Redundant? Not so fast: High Court delivers coal hard truths by clarifying scope of ‘genuine redundancy’

The High Court has cracked open the meaning of redundancy—Helensburgh Coal v Bartley makes it clear: if contractors are doing the work, employers must ask whether staff could too, before calling it a genuine redundancy.

In a decision with significant ramifications to redundancy law, the High Court of Australia has unanimously dismissed Helensburgh Coal Pty Ltd’s (Helensburgh’s) appeal, affirming the Full Federal Court’s interpretation of section 389(2) of the Fair Work Act 2009 (Cth) (FW Act).[1] The ruling confirms that the Fair Work Commission (FWC) may consider whether an employer could have restructured its operations to facilitate redeployment for its employees, even where no existing vacancies are available.

Factual Background

The respondents to the appeal, 22 former employees of Helensburgh, were dismissed by way of redundancies following a restructure at the Metropolitan Coal Mine, operated by Helensburgh. The redundancies were prompted by an economic downturn during the COVID-19 pandemic. While Helensburgh reduced its permanent workforce through redundancies, it continued to engage contractors to perform work at the mine.

The dismissed employees lodged unfair dismissal applications with the FWC, challenging the redundancies. Helensburgh objected, asserting that the dismissals were cases of “genuine redundancy” under section 389 of the FW Act.

Through a series of four decisions, the FWC ultimately held that each of the terminations were not cases of “genuine redundancy” because it would have been reasonable in all the circumstances for the employees to be redeployed to perform the work that was being performed by the contractors. Helensburgh applied to the Full Court of the Federal Court of Australia for a writ of certiorari quashing all four FWC decisions and a writ of prohibition to compel the FWC to cease dealing further with all the unfair dismissal applications. The Full Federal Court refused relief and dismissed Helensburgh’s application.

The High Court’s Determination

On appeal to the High Court, Helensburgh argued that the FWC had erred in law by considering whether the company could have made changes to its enterprise, specifically by replacing contractors with employees, to create redeployment opportunities rather than limiting inquiry into positions available at the time. Helensburgh contended that such an inquiry was beyond the scope of section 389(2).

The High Court rejected this argument. The decision held that, on the proper construction of section 389(2), the FWC can consider whether the employer could have made changes to how the employer uses its workforce to operate its enterprise. This included whether the employer could have altered its use of labour (e.g. ceasing to engage contractors) to make positions available for employees who would otherwise have been redundant.

Industrial and Legal Implications

This decision has material implications for employers managing workforce reductions:

• Expanded redeployment obligations: Employers must now consider not only existing vacancies but also whether roles currently performed by contractors or labour hire workers could reasonably be offered to redundant employees.
• Operational decisions are not immune: The FWC may scrutinise the employer’s workforce configuration and assess whether alternative arrangements, such as insourcing contractor work, would have rendered redeployment reasonable.
• Strategic workforce planning is critical: Employers must adopt a forward-looking, enterprise-wide approach to redundancy assessments. The continued use of external labour in roles suitable for employees may undermine the genuineness of a redundancy.

Lavan’s comments

The High Court has confirmed that employers cannot rely on the formal absence of vacancies or the presence of contractors to shield themselves from scrutiny. Instead, they must demonstrate that redeployment was not reasonably practicable, even if doing so would have required operational change. If you have any queries as to how this could affect redundancies in your business, please contact our experienced Employment, Safety and Education team.

Thank you to Monica Wells, Law Graduate, for her research and assistance with this article.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.

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