New redundancy rules

The High Court of Australia has recently clarified the interpretation of the “reasonableness” of redeployment under the Fair Work Act 2009 (Cth), which provides a comprehensive and stringent process regarding redundancies. Decisions made by the employer must be for genuine reasons, such as a decrease in the pipeline of work and a subsequent loss of jobs.

Redundancies need to be genuine. This means the employee could not have reasonably been transferred into a different role or team, or their role is not required in the business. With its recent landmark decision, the High Court has broadened the scope of the Fair Work Commission’s inquiry when considering whether redundancy is genuine.

What has changed?

It was previously understood that a redundancy is genuine if the role is no longer required by the business, or it could not have been reasonable in all the circumstances for the employee to be redeployed – i.e., transferred into another role or team – within the employer’s company or a company that is connected with the employer, such as through a subsidiary.

In mid-late 2025, the High Court of Australia has provided clarification on the factors that comprise a genuine redundancy. They include:

Nature and size of the business

• Consideration of the employer’s business should not be limited to the current workplace structure or operations; the nature of the business is to be contemplated holistically. 

Definition of redeployment

• Redeployment does not require there to be a vacant position; employers must consider all opportunities that may exist in the context of their broader workforce strategy (particularly impacting employers who engage labour hire, contractors or other outsourced employee arrangements).This means the FWC will inquire as to whether there was work, or a demand for work, within the business, or an associated entity's enterprise, that could have been performed by the otherwise redundant employee.

Timing

• The employer needs to consider a hypothetical situation at the time of dismissal. The question is what, at the time of dismissal, could have been done to redeploy the employee within the business? 

Reasonableness

• The reasonableness of the hypothetical position needs to be objective. This means the employer needs to objectively consider whether the position could reasonably be created given the nature of the business. 

All the circumstances

• Additional factors will need to be considered, such as the employee’s skills, experience, relevance of any contractor arrangements and any relevant employer policies. This is a broad element and allows the FWC to inquire whether an employer could have changed how it uses its workforce to operate its enterprise to create or make available a position for a person who would otherwise have been redundant.

Impact on members 

Employers will need to take caution and ensure consideration of redeployment would be reasonable in all circumstances, prior to making any decision about termination or redundancies of their employees.

This change means employers can no longer elect redundancy as a method of dismissal without fully considering:

• the creation of a new role if the business were to be restructured. 
• the opportunity to retrain the employee.  
• transferring the employee in place of a role that is performed by an independent contractor or labour hire worker. 

Employers should consider what opportunities for redeployment exist in the context of their broader workforce strategy, particularly in cases where the composition of a workforce includes employees and contractor workers who have been engaged through labour hire or other outsourcing arrangements.