Redundancy rules reconsidered: Landmark High Court ruling on redeployment

The High Court of Australia’s recent decision in Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 has provided significant clarity on the law concerning the redeployment of redundant employees who are protected from unfair dismissal.

This landmark ruling explains the obligations of employers under the Fair Work Act 2009 (Cth) (FW Act) when considering redeployment options. It also has far-reaching implications for employers contemplating workforce restructuring and other redundancy circumstances, as well as for employment practices liability insurers, as it is likely to increase the number of unfair dismissal claims where redeployment is in issue.

Background

Helensburgh Coal Pty Ltd operates the Metropolitan Coal Mine in New South Wales, employing a workforce that includes both direct employees and contractors from Nexus Mining Pty Ltd and Mentser Pty Ltd.

Following a downturn in the coking coal market due to the COVID-19 pandemic, Helensburgh Coal restructured its operations, resulting in the dismissal of 90 employees, 47 of whom were made redundant involuntarily. It also reduced its contractor workforce by 40% and decided to insource some functions previously performed by contractors.

The dismissals were due to changes in the operational requirements of the enterprise, and the Helensburgh Coal no longer required the roles previously held by the dismissed employees. At the time of dismissal, there were no suitable alternative positions available within the company, nor were any foreseeable.

The dismissed employees filed unfair dismissal claims, arguing that it would have been reasonable for Helensburgh Coal to redeploy them into roles occupied by contractors.

Relevant statutory framework

Under the FW Act, a dismissal is not unfair if the FWC is satisfied the dismissal was not a case of ‘genuine redundancy’. ‘Genuine redundancy’ is defined in section 389 of the FW Act.

Fair Work Commission decision

In the first instance, the Fair Work Commission (FWC) found that the dismissals were not cases of ‘genuine redundancy’ and that it would have been reasonable to redeploy the employees into roles performed by contractors.

High Court decision

The High Court dismissed Helensburgh Coal’s appeal against the FWC decision.

The High Court stated the FWC is permitted to consider whether an employer could have restructured its workforce, including replacing contractors with employees, to avoid redundancy. It found that redeployment does not require a vacant position to exist at the time of dismissal; rather, it involves assessing whether it would have been reasonable to rearrange the workforce to accommodate the redundant employees.

The majority judgment, delivered by Chief Justice Gageler, Justice Gordon, and Justice Beech-Jones, found the phrase ‘in all the circumstances’ in section 389(2) of the FW Act allows for a broad inquiry into the employer’s workforce arrangements, policies, and business choices. The majority judgment clarified that redeployment is not only required where there is an existing vacancy. However, the FWC cannot mandate changes that would alter the core business model or essential operations of the employer’s enterprise.

Justice Edelman discussed in detail what may constitute the scope of the employer’s enterprise, including its policies and practices, and held that significant changes to the employer’s enterprise are beyond the FWC’s authority. Justice Steward emphasised the gravity of displacing another worker, including a contractor, and noted that such redeployment would rarely be reasonable.

Implications for employment practices liability insurers

For employment practices liability insurers, the decision may lead to an increase in claims, as dismissed employees may argue that redeployment would have been reasonable. This could result in more unfair dismissal cases challenging ‘genuine redundancy’ dismissals, with reinstatement and compensatory back pay being sought more frequently.

Implications for employers

The decision provides crucial guidance for employers on assessing redeployment options. Employers must now consider whether they can make changes to their workforce to create or make available positions for employees who would otherwise be made redundant. This includes evaluating the potential for internal reallocation of work, even if it involves ending contractor arrangements, provided such changes do not fundamentally alter the employer’s enterprise.

Employers contemplating restructures or redundancies should seek legal advice to understand their redeployment obligations and mitigate the risk of successful unfair dismissal claims.

If your business is considering workplace restructures or role redundancies, Gilchrist Connell’s Workplace practice can help you understand your redeployment obligations and mitigate the risk of successful unfair dismissal claims.