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The Fair Work Act 2009 (Cth) (FW Act) provides a defence to an unfair dismissal application made by an employee who has been dismissed as a result of a genuine redundancy.

The Full Bench of the Fair Work Commission (Full Bench) recently reiterated in Orientile Pty Ltd v Zhang [2026] FWCFB 162 what was required to demonstrate that a dismissal was a “genuine redundancy” within the meaning of section 389 of the FW Act, particularly for small business employers.

The employer was a small business who sold imported tiles. At the time of the employee’s dismissal, he was employed as one of three sales representatives. In February 2025, the owner of the employer called the employee into a meeting and advised him that his employment was to end because the business could not afford three sales representatives due to slow sales. The remainder of the discussion in the meeting concerned the employee’s entitlements on termination.

The employee lodged an unfair dismissal application in the Fair Work Commission (FWC). The employer objected to the application on the basis that the dismissal was a genuine redundancy, and in the alterative, the employee’s dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

At first instance, the FWC found that the employee’s dismissal was not a genuine redundancy because the employer did not comply with its obligation to consult under the modern award and that the dismissal, was harsh, unjust and unreasonable. The FWC ordered the employer to pay the employee a total of 18 weeks’ pay plus superannuation, which consisted of:

• 4 weeks’ pay being the period in which a reasonable consultation process would have taken place; and
• 12 weeks’ pay, being the minimum redundancy payment that the employee would otherwise have been entitled to in recognition of loyal service to the employer and effect of the dismissal.

The employer lodged an appeal against the Deputy President’s decision on a number of appeal grounds. Relevantly the employer argued that the Deputy President had disproportionately emphasised the technical breach of the consultation obligations when it had substantially complied with the consultation obligations and failing to take into account the size of the employer when considering the redundancy process taken.

The Full Bench granted the employee permission to appeal on the basis that it raised the issue about whether in determining if a dismissal was a genuine redundancy, there should be consideration given to the size of the employer.

The Full Bench however, dismissed each of the employer’s grounds on appeal. In relation to the genuine redundancy exemption under the FW Act, the Full Bench made it clear that:

• The statutory definition of “genuine redundancy” was separate to the ordinary understanding of “genuine” redundancy – a bona fide redundancy could be found not to be a genuine redundancy within the meaning of section 389 of the FW Act.
• A dismissal that is a genuine redundancy within the meaning of section 389 of the FW Act is not and could not be an unfair dismissal.
• Section 389 of the FW Act requires the employer to comply with any obligation to consult under any applicable modern award or industrial agreement. Small business employers were not exempt from the obligation to comply with the consultation obligations. For small businesses, there was also the likelihood that the consultation obligations requires employers to consult with other employees who may be impacted by a redundancy, for example, where they may be required to perform the redistributed duties of the redundant position.
• The FWC did not have discretion under section 389 of the FW Act to over look non-compliance with consultation obligations and find that partial, technical or substantive compliance with consultation obligations was a genuine redundancy.
• There was no separate regime for consultation obligations for small business employers and there was no basis for reading down the provisions in the FW Act.
• The Code was irrelevant for dismissals as a result of a genuine redundancy.

In relation to the employer’s compliance with the consultation obligations, the evidence provided that the employer brought the employee into a meeting and advised him that his position was redundant.

There was also no evidence that the employer had complied with the consultation obligations in relation to major change as required by the Storage Services and Wholesale Award 2020 (the Award). The owner’s own evidence provided to the FWC as that he only read the Award consultation term after he had dismissed the employee and when he was preparing the Employer Response to the unfair dismissal application. Further the Full Bench was not satisfied that the owner’s comments made to an employee in various conversations about there being “big trouble” if sales did not pick up soon met the consultation obligations.

Accordingly, the Full Bench found that the Deputy President did not fall into error and the appeal was dismissed.

Lessons for employers

This decision confirms that in order to be able to rely on the genuine redundancy jurisdictional objection, there must be complete compliance with the applicable consultation obligations and there is no modification for employers based on the size of the business.

A dismissal which is not a genuine redundancy will then be assessed as to whether it was “harsh, unjust and unreasonable”.  

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