Redundancy is often treated as the safe way to end employment.
No misconduct. No performance management. No difficult conversations — just a business decision, a payout, and a clean exit.
But that assumption is increasingly risky.
Recent decisions from the Fair Work Commission and the High Court reinforce a simple point: labelling a dismissal as a redundancy does not make it a genuine redundancy. And if it is not genuine, the consequences can include unfair dismissal exposure, increased liability, and reputational damage.
So where is the line between redundancy and termination? And why are employers still getting it wrong?
Redundancy Is a Legal Test - Not a Business Decision Alone
Under the Fair Work Act 2009 (Cth), a dismissal will be a genuine redundancy if 3 elements are satisfied:
- the employer no longer requires the person’s job to be performed by anyone because of changes in operational requirements;
- any applicable consultation obligations under a modern award or enterprise agreement have been complied with; and
- it would not have been reasonable in all the circumstances to redeploy the employee within the employer’s enterprise or an associated entity.
If any one of these elements is not met, the dismissal will not be a case of genuine redundancy for the purposes of unfair dismissal.
In practice, the third element, being redeployment, is where most disputes arise.
Redeployment: The Deciding Factor
Redeployment is not a tick-box exercise. It is a substantive obligation that requires active consideration of available roles.
The assessment is objective and considers the totality of the circumstances, including:
- remuneration and benefits
- hours of work
- seniority and responsibilities
- location and travel
- job security and workload
Importantly, there is no requirement that the alternative role be identical. Roles may still be considered reasonable even if they involve:
- reduced responsibilities; or
- different (including less favourable) conditions
The question is whether it would have been reasonable to redeploy, not whether the role is ideal.
When Employees Refuse Alternative Employment
Where an employer offers suitable alternative employment and the employee refuses, the consequences can be significant.
Under section 120 of the Act, an employer may apply to the Fair Work Commission to reduce redundancy pay (potentially to nil) if:
- the employer obtains other acceptable employment for the employee; or
- cannot pay the full entitlement.
Recent Commission decisions confirm that 'acceptable employment' is assessed objectively.
In one case, an employee declined a role that matched pay, hours, seniority, and location because it no longer allowed informal work-from-home arrangements.
The Commission found the role was acceptable. The absence of a contractual or statutory entitlement to flexible work was critical. As a result, redundancy pay was reduced to zero.
The legal position is clear:
- Preferences (including flexibility or lifestyle considerations) are not determinative
- The focus is on objective suitability, not subjective convenience
Redeployment and Contractors: The High Court’s Warning
The High Court has reinforced that redeployment obligations extend beyond obvious vacancies.
In considering whether redeployment would have been reasonable, the inquiry may include:
- roles performed within the enterprise (including by contractors)
- whether the employer could have made changes to its workforce arrangements
- whether positions could reasonably have been made available
This does not require an employer to fundamentally alter its business model.
However, it does require employers to properly consider how work is being performed across the enterprise, and whether that creates redeployment opportunities.
For organisations with contractor or labour-hire models, this significantly increases scrutiny.
Redundancy vs Termination: The Legal Distinction
The difference is foundational.
Redundancy
- The role is no longer required due to operational change
- The focus is on the position, not the individual
- Consultation and redeployment obligations apply
- Redundancy pay may be payable
Termination (performance or conduct)
- The issue relates to the individual employee
- Procedural fairness obligations apply (warnings, opportunity to respond)
- No redundancy obligations arise
Attempting to manage performance or conduct issues through a redundancy process is high risk and often unsustainable.
Where Employers Are Exposed
Even where there is a genuine operational reason, redundancy processes commonly fail due to:
- inadequate or late consultation
- failure to identify roles within associated entities
- narrow or undocumented redeployment searches
- failure to consider how work is actually being performed (including contractors)
- poor documentation of decision-making
These failures go directly to whether section 389 is satisfied.
What This Means in Practice
The legal direction is clear: redeployment is the critical control point in any redundancy.
For HR and business leaders, this requires a more disciplined and evidence-based approach:
- Clearly articulate and document the operational change
- Comply strictly with consultation obligations
- Conduct a genuine, broad redeployment assessment (including associated entities)
- Consider workforce structure, not just current vacancies
- Document why roles are or are not suitable
- Communicate decisions clearly and consistently
Because if redeployment is not properly considered (or cannot be evidenced) the redundancy will not be genuine.
Final Thought: Redundancy Is Not the Easy Exit
Redundancy is often seen as the cleanest way to end employment. Legally, it is one of the most scrutinised.
It requires more than a business case. It requires a defensible process.
And increasingly, the question being asked is not whether the role disappeared, but whether the employer did everything reasonably possible to keep the employee employed.
That is the standard.
