The Fair Work Commission (‘FWC’) could inquire into whether it would be ‘reasonable in all the circumstances’ to redeploy employees to work performed by contractors rather than make their employment redundant, held the High Court. This is an important decision for employers to understand because:

• It adds an additional step to the redundancy process for employers engaging both employees and contractors; and
• It reinforces just how broad the FWC’s powers of inquiry are.

In this Employment Update we discuss the matter of Helensburgh Coal Pty Ltd -v- Bartley & Ors [2025] HCA 29 (‘Bartley’), what it means for Australian employers, and the law around making an employee redundant.

Bartley in a nutshell

The High Court decision is the last in a series of claims and appeals resulting from Covid-19 layoffs. To briefly summarise the factual matrix:

• Helensburgh Coal Pty Ltd (‘Employer’) operated a coal mine (‘Mine’).
• The Employer engaged a mix of employees and contractors at the Mine.
• Due to a downturn caused by the pandemic the Employer restructured its business, resulting in reductions to its workforce of approximately 40% of its contractors and 90 of its employees.
• Following the restructure, there were enough ongoing jobs performed by supplied contractors for all of the former employees to be redeployed.
• The Employer was not obliged to request workers from the contractor companies, and (later) the FWC Full Bench would find there was ‘little evidence of substance’ of the asserted difference in costs between engaging employees and contractors for the role.
• 22 employees applied to the FWC for an unfair dismissal remedy, to which the Employer objected on the grounds that the dismissals were due to genuine redundancies.

Through a series of four decisions, the FWC held that the dismissals were not genuine as the employees could have been redeployed to the contractor positions. The Employer then appealed to the Full Federal Court and the High Court on the grounds that the FWC could not inquire into whether it could have made changes to its enterprise to create positions but was ultimately unsuccessful in both appeals.

This is an important decision because it ‘expands,’ in the sense of what was generally understood prior to the decision, the powers of the FWC in determining what constitutes a genuine redundancy.

A High-Level overview of redundancy

Under the Fair Work Act (‘Act’), a person’s dismissal will be a case of genuine redundancy if an employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise and the employer complied with their Award or Enterprise Agreement requirements with respect to consultation obligations.

However, notwithstanding the above, a person’s dismissal will not be a case of genuine redundancy where it ‘would have been reasonable in all the circumstances’ for the person to be redeployed within the enterprise or the enterprise of an associated entity of the employer.

In simple terms, this means that for a redundancy to be genuine the employer must be able to show the following:

• that the job was no longer needed due to a change in the business (e.g. a downturn); and
• the decision to terminate was reached in compliance with relevant Award or Enterprise Agreement requirements (e.g. consultation requirements); and
• the employee could not reasonably be redeployed elsewhere in the business, or the business of an associated entity of the employer.

Where an employer is unable to demonstrate the above, it will naturally be the case that the dismissal was not due to a ‘genuine redundancy’ as defined in the Act. The astute reader may ask what this means in practical terms. In effect, the employer loses such a defence against an unfair dismissal or general protections claim that was based on an argument that the termination was due to a genuine redundancy. This issue was a key point of the Bartley decisions.

High Court’s interpretation of s.389

In examining what constitutes a ‘genuine redundancy’ under s.389 of the Act, the High Court observed that the test under section 389 had multiple parts.

Section 389(1)(a)

The High Court described this section as having two parts, and as being a factual inquiry about what happened:

The first part […] turns on the existence of a decision in fact made by an employer. It is the employer’s decision to no longer require a person’s job to be performed by anyone. The provision does not look to whether the employee’s position, in terms of job title, was no longer required, but whether their “job”, in the sense of the nature of the work they performed, was no longer required. Section 389(1) refers to a decision by the employer and no one else.

The second part […] provides that the job must have ceased to be needed “because of changes in the operational requirements of the employer’s enterprise”. An employer determines what those changes might be or if they are needed. There is no reasonableness inquiry in s 389(1). Therefore, the fact that the employer, due to changes in operational requirements, no longer required the work to be performed by anyone need not have been reasonable.

Put another way, the decision as to whether the job is redundant is made purely by the employer and does not have to be reasonable.

Section 389(2)

As to section 389(2),¹ the High Court characterised it as providing protection to an employee by posing ‘counter-factual’ qualified by reasonableness. That is, despite the employer’s ability to make the decision, dismissal will not be a case of genuine redundancy ‘if it would have been reasonable in all the circumstances for the person to be redeployed within … the employer’s enterprise’² (emphasis added).

The scope of the reasonableness inquiry is limited, the High Court said, breaking down the matter into the following elements:

• Employers Enterprise: the employer’s ‘enterprise’ is its ‘business, activity, project or undertaking.’ The FWC cannot change the nature of the enterprise, however the nature ‘is not defined by reference to how the employer uses its workforce to operate its enterprise, or why it does so in that manner.’
• Meaning of Redeployment: ‘Redeployed’ does not require there to be a vacant position. Rather, ‘redeployed’ looks to whether there was work, or a demand for work, within the employer’s enterprise or an associated entity’s enterprise that could have been performed by the otherwise redundant employee.
• Meaning of ‘would have been reasonable’: The words ‘would have been’ direct the FWC to consider a hypothetical situation. The hypothetical inquiry therefore asks ‘what, at the time of the dismissal, could have been done to redeploy the employee within the employer’s enterprise.’ In other words, would it, at the time of the dismissal, have been reasonable to redeploy the employee to perform other work within the employer’s enterprise?
• Such work may not have to be available at the date of the decision. In his separate judgement (which also dismissed the appeal), Edelman J provided the example of an employee made redundant where another employee would retire the next day. In such a situation, said Edelman J, the ‘natural conclusion […] would be that redeployment would have been reasonable.’
• Nature of Reasonableness Inquiry: Reasonableness is an objective question to be determined by the FWC. The inquiry does not look to reasonableness only from the point of view of the employee or employer, although they are relevant. It is an inquiry as to reasonableness in the context of the employer’s enterprise, with regard to the nature of that enterprise.
• ‘All of the Circumstances’: The words ‘all the circumstances’ ‘are unmistakably broad; they point against the existence of binding rules concerning the application of s 389(2) in all cases irrespective of the circumstances of each particular case.’ The Court went on to set out various (non-exhaustive) circumstances that would be encapsulated, (which have been added in a footnote below for the sake of brevity).³

Putting it all together

In essence, the High Court has said that when considering whether it would be reasonable to redeploy an employee, the FWC may have regard to an extremely broad range of circumstances.

While the FWC may not consider the size, scope, or nature of the enterprise (which are fixed at the date of dismissal), it is not prohibited from asking 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 a person who would otherwise have been redundant.

Common pitfalls

The most common (and costly) pitfall in redundancy matters is the use of redundancy as a substitute for performance management. Where an employer still requires the position, (and it is not a case that the duties of the position will be redistributed to other employees/positions), they should seriously consider whether they should instead be managing the employee’s performance.

While we acknowledge that employers often feel uncomfortable with performance management processes, failing to engage in such or utilising redundancy as an alternative option is to open your business up to the risk of an unfair dismissal or general protections claim.

Employers should also ensure that they comply with the terms of any applicable Award(s) which contain provisions in relation to redundancies, including consultation requirements. Employers with multiple businesses should also carefully consider whether the employee could reasonably be redeployed to another business owned by the employer, even where some training may be required.

Making an employee’s position redundant can be a complex process, and even more so in light of this decision, so when in doubt you should seek professional advice.

Summary

In summary, while the decision in Bartley does not ‘change’ the law per se (being an interpretation of statute), in a practical sense, it does change how employers will need to approach redundancies going forward.

When considering whether an employee should be made redundant, an employer who engages contractors should now also consider whether it would be reasonable to redeploy the employee to undertake work done by a contractor. Whether such a redeployment is reasonable will vary depending on the circumstances, but relevant issues may include, (without limitation), whether:

• you are required to engage the contractors or, as in Bartley, the contractors are simply provided on request;
• there is a clear business case that the use of contractors brings significant savings to the business (noting that the FWC was not convinced of the evidence of such savings in Bartley); or
• the work being performed by the contractors is specialist work, or if it could be done by the employee(s) who will otherwise have their employment made redundant.

Furthermore, even where there are no contractor positions to be considered, employers should consider if there are any other measures that could be taken to redeploy the employees within its enterprise (or related enterprise). This may include considering expected termination dates, retirements, training that could be provided to allow the employee to undertake an available role or other relevant factors in their circumstances.

If you would like assistance or advice on a potential redundancy, or if you have any questions about this article, please do not hesitate to contact our experienced Employment Law Team.

 Notes & References

¹The High Court did not deign to comment on 389(1)(b).

² Or the enterprise of an associated entity of the employer.

³ Bartley at [39] – [40]:

Fifth, the inquiry is whether redeployment would have been reasonable in “all the circumstances”. The words “all the circumstances” are unmistakably broad; they point against the existence of binding rules concerning the application of s 389(2) in all cases irrespective of the circumstances of each particular case. If there were circumstances that were intended to inform whether, in any given case, redeployment would have been reasonable, the legislature would not have used the qualifying phrase “in all the circumstances”.

[A]ll the circumstances” can include the attributes of the otherwise redundant employee, such as their skill set, experience, training and competencies. “[A]ll the circumstances” can also include those attributes of the employer’s enterprise that concern its workforce, such as: its policies, including appetite for risk; plans; processes; procedures; business choices, such as a decision to terminate a contract in the future and a decision to persist with using contractors; decisions regarding the nature of its workforce, such as whether it has a blended workforce of both employees and contractors; contract terms, such as whether they are “as needs” contracts and whether the contractors are on daily work orders or on some long-term fixed commitment; practical concerns, such as whether redeployment would require the employee to undergo further training; and anticipated changes, such as another employee going on parental leave or retiring, a contract expiring, or a position being performed by a contractor while waiting for an employee to be hired. These are “circumstances” of how an employer uses its workforce to operate its enterprise, or why it does so in that manner, which can, depending on the circumstances of the case, bear on whether it would have been reasonable to redeploy an employee within the enterprise. These circumstances are not directed at the size, scope or nature of the enterprise, which are fixed at the date of dismissal.