The High Court has handed down a major decision on the obligations of employers to find redeployment options within its organisation for employees who are being made redundant.
In Helensburgh Coal Pty Ltd v Bartley & Ors1 the High Court confirmed that, when deciding whether a dismissal is a “genuine redundancy” under the Fair Work Act 2009 (Cth) (Act), the Fair Work Commission (Commission) may inquire broadly into whether an employer could reasonably have redeployed an employee within its enterprise — including by insourcing work done by contractors or by restructuring to create a role. That decision increases the evidentiary and procedural expectations on employers when making redundancy decisions and provides a compelling case for employers to update their redundancies processes.
Background
Helensburgh Coal operated the Metropolitan Mine and, during the COVID-19 downturn, scaled back operations. In 2020, it dismissed about 90 employees and continued to use contractors or labour hire workers to perform work formerly undertaken by some of those employees. Twenty-two dismissed employees (Employees) applied to the Commission for remedies for unfair dismissal, arguing their terminations were not “genuine redundancies” because it would have been reasonable to redeploy them to work being done by independent contractors.
Ultimately the Commission decided that it would have been reasonable in all circumstances to redeploy the Employees. Helensburgh Coal appealed the decision to the Federal Court of Australia (Federal Court) on the basis that the Commission applied the wrong test in assessing whether it would have been reasonable in all of the circumstances for the Employees to be redeployed. The Federal Court dismissed the appeal.
Helensburgh Coal appealed the Federal Court decision to the High Court of Australia (High Court). The key argument Helensburgh Coal contended was that the Commission was not permitted to inquire as to whether an employer could have made changes to its enterprise to create or make available a position for an employee who would otherwise be made redundant. Helensburgh Coal argued that the Commission is required to take the enterprise as it is ‘found’ on the date of dismissal, not as the Commission may have reorganised it.
The High Court unanimously dismissed the employer’s appeal, confirming the Commission may consider whether the enterprise could have been changed to enable redeployment — including insourcing work being done by contractors or creating a new role.
The High Court’s judgment clarifies how the “genuine redundancy” test in the Act should be applied in practice. Relevant practical points from the decision are:
- Enterprise is to be understood broadly. The employer’s “enterprise” means the business, activity or undertaking and is not confined to the way the employer currently uses its workforce. The Commission can examine the enterprise in the round when assessing redeployment.
- Redeployment does not require a pre-existing vacant role. The inquiry is whether there was work or a demand for work within the employer’s enterprise that the employee could have performed — even if that work was at the time being performed by contractors or casuals.
- Reasonableness is an objective, contextual question. The question is whether redeployment would have been reasonable at the time of dismissal, assessed objectively having regard to the nature of the enterprise, the employee’s attributes, timing, costs and other commercial considerations. Employer and employee perspectives matter but do not alone decide the issue.
- The Commission may look at whether reasonable changes to the enterprise could have created redeployment opportunities. That includes considering the nature of the workforce, contractual arrangements with providers, whether roles could be insourced, the practicalities and costs of retraining, and the employer’s operational and strategic choices.
Justice Edelman and Justice Steward offered further remarks on the facts and on how the reasonableness inquiry may apply in particular circumstances; those factual observations provide useful guidance but do not expand the binding scope of the High Court’s unanimous ruling on the Commission’s jurisdiction to make the inquiry.
Justice Edelman commented that there were jobs imminently available to which the Employees could have been redeployed. The evidence showed that the relevant contractors could have been replaced quickly, if not immediately, and the contract with the organisation that supplied the contractors was due to expire shortly after the Employees were dismissed.
By contract, Justice Steward commented that ‘redeployment of a person at the expense of another person’s position would be a very grave step to take and would be unlikely to be a reasonable outcome’. He further noted that this could be applied to independent contractors or casual labourers in addition to employees.
What this means for employers — the practical implications
The decision highlights that redundancy is an outcome of last resort where redeployment within the enterprise would have been reasonable. Employers should have evidence to show that they conducted a comprehensive and objective assessment of whether redeployment was reasonably available before concluding a dismissal was a genuine redundancy.
Practically, employers should consider taking the following steps before implementing redundancies:
- Map who does what. Maintain a simple register showing which tasks are performed by employees, contractors and labour hire, with contract end dates and key terms. Focus first on roles likely to be affected by restructures or cost reductions.
- Use a standard redeployment-assessment form. Using a consistent, signed form helps demonstrate that redeployment options were considered objectively and contemporaneously. Consider documenting:
- the tasks in scope (including those performed by contractors);
- the employee’s relevant skills, qualifications and availability;
- the training or licence requirements and likely time/cost involved;
- contractual restraints such as exclusivity;
- commercial consequences of insourcing; and
- the decision and reasons by the relevant manager/HR.
- Review contractor/supplier contracts before major workforce changes. Check for exclusivity or other clauses that would prevent insourcing, and record the commercial cost and notice required to replace or reduce contractors. Factor this into the reasonableness assessment.
- Document contemporaneously. Keep dated records of meetings, analyses and alternatives considered. Casual conversations are weak evidence; contemporaneous written records are far stronger.
- Consult properly with affected employees. Provide sufficient information on the business reasons, redeployment options considered (including why contractor roles were or were not suitable) and give employees a genuine opportunity to respond or to propose alternatives. Ensure you comply with any consultation obligations under awards or agreements.
- Train managers and HR. Ensure decision-makers understand the broadened redeployment inquiry and follow the updated protocol; emphasise mapping, documentation and early legal/IR involvement in borderline cases.
- Seek early legal advice on borderline matters. Where proposed redundancies overlap substantially with contractor work or where insourcing decisions would be material, involve legal or IR advisors before finalising dismissals.
These steps reduce legal risk and will be critical evidence if a decision is challenged.
Practical pitfalls to avoid
- Don’t treat contractor work as automatically off limits. Where contractors perform enterprise work, redeployment may still be reasonable.
- Don’t rely on informal memory. Casual conversations are weak evidence; contemporaneous written records are far stronger.
- Don’t confuse commercial preference with reasonableness. It may sometimes be commercially reasonable to continue using contractors — but you must show that judgment, not simply assert it.
How can we help?
If your organisation is considering a restructure, our workplace relations team can help you stress-test your processes, strengthen decision-making, navigate your obligations with confidence, and balance compliance with a people-centred approach that reduces dispute risk and reinforces trust.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.