In a recent decision of a Full Court of the Federal Court of Australia (“FCAFC”), the meaning of “genuine redundancy” was considered. Specifically, the FCAFC considered the scope of the exclusion from “genuine redundancy” where “it would have been reasonable in all the circumstances for the person to be redeployed,” either “within the employer’s enterprise” or “the enterprise of an associated entity.” An employer being able to establish that an employee was dismissed because of a “genuine redundancy” will defeat the employee’s unfair dismissal claim. If the employee can establish that there was a reasonable opportunity for redeployment, then they will defeat the employer’s claim that it was a case of genuine redundancy.

The Fair Work Commission (“FWC”) at first instance had found that it was “reasonable in all the circumstances” for the employees whose roles were redundant to be redeployed to roles which were currently being performed by contractors. The Commissioner specifically found that it was reasonable to reduce the work available to contractors to create roles for the employees.

This decision was appealed by the employer but was confirmed by a Full Bench of the Fair Work Commission (“FWCFB”). Importantly, although the FWCFB upheld the decision, the FWCFB noted that there are no binding rules and that the Commission had to take into account “all the circumstances” in determining whether redeployment was reasonable.

The FWCFB noted that relevant circumstances that the Commissioner disregarded that should have been considered included:

• the feasibility of insourcing, including any impediments such as financial penalties from the termination of the service contract; and
• how the insourcing might affect employees of the contractors.

However, the above factors did not raise sufficient doubt about the correctness of the Commissioner’s decision at first instance for the FWCFB to disturb the Commissioner’s decision.

Before these FWC decisions, it would have been thought that the FWC would not interfere with operational decisions made by an employer about how it organises its workforce (in terms of the mix of contractors, service providers, independent contractors, labour hire and direct hire employees).

The clear outcome of the FCAFC decision is that all redeployment options should be considered by an employer. It will ultimately be “all the circumstances” which will determine whether redeployment is “reasonable.”

It is important to note that it will be a discretionary assessment of the Commissioner at first instance that will determine if redeployment would have been reasonable “in all the circumstances.”

The Full Court majority confirmed that the range and width of those considerations can extend to holding a position for a short for a period until a position becomes vacant.

Training an employee so that they can undertake a role they are presently incapable of performing is another potential reasonable circumstances.

Critically, terminating agreements with external providers so that positions become available for employees to be redeployed into may also be a reasonable circumstance.

However, each of these may also not be reasonable, depending on the facts of the particular situation and the employer’s business.

Importantly, the words “in all the circumstances” may encompass circumstances which are adverse to an employer and other parties, such as the financial or operational impact upon them, which may make redeployment unreasonable in that circumstance.

Practically, what this decision means for employers is that they must consider all possible redeployment opportunities, but an employer may still reach a decision that certain redeployments are not reasonable in the circumstances.

Michael Nguyen, Senior Associate