The High Court clarifies when an employer is obliged to redeploy

The Fair Work Act (FW Act) defines ‘genuine redundancy’. The definition has four parts.

The first part turns on the existence of a decision made by an employer to no longer require a person’s job to be performed by anyone. This part does not look to whether the employee’s position, in terms of job title, was no longer required, but whether their “job” was required. It is a decision to be made by the employer and no one else. 

The second part provides that the job must have ceased to be needed “because of changes in the operational requirements of the employer’s enterprise”. An employer determines what those changes might be or if they are needed. There is no reasonableness inquiry in respect of the first and second parts. Therefore, the fact that the employer, due to changes in operational requirements, no longer requires the work to be performed by anyone need not be reasonable.

The third part provides a protection for the dismissed employee, by posing this counter-factual to the employer – ‘Despite that you no longer require the dismissed employee’s job to be performed by anyone because of changes in the operational requirements of your enterprise, is it reasonable in all the circumstances, for you to redeploy the person within your enterprise (or a related enterprise)’. Unlike the first and second parts, the third part is qualified by a requirement of reasonableness. A person’s dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed.

If the employee make an unfair dismissal application alleging the dismissal was not a case of ‘genuine redundancy’ because it would have been reasonable in all the circumstances for the employer to redeploy the employee, then the Fair Work Commission (FWC) may inquire into this allegation.

The range of the inquiry permitted is limited in the sense that the inquiry is in respect of the employer’s (or an associated entity’s) “enterprise”, and that the redeployment of the person was “reasonable in all the circumstances”.

The employer’s enterprise is its “business, activity, project or undertaking”. It is not appropriate for the FWC to require the employer to change the nature of the business, activity, project or undertaking of the employer’s enterprise. However, the nature of the employer’s “enterprise” is not defined by reference to how the employer uses its workforce to operate its enterprise, or why it does so in that manner. Therefore, such uses may form part of the FWC enquiry.

The inquiry is whether it would have been reasonable in all the circumstances for the person to be “redeployed” within the employer’s enterprise. “Redeployed” does not require there to be a vacant position. The word “redeploy” does not, by its ordinary meaning, exclude or prohibit some change to how an employer uses its workforce to operate its enterprise that facilitates redeployment. Indeed, the ordinary meaning of “redeploy” – “to rearrange, reorganise, or transfer”– envisages some reorganisation or rearrangement.

“Redeployed” does not mean that it is only reasonable to redeploy a person if there is a vacant position in the enterprise, rather it looks to whether there is work, or a demand for work, within the employer’s enterprise (or an associated entity’s enterprise) that could be performed by the otherwise redundant employee. 

Third, the inquiry is whether redeployment “would have been reasonable”. The words “would have been” direct the FWC to consider a hypothetical situation. A hypothetical is inherently a consideration of a situation changed from what it was. The use of the past tense directs attention to the situation at the time of the dismissal, and therefore asks “what, at the time of the dismissal, could have been done to redeploy the employee within the employer’s enterprise”. That is, at the time of the dismissal, would it have been reasonable to redeploy the employee to perform other work within the employer’s enterprise. 

Fourth, the inquiry is a reasonableness inquiry. Reasonableness is an objective question to be determined by the FWC. The inquiry does not look to reasonableness only from the point of view of the employer, or only from the point of view of the employee (although they are relevant). It is an inquiry as to reasonableness in the context of the employer’s enterprise, with regard to the nature of that enterprise. 

The inquiry is whether redeployment would have been reasonable in “all the circumstances”. The words “all the circumstances” are unmistakably broad. “All the circumstances” can include:

• the attributes of the otherwise redundant employee, such as their skill set, experience, training and competencies, and also,

• those attributes of the employer’s enterprise that concern its workforce.

Those employer’s enterprise attributes include such things as:

• its policies, including appetite for risk;
• plans;
• processes;
• procedures;
• business choices, such as a decision to terminate a contract in the future and a decision to persist with using contractors;
• decisions regarding the nature of its workforce, such as whether it has a blended workforce of both employees and contractors;
• contract terms, such as whether they are “as needs” contracts and whether the contractors are on daily work orders or on some long-term fixed commitment;
• practical concerns, such as whether redeployment would require the employee to undergo further training; and,
• anticipated changes, such as another employee going on parental leave or retiring, a contract expiring, or a position being performed by a contractor while waiting for an employee to be hired.

These are “circumstances” of how an employer uses its workforce to operate its enterprise, and can bear on whether it would have been reasonable to redeploy an employee within the enterprise. These circumstances are not directed at the size, scope or nature of the enterprise, which are fixed at the date of dismissal; those circumstances should not be the subject of enquiry by the FWC. 

The FWA does not prohibit the FWC from asking whether an employer could have made changes to how it uses its workforce to operate its enterprise so as to create or make available a position for a person who would otherwise have been redundant.