

Peter
Hello and welcome to Ashurst Legal Outlook, and the fifth episode in our Industrious Conversations series for 2025, bringing new insights into workplace developments in Australia from our leading Employment team here at Ashurst. I'm Peter McNulty, a partner in our Employment practice in Melbourne, and I'm joined today by my colleague Julia Sutherland, an Employment partner in Perth.

In this episode, we'll be talking about restructuring and redundancies. Julia, it's probably worth kicking off with asking, why are we talking about redundancies today?

Julia
Thanks, Pete. Well, we're talking about redundancy for a few reasons.

First, we're conscious that a lot of employers are facing cost pressures and looking for opportunities to streamline business operations and achieve efficiencies, including with the rollout of AI and what this may mean for the size and shape of workforces. Here at Ashurst, we're also seeing an increasing number of challenges to redundancy processes. Against this backdrop, it was timely that the High Court recently handed down its decision in Helensburgh Coal vs Bartley [2025] HCA 29. That decision highlights the breadth of considerations that should be given when considering redeployment options. So, maybe we start here.

Pete, do you want to take us through what the High Court's decision was about?

Peter
In this case, an employer had undertaken a restructure following a significant downturn in business. During the consultation process, the employer had been asked to mitigate the impacts of that restructure by reducing its reliance on contractors.

Now, the employer did agree to some insourcing, but didn't agree to terminate those contracting arrangements outright, and a number of employees were ultimately made redundant. Those employees then brought unfair dismissal claims. The employer argued those employees weren't entitled to unfair dismissal protection, because their dismissals were a case of genuine redundancy. The employees, on the other hand, argued that the dismissals weren't a case of genuine redundancy because it would have been reasonable in the circumstances for them to be redeployed within their employer's enterprise.

Now, by the time the matter got to the High Court, the High Court's objective was to determine the scope of the Fair Work Commission's inquiry when assessing whether it would have been reasonable in all of the circumstances to redeploy the employees within the employer’s enterprise.

The decision highlights the increasing complexity of navigating Australian employment laws, where once you might have been able to take a fairly straightforward approach. For example, from the perspective of a business: ‘we’re restructuring these employees, jobs are no longer required. There are no vacant roles, and therefore these roles are going to be made redundant and the employee is dismissed.’ Now there's going to need to be a much more nuanced approach.

Julia
In this context, this is what the court said specifically about how the Commission should assess whether a role is genuinely redundant. I quite like this because it's a little checklist for all of us to work off.

The Commission is required to pose a hypothetical question, so that is, whether at the time of the dismissal there was work, or a demand for work, within the employer's business or that of a related entity that could have been performed by the otherwise redundant employee? If there was work that could have been performed, the Commission must then ask itself whether it would have been reasonable for the employer to redeploy the otherwise redundant employee into a role that performs that work.

Interestingly, the High Court held that this is something to look at objectively, looking at all of the circumstances of the business. Further, while the views of the employer and the employee are relevant, they're not determinative.

The circumstances that the Commission is looking at might include the otherwise redundant employees’ qualifications and skills, but also the attributes of the employer's workforce, such as its procedures, its requirements, its business choices, decisions the business may make to terminate contracts in future and decisions regarding workforce composition.

However, it's important to recognise that the High Court is not saying that the Commission must disrupt how an employer manages its workforce to find roles for otherwise redundant employees. As you said, Pete, it's clarifying that the Commission is permitted to explore whether the employer could have made changes to workforce composition. In that context, whether the answer to that question is ‘yes’ or ‘no’ is likely to depend on what the employer says about its approach to labour arrangements and the terms of any contracts with third parties.

In Helensburgh it was interesting to note the commentary about the potential availability of roles for otherwise redundant employees, because contracts with third parties were soon to come to an end, or contractors were engaged on an as needs basis. One of the judges, in particular, cautioned 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 my view, the key takeaway from this decision is that as an employer, you need to consider the way in which your labour relations are managed and whether any of these arrangements could reasonably be altered to find roles for otherwise redundant employees. However, this will not always mean displacing contractors in favour of permanent employees, and if the issue is tested, it's likely that an employer representative in a court process will need to give evidence about the arrangements and what was and what was not reasonable at the time, with reference to the overall business circumstances.

Consequently, it might be that we see a position emerge that the evidence of an employer on this issue (tested, of course, by the surrounding circumstances) might be sufficient to satisfy the Commission on this point. So that's the key issue, from my point of view in the decision, but Pete, you mentioned the increasing complexity of navigating laws in this area. I know there are a few more considerations that we have been discussing. What are those in terms of the considerations employers should have in mind before terminating for redundancy?

Peter
Julia, I think there are a couple of considerations from a health and safety perspective as well.
The first of those, for employers to keep in mind, are the obligations under health and safety legislation to consult with employees where they're proposing changes that may affect the health and safety of workers. So employers need to be conscious that where those redundancy processes and restructures may impact on health and safety, there are going to be obligations to consult in accordance with those obligations as well.

Another area where we're seeing a number of employers needing to pay attention, at the moment, is the obligation to ensure the psychosocial health and safety of employees while undertaking these redundancy processes. Redundancy and restructuring processes are inherently times of uncertainty and stress for employees, and employers should be considering whether there's a need to undertake a risk assessment and what measures they could be putting in place to mitigate those risks to health and safety as they're going through those processes.

A mere reference to the employee assistance provider (EAP), is probably not going to be enough in itself when considering those psychosocial risks. Often things like ensuring clear communication, clear timeframes and giving employees certainty about the process can assist in reducing those risks to psychosocial safety.

Julia, there are a whole lot of other things that employers should be keeping in mind as well.

Julia
That's right - As you said at the start, where once this might have been a slightly more straightforward process, I think what's happening in employment law in general is everything is pointing to giving more considered thought to matters where once we might not have taken such an approach.

I think the first step is, and it goes without saying, that there needs to be a plan. If these decisions are made on the run or at pace without giving some considered thought before making final decisions, specifically around consultation and redeployment, your legal risk increases, and it can be difficult to manage it at the back end. So if you don't get it right up front, you might put the whole process at risk and be required to start again.

It's likely to help for the business reasons for the restructure and the redundancy to be clearly recorded.
You've touched on the importance of complying with consultation obligations, and as we know, they might be derived from an award or an enterprise agreement, but also the work health and safety legislation. In particular, if the Work Health and Safety Act consultation requirements apply, the consultation is a bit broader, insofar as it concerns workers and not just direct employees. So you might be consulting with your contractors.

In terms of considering redeployment, if you're concerned about unfair dismissal risk in particular, you should take a broad lens, not just considering vacant positions right now. So that involves, considering your use of contractors, labour hire, the terms of the contracts with those providers, the basis on which labour is being provided and whether it's reasonable to seek to replace the use of that labour with employees. However once again, that's going to be a business decision, and the High Court decision relates to unfair dismissal. So consequently, it's a bit of a balancing exercise as to what things are of concern to you when implementing these processes.

Peter
Julia, it's probably worth highlighting as well a recent Federal Circuit Court decision which related to the payment of entitlements on cessation as well. That case was Jewell vs Magnium Australia (No 2) [2025] FedCFamC2G 676. In that case, penalties were awarded against an employer for not paying termination entitlements on time, that is on the final day of employment.

Things like payment in lieu of notice, accrued leave entitlements and redundancy payments need to be paid upon the dismissal. It highlights the need for employers to be aware of their obligations under the Fair Work Act 2009 (Cth) with respect to paying entitlements on cessation and ensuring that they align the dates of dismissal to instances such as a payday to ensure compliance in those circumstances.

Julia
Thanks very much, Pete. That was great.

Peter
My pleasure, Julia.

Julia
Thank you for listening to this episode of Industrious Conversations on Ashurst Legal Outlook.
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Until then, thank you for listening, and goodbye for now.