Employers must consider the possibility of redeploying an employee to another position within the organisation or an associated entity before making an employee redundant.
Earlier this year, the Full Court of the Federal Court considered whether an employer must consider if employees can be redeployed to a role held by a contractor in the case of Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45 (Helensburgh Coal).
Helensburgh Coal, a coal mining business whose workers were both employees and contractors, was downsizing its operations. As a result, a number of positions were no longer required.
Employees whose positions were made redundant challenged their dismissal in the Fair Work Commission, arguing that the redundancies were not a case of genuine redundancy as required by s.385(d) of the Fair Work Act 2009 because the coal mine could have redeployed them to roles performed by contractors.
When considering whether there was another role within the business that the employees could perform, the Commission considered:
- The employees’ skills and their capacity to perform the work of the contractors;
- Whether the contractors’ work was of a specialised nature;
- Whether it was practicable for the employees to complete the work of the contractors; and
- Whether further training would be required to enable the employees to perform the contractors’ work.
The FWC found that the dismissals were not a case of genuine redundancy as it was reasonable for the coal mine to redeploy some of the employees to roles performed by contractors.
Subsequently, the Full Court of the Federal Court found that “the possibility that an employer might free up work for its employees by reducing its reliance upon external providers … is a circumstance that is capable of informing whether redeployment “would have been reasonable”.”
Implications for employers
When making positions redundant, employers must consider all available options for redeployment, including:
- redeploying an employee to a position previously held by a contractor;
- re-training an employee for a different role within the organisation; and
- retaining an employee if a position is expected to become available in the near future.
Employers who fail to properly consider the possibility of redeployment may face a challenge to dismissals.
Should you require assistance managing your legal obligations in relation to redundancies, please contact Heather Richardson.
