Redundancy can be one of the more difficult issues facing both employers and employees because it arises at times of change, and causes uncertainty, and stress. For employers, redundancies often occur as a result of a need to adapt to economic pressures, technological advances, or organisational restructures. For employees, they can represent sudden and unexpected job loss, with real financial and emotional consequences.

Given the recent focus on psychosocial hazards in the workplace and the complexity of rules and requirements regarding the making of employee roles redundant, this article sets out the issues that employers need to cover when considering making employees redundant.

What is a Redundancy?

At its core, a redundancy occurs when an employer determines that a particular position/role in the organisation is no longer required. This is not about the performance of the employee, but about whether the role itself has ongoing utility. A position may become redundant for many reasons, automation or new technology, restructuring to streamline operations, financial pressures, or changes in customer demand.

In Australia, for employees who would otherwise have access to the unfair dismissal regime under the Fair Work Act 2009 (Cth), redundancy is not simply a matter of an employer deciding a role is no longer needed. The Fair Work Act sets out strict requirements for when a dismissal can properly be classified as a “genuine redundancy”. Where those requirements are satisfied, the termination will fall outside the unfair dismissal jurisdiction, meaning the employee cannot bring an unfair dismissal claim and the employer will have a valid jurisdictional objection to any such proceedings.

Under section 389 of the Fair Work Act, for a dismissal to be a genuine redundancy, the following must occur:

1. The employer must no longer require the job to be performed by anyone, due to changes in operational requirements;
2. The employer must have complied with any applicable consultation obligations in a modern award or enterprise agreement; and
3. It must not have been reasonable to redeploy the employee within the employer’s enterprise (or an associated entity).

If these criteria are not satisfied, an employee may challenge the dismissal as unfair, even if it is described as a redundancy.

Recent decisions by the High Court and the Federal Court, which we discuss below, have clarified these obligations, particularly around redeployment and the use of contractors. These cases highlight that redundancy remains an area of law that continues to evolve and create serious risks for employers who get it wrong.

Redeployment

Redeployment is central to the concept of a genuine redundancy under the Fair Work Act. It is not enough for an employer to say “the job is gone”, they must also consider whether there are other roles within the business, or associated businesses, which the employee could reasonably perform.

The test is practical and realistic. Redeployment does not require the employer to create an entirely new position, but it does require them to look carefully at whether the employee could take up an existing role, even if it requires some retraining. The Fair Work Commission and courts have repeatedly made clear that employers must actively investigate redeployment options, not just assume none exist. This includes an obligation to look for redeployment opportunities in associated entities, even if these entities are overseas.

The recent High Court decision in Helensburgh Coal Pty Ltd v Bartley expanded this obligation even further by confirming that the Fair Work Commission may consider whether an employer should have made broader operational changes to create opportunities for redeployment. In that case, the Court held that it was not sufficient for the employer to demonstrate that redeployment was unavailable within the existing business structure. Instead, the Fair Work Commission was entitled to examine whether the employer ought reasonably to have altered its business model, including by insourcing work performed by contractors, in order to preserve employment.

When assessing redeployment possibilities, employers need to take a broad view. It is not sufficient to look only at roles identical to the one being made redundant. Employers should ask whether the employee’s skills, experience, or qualifications would allow them to perform other duties, perhaps with some support or training.

For example, an administrative employee whose role has been automated may still be suitable for a customer service role. Similarly, a technician in one part of a business may be capable of transferring to a related function elsewhere. Employers are expected to approach this process genuinely and in good faith. Simply assuming an employee “would not fit” a new role, without testing the possibility, may expose the business to legal risk.

Consultation

A redundancy will be treated as a “genuine redundancy” under the Fair Work Act if all statutory requirements are satisfied, including any consultation obligations set out in a modern award or registered enterprise agreement.

Consultation is not automatically required in every case, the obligation arises only if an award or enterprise agreement containing such a clause covers the employee. Where consultation provisions do apply, employers should consult with affected employees as soon as practicable after the decision to implement changes, provide adequate information about the proposed changes, give employees a genuine opportunity to respond, and seriously consider any alternatives to making the position redundant. Even where consultation is not legally required, following these steps is considered best practice and can help mitigate risk. Simply informing an employee that their role is redundant and seeking feedback in the same meeting before termination, will ordinarily be insufficient, as the Fair Work Commission has rejected perfunctory or post-decision “notification” as satisfying consultation requirements.

Jurisdictional Objections

If an employee believes their role is not genuinely redundant and they should not have been dismissed, they can lodge an unfair dismissal application in the Fair Work Commission. If the role is genuinely redundant and the employer did satisfy the applicable statutory requirements, that is, showing that the position was genuinely no longer required, that consultation obligations (if applicable) were met, and that reasonable redeployment opportunities were considered, then the employer can raise a jurisdictional objection to the application to have it dismissed arguing that the Fair Work Commission does not have jurisdiction to hear the claim.

Employers who fail to adequately consider redeployment, neglect consultation obligations where they exist, or cannot demonstrate the genuine abolition of a role may find that their objection fails, leaving them exposed to unfair dismissal claims.

Entitlements on Redundancy

When a role is made redundant, employees are generally entitled to a range of statutory entitlements under the Fair Work Act, as well as any applicable modern award or enterprise agreement and contract of employment. These entitlements are designed to provide financial protection and a period of transition while the employee seeks alternative employment.

One key entitlement is the notice of termination. Employers are required to provide employees with at a minimum the notice contained in their contract of employment, as long as this is the same or more than the minimum notice period based on their length of continuous service Notice may be provided as working notice, allowing the employee to continue performing their duties during the notice period, or as payment in lieu of notice. Compliance with notice requirements is critical, as failure to provide proper notice can give rise to claims for unlawful termination and breach of contract.

In addition to notice, many employees are entitled to redundancy payments in accordance with the National Employment Standard or an applicable company policy. These payments compensate employees for the loss of their role and are calculated based on the employee’s period of continuous service. Redundancy payments are separate from other accrued entitlements, such as annual leave or long service leave, which must also be paid out on termination.

Employers should ensure that all entitlements are calculated and provided accurately and transparently. Proper documentation of notice, redundancy payments, and other entitlements is essential to reduce legal risk and demonstrate that the redundancy was conducted in accordance with statutory and contractual obligations.

How Have the Courts Dealt with Redundancy?

In recent years, courts have made it clear that redundancy is not a rubber stamp for job losses. The Fair Work Commission and courts are increasingly willing to look behind employer decisions to see whether they were genuine, reasonable, and procedurally fair.

Two recent cases illustrate this trend, the High Court’s decision in Helensburgh Coal Pty Ltd v Bartley and the Federal Court’s penalty decision against Qantas.

Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29

In Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29, the High Court considered whether the Fair Work Commission could examine an employer’s decision to rely on contractors instead of redeploying existing staff. The case involved 22 employees who were made redundant during a restructure at the Metropolitan Coal Mine operated by Helensburgh Coal Pty Ltd. The employees argued that their dismissals were not genuine redundancies under section 389 of the Fair Work Act, as it would have been reasonable to redeploy them into roles performed by contractors.

The High Court unanimously dismissed the employer’s appeal, affirming the Fair Work Commission’s finding that the dismissals were not genuine redundancies. The Court held that the Fair Work Commission was entitled to consider whether redeployment could have occurred if the employer had insourced work from contractors. This decision clarifies that employers cannot avoid redeployment obligations by outsourcing work to contractors, and must justify why insourcing was not a reasonable option.

For employees, this ruling strengthens protections against redundancy by ensuring that employers cannot circumvent redeployment obligations through extensive use of contractors. It opens the door to challenges where redundancies are implemented without genuine consideration of internal redeployment opportunities, particularly in workplaces that rely heavily on outsourced work.

Transport Workers’ Union of Australia v Qantas Airways Limited (Penalty) [2025] FCA 971

The Federal Court’s recent penalty decision against Qantas Airways Limited marked one of the largest financial penalties ever imposed in an employment law case in Australia. The Court ordered Qantas to pay $90 million in penalties for unlawful adverse action involving dismissal.

The case arose from Qantas’s decision in November 2020 to outsource its ground handling operations at ten Australian airports to third-party contractors. This move resulted in the dismissal of 1,820 employees, many of whom were members of the Transport Workers’ Union (TWU).

The TWU challenged this decision, arguing that the outsourcing constituted adverse action under section 340(1)(b) of the Fair Work Act, which prohibits employers from taking action to prevent employees from exercising a workplace right. The Federal Court found in favour of the TWU, concluding that Qantas had unlawfully dismissed the employees to prevent them from engaging in protected industrial action and participating in enterprise bargaining.

The Court was scathing of Qantas’ conduct, finding that the airline had deliberately obscured its decision-making and failed to present key evidence. The judgment highlighted not only the devastating impact on affected workers but also the importance of transparency and good faith in redundancy processes.

This case demonstrates the risks employers face if redundancies are mishandled. Financial penalties, reputational damage, and long running litigation can far outweigh any short term savings.

Employer Obligations

Employers should treat redundancy as a serious and carefully managed process. Before making any decisions, businesses should:

1. Review operational needs thoroughly and document the reasons why particular roles are no longer required;
2. Explore redeployment opportunities genuinely, including considering insourcing contractor work where relevant;
3. Comply with all consultation obligations in awards or enterprise agreements;
4. Provide affected employees with notice and redundancy pay in line with the NES; and
5. Seek legal advice early to ensure compliance and minimise risk.

Being transparent, documenting decision making, and approaching the process in good faith can help protect employers from costly disputes and reputational harm.

Employee claims

As discussed above, employees may be able to commence unfair dismissal proceedings if the termination does not meet the definition of a genuine redundancy under the Fair Work Act. This means that if the position was not genuinely abolished, if redeployment options were available but not considered, or if consultation obligations were not met where applicable, the dismissal may be challenged.

In addition to an unfair dismissal claim, employees may be entitled to bring a general protections claim if the redundancy was not genuine or if it was motivated by matters unrelated to the removal of the position from the organisation, for example, because of the employee exercising their workplace rights.

In such circumstances, it is critical for the employer to be able to demonstrate that the only reason that the employment was terminated was because the employer no longer needed the role to be performed by anyone. It is also highly beneficial if the employer can show it has carefully considered and discussed the matter with the employee concerned.

Redundancy can be a significant and stressful event for employees, with both financial and emotional consequences. Clear communication, proper documentation, and good faith engagement with affected employees are therefore essential for employers to manage legal and reputational risks effectively.