The High Court has handed down a decision confirming that the Fair Work Commission was correct to consider—in determining whether a dismissal was a case of a genuine redundancy—whether an employer could have offered reasonable redeployment to employees by insourcing work that was, at the time, outsourced to a contractor.1
Background
Around the middle of 2020, Helensburgh Coal began a restructure process due to a shortfall in work. In the two years leading up to this, Helensburgh Coal had outsourced various work to two contractors, Nexus Mining and Menster. During consultation, employees asked Helensburgh Coal to reduce its reliance on contractors, such as Nexus and Menster. Helensburgh Coal did agree to insource some of the work that Nexus and Menster were undertaking (resulting in around 40% fewer workers through those contractors), but it did not end the contracts entirely.
90 employees were made redundant, 47 of which were not by agreement. 22 employees filed an unfair dismissal claim to the Fair Work Commission. Helensburgh Coal objected to these applications, claiming that there was no jurisdiction to make an unfair dismissal claim because each dismissal was a ‘genuine redundancy’.
The Fair Work Commission found—over the course of two single member and two Full Bench decisions—that none of the dismissals were a ‘genuine redundancy’; therefore, the question of whether each employee was unfairly dismissed was to be decided on the merits. That is, the Commission would then have to decide whether any of the dismissals were harsh, unjust, or unreasonable.
On appeal to the Federal Court, a Full Court upheld the Commission’s decision. The matter was then appealed to the High Court.
The Issue and the Decision
The issue for determination was whether the Commission was permitted to consider, when deciding if it would have been reasonable in all of the circumstances for the employer to redeploy the employee within its enterprise, whether the employer could have made changes to how it used its workforce (ie whether it could have insourced work that was being outsourced to contractors).
The High Court unanimously found—in summary—that the Commissioner was permitted to take into consideration whether Helensburgh Coal could have made changes to how it engaged the contractors when deciding if there were reasonable redeployment options. The appeal was dismissed.
Effect of Decision
Does this decision mean that if a company is making employees redundant, it must always redeploy those employees into jobs that were (at the time) being outsourced, provided the employees can do the work? Absolutely not. In fact, deciding to outsource work is a commonly accepted reason for making employees redundant—in general, an employer is free to decide on how it conducts its business.
The majority of the High Court made it plain that it was not deciding whether the Commission was right or wrong to decide that Helensburgh Coal could have insourced the work as a reasonable redeployment option—the High Court was concerned only with whether the Commission was permitted to take that question into consideration.2
In the case of Helensburgh Coal, all this means is that the employees are clear to pursue their unfair dismissal claims. If those claims do not settle and go to a hearing before the Fair Work Commission, the Commission will determine if the dismissals were unfair—that is, if the dismissals were harsh, unjust, or unreasonable in all of the circumstances.
What does this mean for Employers?
This decision does not really affect how employers should be approaching restructures. The key obligations (especially under awards and enterprise agreements) are still to consult with employees and their representatives on the nature of the restructure and the effect on employees, as well as any reasonable steps the employer can take to mitigate the effect of the restructure on employees. If the employer is, at that time, outsourcing work that the employee could perform, this is one factor that the employer should take into consideration.
If, following a redundancy, an employee makes an unfair dismissal claim and the employer objects on the basis that it was a genuine redundancy, this decision confirms that it is open for the Commission to inquire whether the employee could perform any work that is being outsourced to another company. The Commission must always answer that inquiry based on all of the relevant circumstances of the case.
If you would like more information about redundancies and restructures, see our general guidance notes on our website here. If you would like specific advice or assistance in relation to a restructure or any unfair dismissal claims, please contact us and we would be glad to help.
Require further information/assistance?
This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, please contact your Consultant.
- Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 ↩︎
- [2025] HCA 29 [7], [135] ↩︎
