Australian Federal Court Decision Clarifies Employer Obligations During Restructuring and Redundancy – subject to special leave application – subject to appeal

Key Takeaways for Employers  

• Assessment of Redeployment Opportunities: Employers must consider whether existing employees can be redeployed into roles occupied by contractors, or soon-to-be-vacant positions before proceeding with redundancies. 
• Comprehensive Review Required: Redundancy decisions should consider all operational circumstances, including the potential for retraining employees, or modifying employment terms to facilitate redeployment. 

Helensburgh Coal Pty Ltd v Bartley [2024], a recent decision of the Full Federal Court of Australia confirmed that, when determining whether a redundancy is “reasonable in all the circumstances”, the FWC can consider whatever matters they believe appropriate. For Helensburgh Coal, this meant that the FWC acted within their powers when determining that a vacant position in an enterprise doesn’t have to exist for redeployment to be “reasonable in all the circumstances”.  The decision provides new insight into the meaning of genuine redundancy encapsulated in section 389 of the Fair Work Act. 

History of Dispute – Fair Work Commission  

In June 2020, 22 employees were collectively dismissed by Helensburgh Coal due to a decision to reorganise the performance of work at the Metropolitan Coal Mine. These employees submitted an unfair dismissal application with the Fair Work Commission (FWC), contending that redeployment to other roles, specifically those being performed by contractors at the Mine, would have been reasonable.  

At first instance, Commissioner Riordan of the FWC was not satisfied that each dismissal was “a case of genuine redundancy”. An appeal was allowed, and the decision was referred back to the Commissioner for reconsideration. 

The central issue before the FWC was whether “it would have been reasonable in all the circumstances for the person to be redeployed.” In making the decision, Commissioner Riordan considered the skills of the employees, their capacity to undertake work of the contractors, the specialist nature and scope of the work, and the training necessary. The Commissioner considered the “operational impracticality of insourcing”, but ultimately concluded that redeployment was reasonable and that none of the dismissals were “a case of genuine redundancy”. 

Helensburgh Coal appealed again; the appeal was allowed but was ultimately dismissed. 

Application to Full Federal Court of Australia 

Helensburgh Coal made an application to the Full Federal Court of Australia contending that, in all four decisions, the FWC misunderstood the meaning of Fair Work Act s389 and therefore considered the wrong questions or issue and incorrectly interpreted relevant tests. They also contended that the appellate jurisdiction of the FWC, conferred by Fair Work Act s604, was inappropriately exercised. This was because the Full Bench of the FWC identified two potential errors in the Commissioner’s decision but did not consider the errors sufficient to warrant appellate interference. Helensburgh Coal therefore sought an order quashing all four FWC decisions, and an order prohibiting the FWC dealing any further with the unfair dismissal applications.   

Full Federal Court Decision 

The Full Federal Court dismissed the application, finding that neither the Full Bench or Commissioner Riordan misunderstood what the legislation contemplates, and that the Appellate jurisdiction of the FWC was appropriately exercised.  

Meaning of s389 FW Act: 

The court found that if the legislation intended to exclude specific circumstances from consideration when determining whether “redeployment would be reasonable”, the phrase “in all the circumstances” would not have been used. The FWC, as a specialist employment tribunal, can consider whatever matters they believe appropriate when making that decision. In this case, the FWC was required to analyse what the employer could have done, apart from dismissing the employee. It is open to the FWC to take into account whether the employer could have taken steps to enable redeployment, regardless of whether that redeployment would have been more difficult or more involved than it otherwise could be. 

Whether FWC Appellate Jurisdiction Appropriately Exercised 

Under FWA s607(3), the Full Bench was open to confirm, quash, or vary the Commissioners decision. The court confirmed that the Full Bench considered the correct question, namely whether it should interfere with the Commissioners ultimate conclusion having identified what they considered “discrete, minor errors” in the decision-making process. The court found that it was open to the Full Bench to affirm the Commissioners decision, despite the errors identified in the decision-making process, as the errors would not have changed the result.