In times of economic distress or changes in a business’ needs, employers make positions within their organisation redundant, as long as it falls within the meaning of a ‘genuine redundancy’ under Federal law.

Section 389 of the Fair Work Act provides –

(1) A person’s dismissal was a case of genuine redundancy if:

(a) The person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) The employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2)  A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer

The recent case of Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 considers how far an employer can pursue a redundancy under section 389 of the Act.

Background

Helensburgh Coal Pty Ltd (Helensburgh) operated a coal mine and engaged Nexus Mining Pty Ltd and Mentser Pty Ltd (the contracting companies) to provide services at the mine. After observing that the COVID-19 pandemic had significantly reduced demand for the coking coal extracted from the mine, Helensburgh embarked on a restructuring of its workforce by reducing the number of employees. This restructuring reduced the number of employees proportionately more than the number of contractors.

The issue

The primary question before the High Court of Australia was whether section 389 permits consideration of whether an employer can shift the use of its enterprise and workforce to make available a position for an otherwise redundant employee. In other words, can Helensburgh’s ability to shift the use of its contractors to make available a position for an otherwise redundant employee be considered?

The test is as follows:

1. ‘reasonable in all the circumstances’

The first limb for the section 389(2) inquiry is that redeployment of an employee must be ‘reasonable in all the circumstances’. The Court held that the broad nature of the phrase covers a breadth of considerations, and therefore does not preclude the Fair Work Commission from considering whether an employer could have made changes to how it uses its enterprise and workforce to make available a position for an otherwise redundant employee.

2. ‘employer’s enterprise’

The second limb for the section 389(2) inquiry is that redeployment must be within the ‘employer’s enterprise’. Edelman J held that the ‘employer’s enterprise’ should be characterised at an appropriate level of generality which is broad enough to cover the essential or important facets of the enterprise. Citing Steward J, Edelman J (with whom the majority agreed), held that policies, processes and procedures, strategies and business choices, are relevant to the characterization of an ‘employer’s enterprise’. This includes the employer’s ‘policies and practices in relation to the use of labour, including as to whether to use permanent employees, independent contractors, casual labour, or contractors’ at [131].

3. Combined effect

The broad meaning of the term ‘reasonable in all the circumstances’, (held to capture considerations as miniscule as employee skillsets, the employer’s preferred mix of contractors and employees and practical concerns), combined with the broad meaning applied to ‘employer’s enterprise’ by the Court, (held to be set at a level of generality that captures the employer’s policies and practices), means that  the FWC cannot consider redeployment of an employee that would cause change to the employer’s policies and preferred practices. To do so would not be ‘reasonable within all the circumstances’ within the ‘employer’s enterprise’.

What did this mean for Helensburgh?

The following characteristics of actions undertaken by Helensburgh lead the Court to determine that redeployment did not affect an ‘employer’s enterprise’ –

1. The contracting companies were supplied on an ‘as needs’ basis, and Helensburgh was under no obligation to continue supplying work to the contracting companies.
2. There was no evidence that Helensburgh had any policy or practice whereby jobs are performed by contractors and should continue to only be performed by contractors. In other words, Helensburgh was not ‘philosophically opposed to insourcing work to employees’ at [73].

For these reasons, preference for contractors did not form part of Helensburgh’s policies and practices in relation to their use of labour. As this was the characterisation of Helensburgh’s enterprise that the High Court adopted, redeployment of employees by restructuring the work of contractors was ‘reasonable in all the circumstances’ within the ‘employer’s enterprise’.

The appeal was dismissed.