Redundancy vs redeployment: avoiding unfair dismissals

Although employees may be dismissed in cases of "genuine redundancy", to avoid unfair dismissal claims employers should take care to consider other available options before making employees redundant.

The Full Federal Court recently interpreted and clarified the definition of "genuine redundancy" to determine whether 22 employees of the Metropolitan Coal Mine in Helensburgh, who had been made redundant in 2020 as a result of restructuring, were unfairly dismissed.

In its judgment in Helensburgh Coal Pty Ltd v Bartley (Helensburgh Coal),¹ the Court found that the 22 employees were unfairly dismissed. This was because the mine could have redeployed these employees into roles that at the time were occupied by contractors whose contracts expired around the time of the restructure, but had been renewed for a further 12-month period.

Key takeaways for employers

The Court in Helensburgh Coal made it clear that when assessing whether current employees could be redeployed in other roles rather than be made redundant, employers should consider whether:

• there are any currently available roles in their enterprise or in the enterprise of an associated entity;
• any suitable roles may arise in the near future, for example due to contractors' contracts expiring;
• providing further training to the current employees could allow them to fill other available positions in the business; and
• any impracticality caused by redeployment renders it unreasonable, in all the circumstances, to facilitate a redeployment.

By taking the above factors into account, employers may avoid unfair dismissal claims from employees alleging that their redundancy was not a "genuine redundancy".

Background to Helensburgh Coal

This matter had been heavily litigated prior to reaching the Full Federal Court, having been the subject of four Fair Work Commission decisions. The procedural history and background facts are briefly discussed below.

On 24 June 2020, 22 employees of the Metropolitan Coal Mine were notified that they were to be made redundant. On 10 July 2020 these employees filed unfair dismissal applications, and the parties subsequently agreed that the applications should be heard together.

At the initial Fair Work Commission hearing,² which was heard by Commissioner Riordan, the key issue was whether the employees' terminations were genuine redundancies. Commissioner Riordan found that as it would have been reasonable for the employer to redeploy the dismissed employees the redundancies were not genuine, and therefore the employer's jurisdictional objection to the employees' applications was dismissed.

The employer then appealed the Commissioner's decision to the Full Bench of the Fair Work Commission,³ primarily arguing that the Commissioner had incorrectly applied the test in section 389(2) of the Fair Work Act of whether redeployment was "reasonable in all the circumstances".

The Full Bench found that although the test in section 389(2) had been correctly applied, the Commissioner did not have an evidentiary basis to reach a particular conclusion he made in his decision regarding the insourcing of employees. For this sole reason, the Full Bench allowed the employer's appeal and remitted the matter back to the Commissioner for determination.

Upon reconsideration of the matter, Commissioner Riordan again found that the redundancies were not genuine, as the dismissed employees could have reasonably been redeployed in roles undertaken by contractors at the mine.⁴

Shortly thereafter, the employer appealed Commissioner Riordan's decision to the Full Bench of the Fair Work Commission,⁵ again arguing that the Commissioner had incorrectly applied the test in section 389(2) of the Fair Work Act. Although the Full Bench held that there were some factual errors in the Commissioner's decision, it found that these errors were not significant errors of fact, and therefore dismissed the appeal.

Two months later, the employer made an application for judicial review of the four Fair Work Commission decisions.⁶

Genuine redundancy and reasonableness of redeployment

The Full Federal Court in Helensburgh Coal emphasised that a redundancy will not be genuine if the redeployment of employees to other roles is reasonable in all the circumstances. These concepts are discussed below.

Genuine redundancy

"Genuine redundancy" is defined in section 389(1) of the Fair Work Act as occurring where the following two criteria are met:

• an employer no longer requires the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise; and
• the employer has complied with any relevant consultation obligations.

Section 389(2) provides an exemption to an employer's immunity in relation to redundancy, and specifies that a dismissal will not be a genuine redundancy "if it would have been reasonable in all the circumstances for the person to be redeployed in the employer's enterprise or the enterprise of an associated entity".

Reasonable in all the circumstances

In Helensburgh Coal, to determine whether the redundancies were genuine the Court analysed what was "reasonable in all the circumstances" at the point in time when the former employees were made redundant.

A key interpretative issue in relation to this was whether the Full Bench of the Fair Work Commission's interpretation of redeployment (being that it is not necessarily restricted to redeployment to positions not currently occupied), was correct.

The Court upheld the Full Bench's interpretation of redeployment, finding:

"Unquestionably, a construction consistent with that observation introduces a measure of complexity that would be absent if 'redeployed' were read as 'redeployed to a position not currently occupied'. Nonetheless, it is inherent in the existence of the exemption to immunity from relief for unfair dismissal that a measure of complexity was intended. The challenge for the applicant is to establish that there was a limit to that intention and that the construction favoured by the Full Bench goes beyond that limit."⁷

In coming to the conclusion that it would have been reasonable in all the circumstances to redeploy the 22 employees in roles undertaken by contractors at the mine, the Court identified that:

• what is "reasonable in all the circumstances" is a very wide consideration and gives significant scope to consider all alternatives to redundancy;
• when considering redeployment, employers should not only consider other currently available positions, but also positions that are about to become available;
• even where further training would be needed to redeploy employees in another role, this is not necessarily a barrier to redeployment; and
• other relevant considerations may include the skill of employees, their capacity to undertake other work, and the operational impracticality of insourcing.

¹ [2024] FCAFC 45.

² Bartley v Helensburgh Coal Pty Ltd [2020] FWC 5756.

³ Helensburgh Coal Pty Ltd v Bartley (2021) 306 IR 219.

⁴ Bartley v Helensburgh Coal Pty Ltd [2021] FWC 6414.

⁵ Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166.

⁶ By an originating application dated 18 November 2022, the applicant seeks the issue of a writ of certiorari quashing all four FWC decisions and a writ of prohibition to compel the FWC to cease dealing further with all the unfair dismissal applications. The Court noted in its decision that it was only the second Full Bench appeal decision that mattered as it is was the only one of the four decisions that had (or purported to have) operative or legal effect.

⁷ Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45 at [61].