High Court clarifies scope of employee obligations under redundancy provisions

On 6 August 2025, the High Court of Australia (High Court) unanimously dismissed an appeal from Helensburgh Coal Pty Ltd (Helensburgh Coal), challenging a decision of the Full Court of the Federal Court of Australia regarding an employer's obligations under section 389 of the Fair Work Act 2009 (Cth) (FW Act).

Key takeaways for employers

• The High Court's Helensburgh Coal decision clarifies how the Fair Work Commission assesses whether redeployment is possible in cases of "genuine redundancy".
• The Commission may consider whether an employer could adjust workplace operations to create or make available work for an otherwise redundant employee.
• While not required to make "significant" changes, employers may be expected to adjust service contracts or third-party arrangements to allow employees to take over contractor duties.
• The decision reflects the broader rebalancing in favour of employee rights under the FW Act.
• Employers must go beyond a basic search for vacancies and actively assess whether roles could reasonably be created through operational changes.
• Redeployment assessments must consider whether changes to create work are reasonable in the circumstances.

Background

Helensburgh Coal employed workers to operate a coal mine owned by Peabody Energy in Helensburgh, New South Wales (Mine).

In 2018 and 2019, Helensburgh Coal engaged two companies, Nexus Mining Pty Ltd (Nexus) and Mentser Pty Ltd (Mentser) to provide various services related to the Mine. Nexus and Menster engaged contractors to provide those services (Contractors).

As a result of the COVID-19 pandemic significantly reducing the demand for coking coal, in May 2020 Helensburgh Coal gave notice to a number of employees that it had resolve to restructure its operations at the Mine, by reducing the number of crews and reducing the number of days worked per week, thereby requiring fewer workers.

During consultation for the redundancies arising from the restructure, Helensburgh Coal was asked by workplace representatives to mitigate the impact of the restructure on employees by reducing its reliance on the Contractors.

While Helensburgh Coal insourced some of the Contractors' work to its existing employees, the restructure still resulted in 47 forced redundancies at the Mine. Helensburgh Coal elected to continue under its existing services agreement with Nexus and Mentser, despite the redundancies.

Litigation history

In July 2020, 22 employees made redundant by reason of Helensburgh Coal's restructure (the Employees) applied to the Fair Work Commission (Commission) for remedies for unfair dismissal under section 394 of the FW Act. The Employees contended that their dismissal was not a case "genuine redundancy" as Helensburgh Coal could have redeployed them to other roles that contractors from Nexus and Mentser were still performing. Helensburgh Coal objected to the applications on the basis that the dismissals were cases of "genuine redundancy".

Section 389(2) of the FW Act provides that:

A person's dismissal is not a case of genuine redundancy if it have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer's enterprise; or (b) the enterprise of an associated entity of the employer

At first instance before the Commission, Commissioner Riordan held that the termination was not a "genuine redundancy", on the basis that, applying section 389(2), it would have been reasonable in all the circumstances to redeploy the Employees into roles performed by the Contractors.

Helensburgh Coal appealed that decision to a Full Bench of the Commission. The Full Bench accepted Helensburgh Coal's contention that the Commission was required to and failed to consider the feasibility, from the employer's perspective, of insourcing the Contractors' work in addition to considering the nature of that work, including whether or not it was specialised. The Full Bench allowed the appeal and remitted the matter to Commissioner Riordan.

At second instance, Commissioner Riordan held that much of the work performed by the Contractors was not specialist work, and that there was "no easily identifiable reason why [the Employees] could not be performing this work". Commissioner Riordan again found that the terminations of the Employees were not cases of "genuine redundancy".

Helensburgh Coal again appealed to a Full Bench of the Commission. The Full Bench dismissed the appeal and said that Commissioner Riordan turned his attention to the matters identified in the first appeal decision as being relevant matters to consider in deciding if insourcing was feasible.

Helensburgh Coal then applied to the Full Federal Court for orders quashing all four decisions and to compel the Commission to cease dealing further with the unfair dismissal applications. The Full Federal Court dismissed the application.

Helensburgh Coal appealed the Full Federal Court's decision to the High Court.

High Court appeal and the scope of the "genuine redundancy" inquiry

The principal issue before the High Court concerned the scope of the consideration required by section 389(2) of the FW Act.

Helensburgh Coal's principal contention was that in applying section 389(2) of the FW Act - whether it would have been "reasonable in all the circumstances for a person to be redeployed within the employer's enterprise" - the Commission was not permitted to inquire into whether an employer could have made changes to its enterprise so as to create or make available a position for an employee who would otherwise have been redundant.

In assessing the scope of the Commission's "genuine redundancy" inquiry, in their joint judgment, Chief Justice Gageler and Justices Gordon and Beech-Jones addressed each element of the inquiry under section 389(2):

• the term "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
• the term "redeploy" does not, by its ordinary meaning, exclude or prohibit some change to how an employer uses its workforce to operate its enterprise that facilitates redeployment. Rather, "redeployed" 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
• the term "would have been" in the inquiry of whether redeployment "would have been reasonable" directs the Commission to consider a hypothetical situation, being a situation changed from what it was
• the reasonableness element of the inquiry requires the Commission to consider reasonableness not only from the view of the employer or the employee, but in an objective sense; and
• the phrase "all the circumstances" points against the existence of binding rules concerning the application of section 389(2).

Chief Justice Gageler and Justices Gordon and Beech-Jones held that the language of section 389 did not prohibit the Commission inquiring into whether an employer could have made changes to how its workforce operates, so as to create or make available a position for an employee who would otherwise have been redundant.

Justice Steward broadly agreed with the joint judgment, finding that while the Commission was limited to assessing the "employer's enterprise" as it existed at the time of the dismissal, including its policies and practices in relation to the use of labour, the language of section 389 does not otherwise prohibit the Commission from asking whether an employer could have made changes to its enterprise so as to create or make available a position that would otherwise have been made redundant. However, Justice Steward qualified that the scope of the inquiry may ultimately turn on the evidence adduced before the Commission in each case.

Taking a slightly narrower approach, Justice Edelman agreed with Justice Steward that the Commission was limited to assessing the "employer's enterprise" as it existed at the time of the dismissal, and that this included the employer's "policies and practices in relation to the use of labour, including as to whether to use permanent employees, independent contractors, casual labour, or contractors", but held that the Commission had no authority consider the reasonableness of a redeployment that would involve a significant change to these matters such that there would be a change to the "enterprise".

In their majority judgment, Chief Justice Gageler and Justices Gordon and Beech-Jones, (and, separately, Justice Steward) held that because the Commission was permitted to make the inquiry into whether an employer could have made changes to how it uses its workforce so as to create or make available a position for an employee who would otherwise have been redundant, the Commission could inquire into whether it would have been reasonable in all the circumstances for the Employees to be redeployed in Helensburgh Coal's enterprise to perform work that was being performed by the Contractors.

While there were slightly different views on the scope of the Commission's "genuine redundancy" inquiry, the High Court unanimously rejected Helensburgh Coal's appeal.

For more information about how this could impact you or your organisation, please contact a member of Lander & Rogers' Workplace Relations & Safety team.