During periods of financial downturn, employers are often faced with the difficult decision to make operational changes to its business to reduce costs, which may include implementing redundancies.
Employers should be mindful that dismissing an employee because it can no longer afford to pay them will not, on its own, be enough to meet the definition of “genuine redundancy” under the Fair Work Act 2009 (Cth) (FW Act).
This is because of the operation of section 389(1)(a) of the FW Act, which states that a dismissal will only be a case of genuine redundancy if the employer no longer requires the employee’s role to be performed by anyone due to operational changes.
This scenario was recently considered by the Full Bench of the Fair Work Commission (Full Bench) in Demin v Tuggeranong Vikings Swim Club Inc [2026] FWCFB 191.
In this matter, the Full Bench was required to consider the appeal against a decision of Deputy President Dean of the Fair Work Commission (FWC), who dismissed an employee’s unfair dismissal application on the grounds that his dismissal was a case of genuine redundancy.
The employee was employed in the position of Head Coach by Tuggeranong Vikings Swim Club (the Club), a community swim club that was managed by a committee of volunteers (Management Committee).
From the commencement of his employment in April 2024, the employee was paid a salary of $110,000 per annum.
In May 2025, following a review into the Club’s finances, the Management Committee decided that the Club was no longer in the financial position to pay the employee a salary at his current level.
The Management Committee wrote to the employee to advise him that his position of Head Coach at the salary of $110,000 per annum was redundant. The letter stated that the Club still required a Head Coach however the role would be remunerated at a reduced salary of $65,000 per annum. The employee was offered redeployment into the Head Coach role with a reduced salary, which he refused.
Consequently, the employee was terminated by reason of redundancy. The employee went on to lodge an unfair dismissal claim in the FWC, which the Club objected to on the basis that his dismissal was a genuine redundancy.
At first instance, the Deputy President dismissed the application and upheld the Club’s jurisdictional objection, finding that the role of Head Coach with a salary of $110,000 per annum no longer existed and had not been replaced. For the Deputy President, there were clear changes in the operational requirements of the Club such that it was reasonable and appropriate for it to reduce its costs.
The employee appealed the first instance decision on several grounds. Relevantly, the employee submitted that the Deputy President erred by misapplying section 389(1)(a) of the FW Act by assessing whether his role of $110,000 per annum continued, rather than whether the Head Coach role continued to be required by the Club.
Ultimately, the Full Bench agreed with the employee, finding that the Deputy President had misapplied section 389(1)(a) of the FW Act to the facts of the matter.
The Full Bench found that the decision of the Management Committee was not that the role of Head Coach was no longer required, but instead a decision to pay the employee less for the job he was performing.
For the Full Bench, this was not a case where the employee’s work was reorganised or where his duties were no longer carried out or redistributed to others. This was supported by the fact that the Club had offered the employee redeployment into the exact same Head Coach role, albeit for less pay.
The Full Bench then turned to the “critical question” established in the leading decision of Jones v Department of Energy and Minerals (1995) 60 IR 304 at [309]:
What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…
The Full Bench found the answer to this question to be affirmative – that is, the duties that would have been performed by the employee at a salary of $65,000 per annum were the same as the duties he was performing at a salary of $110,000 per annum.
The Full Bench held that because the duties assigned to the Head Coach role were still required to be performed, his position had not been made redundant. As a result, the Full Bench held that the employee’s dismissal was not a case of genuine redundancy for the purposes of section 389(1)(a) of the FW Act.
Due to the findings with respect to section 389(1)(a) of the FW Act, it was not necessary for the Full Bench to consider the remaining appeal grounds relied upon by the employee.
The Full Bench concluded that the Deputy President had misapplied the statutory test for genuine redundancy by focusing on the financial situation of the Club rather than whether the Head Coach job itself was no longer required to be performed by anyone. It stated that the consequence of this was that the employee was “erroneously” denied the opportunity to pursue his unfair dismissal application. As a result, the Full Bench granted permission to appeal and allowed the appeal on the grounds of public interest.
The Full Bench then made orders quashing the first instance decision, dismissing the Club’s jurisdictional objection that the dismissal was a genuine redundancy, and referring the unfair dismissal application to the FWC for redetermination.
We are often asked by clients if they can make an employee’s role redundant because they can no longer afford to pay their current salary level. As seen in this decision, if the role itself still exists within the business following the dismissal, the answer is no.
A dismissal will only be a case of genuine redundancy under the FW Act if the employee’s role is no longer required to be performed by anyone. This requires consideration of whether the job itself and nature of work performed is no longer required, as opposed to whether the role at a certain salary level can no longer be paid.
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