By Megan Flower

With the tough economic conditions, employers are having to make hard choices. For some, this may include making part of their workforce redundant.

Employers will be protected from unfair dismissal claims under the Fair Work Act 2009 (Cth) (the Act) where the dismissal is a case of “genuine redundancy.”[i]

However, under section 389(2) of the Act, a dismissal will not be a genuine redundancy if it would have been reasonable in all of the circumstances for the person to be redeployed within:

• the employer’s enterprise; or
• the enterprise of an associated entity of the employer.[ii]

Employers should be aware that this is a broad test.

Notably, the Full Court of the Federal Court of Australia recently confirmed that it can extend to considering whether employees could be redeployed to replace existing contractors.[iii]

Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45 and its related cases.

As a result of an economic downturn, Helensburgh Coal Pty Ltd (the Company) decided to decrease its production level and workforce by making 90 of its employees redundant and decreasing its contractor workforce by approximately 40%.

Following their terminations for redundancy, many of these employees filed unfair dismissal claims with the Fair Work Commission (FWC).

The Company objected to the claims on the grounds that the terminations were genuine redundancies. However, the employees countered that the terminations were not genuine redundancies, as it would have been reasonable for the employees to have been redeployed to roles filled by the Company’s contractors.

In the initial decision, Commissioner Riordan agreed with the employees and dismissed the Company’s objections.[iv] The Company successfully appealed this decision, and the matter was remitted back to Commissioner Riordan for reconsideration.[v]

In his second decision, Commissioner Riordan again found that it would have been reasonable for the employees to have been redeployed into the roles held by the Company’s contractors.[vi] However, when the Company again appealed, this time the FWC’s Full Bench upheld the Commissioner’s decision.[vii]

The Company then appealed to the Full Court of the Federal Court of Australia to quash the decision.  Although, the Company’s appeal was again dismissed, the matter remains unresolved as the Company is now awaiting the determination of its application for special leave to appeal to the High Court of Australia.[viii]

Key findings  – Redeployment of employees into work performed by contractors

In Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, the Full Court of the Federal Court of Australia confirmed that:

• the possibility of redeployment should be assessed by what “would have been” reasonable;
• that envisages analysis of the measures that an employer could have taken in order to redeploy an otherwise redundant employee; and
• there is no reason why the possibility that an employer might free up work for its employees by reducing its reliance on external providers could not be considered.[ix]

The fact that there might be some barrier that makes redeployment more difficult or more involved is not the point.[x]

Section 389(2) of the Act requires an analysis of what the employer could have done apart from dismissing the employee.[xi]

In determining whether it was reasonable to redeploy employees into work performed by contractors, the FWC’s Full Bench in Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166 remarked that the Commissioner first had to determine:

• whether insourcing the work was feasible; and
• whether redeployment of the employees would have been possible.[xii]

In determining whether insourcing was feasible, relevant matters to consider could include:

• the history of contracting the work in question;
• any requirement to change the employer’s business strategy (e.g. to have all maintenance work performed by a contractor);
• the degree of control over the work of the contractor by the employer;
• the length of the contract period left to run;
• the rights of third parties (including those of the contractor and its employees);
• the fact that positions cannot be created where there are none; and
• that displacing existing occupants of positions may not be appropriate.[xiii]

If insourcing was feasible, the Commissioner then needs to consider whether redeployment would have been possible (i.e. would the employees have been able to perform the contractor’s work?).[xiv] This would involve a consideration of the nature of the work to be insourced and the skills of the workers being considered for redeployment.[xv]

Nevertheless, if insourcing was feasible and redeployment to those positions was possible, the Commissioner is still ultimately required to answer whether it was reasonable in all of the circumstances to redeploy the workers concerned.[xvi]

Key takeaways for employers

It is clear from this matter that the FWC and the Federal Court is prepared to take a broad approach to determining if it would have been reasonable in all of the circumstances for an employee to be redeployed for the purposes of section 389(2) of the Act.

But there will still be cases where insourcing the contractor work is not feasible or redeployment is not possible.

Whether it is reasonable to redeploy will depend on the specific facts involved. For example, it may not be feasible where there are significant penalties for breaking the contract, or redeployment may not be possible where the contractor work is too specialised.

Nevertheless, where redundancies are planned, employers need to consider all potential avenues of redeployment. This includes reviewing the possibility of insourcing any contractor work.

If you have any questions about what redeployment opportunities need to be considered for redundancies, or about redundancies in general, please contact Tony Smetana or Megan Flower at HLS Legal on (08) 9322 5202.

This article is intended to be informative only and does not constitute legal advice. If you are concerned about your individual circumstances, please contact a lawyer.

[i] Fair Work Act 2009 (Cth), s 385.

[ii] Fair Work Act 2009 (Cth), s 389(2).

[iii] Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45.

[iv] Bartley v Helensburgh Coal Pty Ltd [2020] FWC 5756, [63] and [65].

[v] Helensburgh Coal Pty Ltd v Bartley [2021] FWCFB 2871, [95].

[vi] Bartley v Helensburgh Coal Pty Ltd [2021] FWC 6461, [105] and [108].

[vii] Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166, [90].

[viii] Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, [92]; Helensburgh Coal Pty Ltd v Bartley & Ors, File Number: S56/2024, filed 3 May 2024.

[ix] Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, [59] – [60].

[x] Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, [64].

[xi] Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, [64].

[xii] Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166, [35].

[xiii] Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166, [38].

[xiv] Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166, [39].

[xv] Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166, [39].

[xvi] Helensburgh Coal Pty Ltd v Bartley [2022] FWCFB 166, [41].