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Full Federal Court rejects employers bid to quash decision which found employees were not genuinely redundant

Section 389(2) of Fair Work Act 2009 (Cth) provides that a dismissal will not be a case of “genuine redundancy” if it “would have been reasonable in all of the circumstances” for the employee to be redeployed within the employer’s enterprise or the enterprise of an associated entity.

Section 389(2) of Fair Work Act 2009 (Cth) (FW Act) provides that a dismissal will not be a case of “genuine redundancy” if it “would have been reasonable in all of the circumstances” for the employee to be redeployed within the employer’s enterprise or the enterprise of an associated entity.

It has long been established that whether redeployment is reasonable will depend on the circumstances that exist at the time of the dismissal, including factors such as whether an available suitable role exists, the qualifications required to perform the role, the location of the role, and the remuneration which is offered for the role.  

In the decision of Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, the Full Court of the Federal Court of Australia (the Full Federal Court) has refused an application from an employer seeking orders to quash previous decisions and compel the FWC from further dealing with the unfair dismissal applications lodged by employees.

The decision comes after a lengthy procedural history in the Fair Work Commission (FWC), commencing in July 2020 with the Helensburgh Coal Pty Ltd (the Employer) jurisdictionally objecting to a joint application made by 22 employees claiming that their redundancies amounted to unfair dismissal.

Background

The employees were made redundant following a restructure at the Metropolitan Coal Mine (the Mine) at which they worked, resulting in a significant reduction in both production and the workforce. At the time of the redundancies, the Employer held service agreements with two external contractors – one of which outsourced the cleaning, inspection and repair of the underground conveyor belts systems at the Mine.

The proceedings before the FWC consisted of two initial decisions of Commissioner Riordan and two appeals to the Full Bench of the FWC (Full Bench).

In December 2022, the Full Bench handed down a final appeal decision upholding Commissioner Riordan’s earlier finding that the terminations were not a case of genuine redundancy (Helensburgh Coal Pty Ltd v Bartley & Ors [2022] FWCFB 166).

Specifically, the Full Bench agreed that “some, if not all” of the employees could have reasonably been redeployed into roles taken by the external contractors on the basis that the work performed by the contractors was not “specialised work” and was akin to the work previously performed by some of the employees, but with additional minor training.

Seeking to quash the four FWC decisions, the Employer applied to the Full Federal Court for judicial review on the basis that the decisions fell into jurisdictional error and erred in law.

Application to Full Federal Court

The Employer advanced four grounds in which it claimed that the FWC erred in law. Relevantly, grounds 1 and 2 were that the FWC had “misconstrued” s 389(2) of the FW Act:

  1. as permitting or contemplating that employees could be redeployed into a role which was already filled by others under a contract;
  2. by failing to construe the test in s 389(2) by reference to the purpose and the context of the provision.

The Full Federal Court commenced its consideration of these grounds by stating that s 389 of the FW Act intended on narrowing the circumstances in which an employee may have been “unfairly dismissed” in cases of redundancy, thereby providing employers with the “genuine redundancy” defence in circumstances involving dismissal on operational grounds.

It went on to state that such defence is not absolute, particularly in light of s389(2) of the FW Act where it “would have been reasonable in all of the circumstances” to redeploy employees.

The Full Federal Court stated that the assessment of what would have been reasonable required an analysis of the measures an employer “could” have taken in order to redeploy an otherwise redundant employee.

The Full Federal Court warned that this analysis did not necessarily require an employer to free up work for its employees by reducing its reliance on external providers, however, the mere “existence of that possibility is capable of informing whether redeployment would have been reasonable”. It stated that this supported the legislatures intention to capture “all [of] the circumstances” when considering the possibility of redeployment.

Adding further, the Full Federal Court found that the immediate unavailability of a position to which a redundant employee could have been redeployed does not necessarily reduce the likelihood that the dismissal was not a case of genuine redundancy. It stated that s 389(2) of the FW Act could cover circumstances where the employer makes an employee redundant on operational grounds, but the employee could have been redeployed into positions which were not currently available but would soon become available.

In doing so, the Full Federal Court cited examples of where an employer knows other employees are soon to retire or, as was the case in the current decision, where an employee would qualify for the position with retraining or where a role exists but is occupied by contractors. It stated that the existence of such barriers was irrelevant and instead s 389(2) required analysis of what an employer could have done apart from dismissing the employee.

On this basis, the Full Federal Court found that the FWC had correctly considered the possibility that the employees “could have been” redeployed into the positions held by contractors and therefore did not misconstrue the operation of s 389(2) of the FW Act.

The Full Federal Court concluded by dismissing the application for judicial review finding that the FWC did not fall into jurisdictional error.  

Lessons for employers

The Full Federal Court found that the FWC correctly applied s 389(2) of the FW Act in its earlier decisions, namely, that employers conduct a full assessment of “what would have been reasonable in all the circumstances” to redeploy another wise redundant employee.

In this particular case, the FWC considered the employees could have reasonably been redeployed into work outsourced by contractors (i.e. insourcing the work).

Recent decisions have highlighted the extent to which employers must now actively consider what is reasonable redeployment and to look at all reasonable opportunities.

In this decision, the Full Federal Court stated that employers must consider whether employees can be redeployed to positions which are not currently available but may soon become available, for example, where:

  • it is known that other employees are soon to retire;
  • a contract with a third party for the performance of work is soon to expire; or
  • the employee may be redeployed to a position which requires them to first undertake appropriate training.

This decision also follows from the decision in Khliustova v Isoton Pty Ltd[2023] FWC 658 which we reported on in “Pride & Prejudice”. In this decision, the FWC held that an employer could have redeployed an employee to an overseas associated entity and not to immediately rule out roles in different locations or with lower salaries.

In summary then, the redundancy process must be fully and properly constructed and the time taken to thoroughly review and assess all of the factors relevant to potential redeployment opportunities.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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