Redeployment or retrenchment? Restructuring your workforce just got harder, following High Court decision

When considering whether an employer has considered all reasonable redeployment obligations for a retrenched employee who brings an "unfair dismissal" claim, the Fair Work Commission (FWC) can inquire into whether the employer could have made changes to how it uses its workforce to operate its enterprise, including by replacing contractors with employees who would otherwise be redundant.

That's the result of the High Court's decision in Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29, which has wide-ranging implications for employers who may be undergoing restructures or making employees redundant. It will no longer simply be a case of confirming there are no suitable vacancies for employees whose roles are no longer required, but rather considering whether any changes are required to broader workforce arrangements to meet redeployment obligations.

Redundancy vs redeployment by replacing contractors

Helensburgh Coal Pty Ltd dismissed 22 employees from its Metropolitan Coal Mine in New South Wales in June 2020 as part of a restructure prompted by the COVID-19 pandemic. The dismissed employees brought unfair dismissal claims in the FWC. Helensburgh argued that the dismissals were cases of "genuine redundancy" under the Fair Work Act 2009 (Cth) (FW Act), precluding the employees from bringing claims of unfair dismissal. The FWC found that the dismissals were not cases of genuine redundancy because it would have been reasonable for the employees to be redeployed into roles performed by contractors.

At issue was section 389(2) of the FW Act which deals with redeployment. Can the FWC consider whether an employer could have made changes to its enterprise, such as replacing contractors with employees, to facilitate redeployment?

The High Court unanimously held that section 389(2) permits the FWC to consider whether an employer could have made changes to its enterprise to create or make available positions for otherwise redundant employees. Its inquiry under section 389(2) is not limited to existing vacancies within the employer's enterprise at the time of dismissal.

The Court considered that the word "redeploy", by its ordinary meaning, "envisages some reorganisation or rearrangement" and does not exclude or prohibit some change to how an employer uses its workforce to operate its enterprise that facilitates redeployment. It followed that there need not be a vacant position in the enterprise in order for it to be reasonable to redeploy the person.

To illustrate this, the Court gave the example of an employee being dismissed from an enterprise in which another employee, performing an identical job, was to retire the next day. The Court held that the "natural conclusion" in these circumstances would be, considering the state of the employer's enterprise, that redeployment would have been reasonable.

The Court also emphasised that what is "reasonable in the circumstances" under section 389(2) is a broad inquiry and should take into account factors including the employer's workforce structure, risk appetite, contract terms, and the skills and experience of the dismissed employees. However, this can only be determined by reference to the nature of the employer's enterprise as it existed at the date of dismissal.

Implications for employers: taking a holistic view of your workplace

The decision will add complexity for businesses in justifying redundancies in any restructure process. The broader scope for redeployment inquiries means that employers will need to be prepared to justify their workforce arrangements, including their use of contractors and labour hire, when defending unfair dismissal claims arising out of redundancies.

Employers will need to take into account their wider workforce structure, rather than simply considering vacant or new roles, when determining whether any appropriate redeployment opportunities exist for employees. Restructure processes are going to require careful and informed navigation, to mitigate an employer's risk. However, this will inevitably create difficulties for employers while the precise application of section 389(2) remains uncertain.

Between this case and the recent same-job, same-pay decision for employers with enterprise agreements in place, employers may be prompted to take a close look at their use of a labour hire workforce in particular. Time will tell if a major shift to resourcing strategy is on the horizon for some.

Employers should prepare for increased FWC scrutiny into restructures and a potential escalation of unfair dismissal claims, and take steps to support a response, including:

• Consider your organisation's workforce structure holistically (including contractors, labour hire employees and casual/part-time employees) as part of the overall rationale for a restructure and build this into the business case;

• Ensure the redeployment process considers the appropriateness of any broader workforce changes that may result in suitable and available redeployment opportunities (for example, noting the FWC's example of a role that will shortly be vacant);

• Document your process and considerations, including consultation with employees and consideration of their suitability for possible redeployment opportunities.