Jurisdictional dispute over Fair Work Commission's assessment of genuine redundancies goes to High Court
The High Court has recently issued a significant decision concerning the powers of the Fair Work Commission (FWC) when considering whether or not a redundancy was genuine, particularly in relation to whether or not redeployment was an available alternative to termination.
In Helensburgh Coal Pty Ltd v. Bartley and others [2025] HCA 29, the employer operated a coal mine in NSW, engaging its own direct employees and supplementing the workforce with contractors through two labour hire providers.
In June 2020, due to an economic downturn, the employer terminated 90 employees and reduced the labour hire workforce by 40 per cent. Of the 90 employees, 47 were forced redundancies. Ultimately, 22 employees challenged the dismissals as unfair.
The employer raised the jurisdictional objection that the terminations were genuine redundancies. The hearings that followed were:
- A hearing by a single member of the FWC.
- An appeal by the employer to a Full Bench of the FWC.
- Re-hearing by the original single member of the FWC.
- Second appeal by the employer to a Full Bench of the FWC.
- Application by the employer to a Full Bench of the Federal Court.
- Appeal by the employer to the High Court.
Fair Work Commission required to consider redeployment opportunities
The most relevant question for determination by the High Court concerned s. 389(2) of the Fair Work Act, which reads:
“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:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
The High Court had to consider whether this section permits the FWC to inquire into whether an employer could have made changes to how it uses its workforce to operate its business, including whether it could potentially replace contractors with the redundant employees.
“Section 389 of the FW Act is a significant change in Australian workplace relations legislation. Unlike the Workplace Relations Act 1996 (Cth), s. 389 of the FW Act expressly requires the FWC to consider redeployment opportunities. There has therefore been a significant rebalance in favour of employees since the enactment of the FW Act.
This appeal confirms the authority of the FWC to make a particular type of inquiry. Because the FWC was permitted to make the inquiry into 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 an employee who would otherwise have been redundant, ground 1 is rejected.”
Presumably, some five years after the terminations, the dismissals will now be considered by FWC as to whether they were unfair, and if so, what remedy should apply.
Implementing redundancies
The decision is particularly significant for any employer facing the difficult prospect of making employees redundant. It makes it more relevant than ever that an employer must be able to show that it has genuinely considered all redeployment opportunities before implementing redundancies.
Where an employer uses contractors or labour hire employees to supplement its own workforce, it will be crucial that the employer has examined its capacity to replace external labour with employees who would otherwise be redundant. A decision to retain external labour ahead of making employees redundant will require credible business reasoning to withstand potential FWC scrutiny.
David McLaughlin is a Partner in the Workplace Relations group at Rigby Cooke in Melbourne.
