What Makes a Genuine Redundancy? Understanding Employer Obligations After the High Court Case

A recent High Court ruling in the Helensburgh Coal case has prompted employers and businesses to reassess their understanding of what constitutes a genuine redundancy. This landmark decision emphasised a crucial element of redundancy processes: the need to broaden the scope of redeployment considerations beyond simply looking at vacant positions within the organisation.

The three pillars of genuine redundancy under the Fair Work Act

When examining genuine redundancy situations, employers must refer to the Fair Work Act 2009 (Cth), specifically Section 389, which establishes three criteria for determining genuine redundancy:

First – the employer must demonstrate that the employee’s position is no longer required to be performed by anyone due to operational changes within the business. 

Second – where employees are covered by modern awards or enterprise agreements, employers must fulfill their consultation obligations throughout the redundancy process. 

Third – and particularly relevant to the recent judicial decision, employers must thoroughly assess whether the affected employee could reasonably be redeployed within the organisation or able to be provided with suitable alternative employment.

The expanded definition of redeployment in genuine redundancy cases

According to our Workplace Relations Advisor, Emily Diaz, while most employers consider redeploying staff into existing vacant roles, the recent court decision appears to have significantly broadened this obligation. In this matter, the Fair Work Commission and the Courts examined not merely whether vacancies existed, but whether positions currently occupied by contractors could have been filled by the redundant employee. 

This broader interpretation resulted in a finding of a non-genuine redundancy, highlighting a pivotal shift in how redeployment obligations are assessed. 

Employers need to examine potentially all relevant opportunities within their business structure, including positions held by contractors or labour hire workers. Whilst it appears that the definition of suitable alternative employment has been somewhat broadened, the more salient point is that the search needs to be deep, documented, and not what could be perceived as a cursory ticking the box exercise.

Common Red Flags That Indicate Non-Genuine Redundancy

Given the complexity of these new requirements, we sought expert advice to identify key warning signs and actionable steps for employers navigating redundancy processes.

• Failure to Consider Existing Workforce Arrangements

One of the most significant red flags occurs when organisations haven’t thoroughly examined their workforce arrangements. Employers must investigate current vacancies and assess whether affected employees could transition into these roles. This includes evaluating whether contractors or labour hire workers employed on an “as needed” basis could be disengaged to create opportunities for permanent employees facing redundancy.

• Insufficient Justification for Role Unavailability

The Helensburgh Coal case confirmed that the Fair Work Commission has the power to make detailed inquiries into what constitutes genuine redundancy. This broader investigative scope means employers face greater scrutiny regarding their restructuring decisions and must provide clear, transparent reasoning as to why alternative positions aren’t available for employees facing redundancy. 

Vague or poorly documented justifications expose organisations to unfair dismissal claims.

• Inadequate Consultation Processes

A common compliance failure occurs when businesses initiate redundancies without meeting appropriate consultation obligations. This becomes particularly critical when employees are covered by specific awards or protected by enterprise agreements involving union representation. For genuine redundancy status, employers must demonstrate they have fulfilled all consultation requirements outlined in relevant industrial instruments.

Key Strategies For Managing Genuine Redundancy Processes

While the Fair Work Commission cannot fundamentally alter business operations, activities, or projects, the recent High Court decision clarified that the FWC can conduct broader inquiries into whether employers could have made workforce changes to redeploy affected employees.

Based on expert advice from our workplace relations adviser, here are three essential recommendations for businesses to comply with Fair Work Act redundancy requirements:

1. Engage HR Expertise for Objective Assessment

Our specialists frequently observe businesses misinterpret awards and enterprise agreements when dealing with redundancies, which can escalate into significant compliance issues. Since genuine redundancy processes are not straightforward, it is highly recommended that qualified compliance experts assess whether the business is complying with the redundancy requirements and provide advice on ensuring the redundancy is carried out genuinely. 

2. Invest in Leadership Training for Redundancy Conversations

In our years of upskilling managers and senior executives, our experts have noted a consistent pattern: leaders frequently find themselves managing uncomfortable conversations with vulnerable employees. Redundancy discussions fall under this criteria. 

Initiating a redundancy conversation requires exceptional empathy and clear communication to ensure employees receive difficult news in a respectful manner.

Our most sought-after leadership workshop, Professional and Courageous Conversations, focuses on equipping managers with:

• Essential communication skills and conversation frameworks
• Techniques for managing emotions during sensitive discussions
• Strategies for delivering difficult messages with empathy and clarity

These capabilities prove invaluable when conducting redundancy conversations that can significantly impact employees’ livelihoods and wellbeing.

Interested in our Professional and Courageous workshop? Develop the knowledge and practical skills you need to effectively address difficult, conflict-ridden situations. Join our upcoming L&D workshop on 28 October, hosted on Zoom.

3. Follow Rigorous Protocols to Prevent Unfair Dismissal Claims

As mentioned earlier, redundancies are inherently complex to handle, with extensive case law demonstrating that even well-intentioned employers sometimes miss the critical requirements involved. This is why having experienced professionals can offer several benefits:

• Expert guidance through complex legal requirements
• Upholding necessary consultation obligations 
• Access to relevant case studies and precedents
• Reduced risk of costly legal challenges
• Peace of mind that processes meet current standards

A Model of Genuine Redundancy in Practice – Case Study

The Easy Payroll Perth Pty Ltd case provides an excellent example of properly executed redundancy procedures. When a payroll officer was informed their position would become redundant, the organisation proactively offered them the opportunity to apply for a full-time HR role during both the initial meeting and subsequent consultation processes.

Despite the employee’s claims that the redundancy was not genuine and constituted unfair dismissal, the Commission ruled in favour of the organisation. The decision highlighted that the employer had:

• Fulfilled its consultation obligations comprehensively
• Provided genuine alternative employment opportunities
• Followed proper procedural requirements throughout

This case demonstrates the importance of proactive redeployment considerations and thorough consultation processes in achieving successful redundancy outcomes.

The Path Forward

It is now more critical than ever for employers to assess redundancies in strict accordance with Fair Work Act requirements, establish clear communication guidelines for affected employees, and ensure all consultation obligations are comprehensively met. The expanded scope of redeployment obligations means that what was once considered adequate may no longer suffice in the current legal landscape.

By implementing these three key strategies—engaging expert support, investing in leadership capability, and following rigorous protocols—employers can navigate redundancy processes with confidence while protecting both their organisation and their employees’ rights.

For assistance managing genuine redundancy situations and change management within your organisation, consult with our workplace relations specialists who can provide tailored solutions for your specific circumstances.