Navigating Redundancy: Legal Framework, Redeployment, and Recent Cases

Understanding Redundancy

Broadly under the Fair Work Act 2009 (Cth) (Act), a “genuine redundancy”¹ happens when an employer no longer requires an employee's role, and the employer meets any consultation obligations. Certain conditions apply, for instance an employee must have performed a minimum of 12 months of service.²

A decision to terminate a person’s employment due to redundancy should not be confused with a decision to terminate employment for reasons relating to that person’s conduct or capacity to perform their job.³

Where a person is dismissed by their employer as the result of a “genuine redundancy,” the dismissal will not be “unfair” for the purpose of the Act.⁴ However, a dismissal will not qualify as a genuine redundancy if it would have been reasonable in all the circumstances to redeploy the person within the employer's business.⁵

Legal Framework

The Act governs redundancy for most private sector employees in Western Australia. It mandates redundancy pay based on the duration of a person’s continuous service with an employer, up to a maximum of 16 weeks’ pay for someone who has worked between 9 and 10 years.⁶

The value of redundancy pay is calculated with reference to an employee’s weekly pay provided for his or her ordinary hours of work.⁷

There are exclusions to the obligation to pay redundancy pay, such as for casual or fixed-term employment,⁸ and for some small businesses.⁹

Redeployment

The Act empowers the Fair Work Commission to issue orders addressing unfair dismissal, defined as termination not stemming from a “genuine redundancy”. To be “unfairly dismissed”, a person must demonstrate that the dismissal was not a case of genuine redundancy.¹⁰ 

A person’s dismissal will not qualify as a “genuine redundancy” if it would have been reasonable for the person to be redeployed within the employer’s business.¹¹

In a recent case,¹² a number of dismissals made due to operational reasons were alleged by an employer to be cases of genuine redundancy. The Fair Work Commission found the redundancies not to be “genuine redundancies” because the employees were capable of being redeployed to perform tasks typically outsourced to contractors.

The employer appealed against the decision because the supposed redeployment roles were already filled by contract staff at the time.

On appeal, it was ultimately decided that the Fair Work Commission may assess various factors deemed to be relevant, including any job roles that are not immediately available. If it appears feasible for an employer to have facilitated redeployment instead of termination, even to a role that is not yet vacant, then this possibility can influence a decision about whether a redundancy was genuine.¹³

The key takeaway is that in cases of dismissal due to operational reasons, an employer must not only consider job roles that are currently vacant as possibilities for redeployment. Some thought must be given to reasonable steps the employer may be able to take to fill a vacancy that might arise in the near future.

Acceptable alternative employment

The Act allows an employer to seek to reduce the amount to be paid to an employee if an acceptable alternative role is offered.

In some instances, an employee may be successfully redeployed to a position with lower remuneration following structural changes within a company, and provided that the employee is willing to agree to such a change, the Fair Work Commission may approve a reduction in redundancy pay.¹⁴

The example provided by the case of Mercy Community Services[15] illustrates the potential benefit to both an employee and the employer of engaging in thorough consultation before finalizing a redundancy decision.

In closing, the landscape of redundancy under the Act requires both employers and employees to be conscious of many considerations that are involved. Recent example cases underscore the pivotal role of redeployment and robust consultation in determining the fairness of a final outcome.

This does not mean the employer will have an obligation to find a viable redeployment option in every case. However, in the event of a dispute, an employer may be called upon to demonstrate with evidence that genuine consideration was given to such other roles or opportunities before a final decision was made.  

To discuss your business requirements and how you can ensure the appropriate safeguards are in place, talk to one of our employment team lawyers today. 

The information provided serves as a general guide and does not constitute legal advice. It is based on our research and experience at the time of publication. Please consult our knowledgeable legal team for any specific inquiries or advice relevant to your circumstances.

^{[1] Act section 389.}

^{[2] Note the schedule at s 119(2) of the Act only provides a payment of redundancy pay where a person has performed continuous service for at least 1 year.}

^{[3] J Boag & Son Brewing Pty Ltd v Button [2010] FWAFB 4022 at para.22}

^{[4] Act s 385(d).}

^{[5] Act s 389(2).}

^{[6] Act s 119(2).}

^{[7] Act sections 119(2) and 20.}

^{[8] Act s 123(1).}

^{[9] See Act s 121.}

^{[10] Act s 385(d).}

^{[11] Act s 389(2)}

^{[12] Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45}

^{[13] Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45 at [66].}

^{[14] See for instance the case of Mercy Community Services SEQ Limited T/A Mercy Community [2023] FWC 2616.}

^{[15] Mercy Community Services SEQ Limited T/A Mercy Community [2023] FWC 2616.}