Leading employment lawyers say the judgement has important implications for employers making redundancy decisions
The High Court has issued its hotly anticipated decision in Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29.
In short, the High Court has found that, when considering a ‘genuine redundancy’, the Fair Work Commission (FWC) can consider whether it would have been reasonable to redeploy an employee to a role otherwise performed by a contractor.
The decision has important implications for employers making redundancy decisions.
Background of the case
A redundancy occurs where a business no longer requires an employee’s position to be performed.
That is not the end of the matter however.
Indeed, if the employer wants protection from an unfair dismissal claim in a redundancy scenario, it will need to:
- consult with the employee and/or the employee’s representative in accordance with any applicable award or enterprise agreement; and
- consider options for redeploying the employee to another role/position and redeploy the employee if this is reasonable in the circumstances.
The decision
The High Court decision examined the dismissal of a group of employees at a coal mine operated by Helensburgh Coal Pty Ltd (Helensburgh Coal).
Due to a sharp decline in business, Helensburgh Coal reduced the size of its workforce, which involved dismissing direct employees due to redundancy and reducing the number of contractors performing similar roles.
During the dismissal process, the union argued that instead of being dismissed, the employees should be redeployed to roles otherwise performed by contractors.
All 22 of the dismissed employees made unfair dismissal claims in the FWC.
In its decision, the High Court clarified that, when assessing whether a redundancy was a genuine redundancy and specifically whether it would have been reasonable to redeploy an employee to another role, the FWC may enquire into a broad range of matters, including whether it would have been ‘reasonable in all the circumstances’ to replace existing contractors (or labour hire) with employees.
Lessons for employers
There are a range of important lessons for employers:
1) Employers should take a broad approach to considering possible redeployment options for an employee affected by redundancy – do not simply focus on ‘open’ or ‘vacant’ positions, but also consider whether any reasonable changes could be made to ‘create’ a suitable role for redeployment. This might involve considering changing how many labour-hire or contractors are engaged or even considering whether there are any impending retirements, resignations or extended leave periods which might ‘free up’ an available role;
2) Employers need to be guided by what is reasonable in all the circumstances - including the circumstances of the employee and circumstances of the business. This would involve considering the skills and qualifications of the employee and whether retraining might allow for redeployment to occur; and
3) Employers should not be restricted by artificial rules or assumptions about what can and cannot constitute an option for redeployment – the enquiry is a broad one: what is reasonable in all the circumstances?
Artificial rules/assumptions include the following:
- That an employee’s prospects for redeployment are ‘set in stone’ at the time of a dismissal.
- That redeployment requires a particular vacant ‘position’ i.e. on the Organisation’s intranet or ‘org chart’.
- That redeployment can never require a business to change the way it uses contractor labour or external service providers.
As always, the Helensburgh Coal case was decided on its own unique facts.
Importantly, the decision does not mean that employers are always required to remove all contractor labour before making any employees redundant.
What effect will the Decision have?
Most significantly the decision will influence the dynamics of consultation in redundancy scenarios.
Unions (and potentially individual employees) may be encouraged to be far more ambitious during a consultation process and may provide suggestions for changes to the enterprise to enable redeployment for affected employees.
Equally, when making restructuring/reorganisation decisions, employers will need to be more conscious about the prospect that it is reasonable in all the circumstances to redeploy displaced employees.
Once a dismissal occurs, the High Court decision will also give rise to fresh challenges for employers in unfair dismissal claims to establish the ‘genuineness’ of a redundancy.
Employers will need actual evidence/data to establish that it would not have been reasonable in all the circumstances to redeploy the employee.
This is most likely to give higher unfair dismissal settlements for redundancy claims.
Julian Arndt and Sam Cahill are Director and Senior Associate at Australian Business Lawyers & Advisors (ABLA)
