Restructuring and redundancies – should the contractor go first?
Posted on October 13, 2025
The recent High Court decision of Helensburgh Coal Pty Ltd v Bartley & Ors [2025] HCA 29 gives employers a timely reminder of the enquiries needed when undertaking workforce restructuring and redundancies.
Helensburgh Coal Pty Ltd (Helensburgh) operated the Metropolitan Coal Mine. Two companies, Nexus Mining Pty Ltd and Menster Pty Ltd, were engaged to provide various services at the mine. Nexus and Menster engaged contractors to provide those services.
The COVID-19 pandemic significantly reduced the demand for coking coal. As a result, Helensburgh restructured its operations.
During consultation with the workforce representatives, Helensburgh was asked to reduce its reliance on contractors. Helensburgh agreed to some insourcing but did not agree to terminate the arrangements with Nexus and Menster. The workforce restructure resulted in a reduction in the use of contractors but also the termination of 47 Helensburgh employees on the grounds of redundancy.
22 Helensburgh employees made unfair dismissal applications. Helensburgh objected on the basis that the terminations were genuine redundancies in accordance with section 389 of the Fair Work Act 2009 (Cth) (Act).
What is a genuine redundancy?
Section 389 of the Act provides:
1. A dismissal is a genuine redundancy if:
a. the employer no longer requires the job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
b. the employer has complied with its obligation in a modern award or enterprise agreement to consult about the redundancy; and
2. A dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.
The issue for consideration on appeal to the High Court was whether it was reasonable in all the circumstances for the employees to be redeployed within Helensburgh’s enterprise.
What is reasonable in the circumstances?
The High Court considered each element of section 389(2) of the Act and found:
- ‘enterprise’ is the ‘business, activity, project or undertaking’ and not the way the business uses its workforce;
- ‘redeployed’ does not require there to be a vacant position. It looks to whether there is work that could have been performed by the otherwise redundant employee;
- ‘reasonable’ is an objective test;
- ‘all the circumstances’ is broad and can include the skill set, experience, training and competencies of the employee but also those attributes of the employer's enterprise that concern its workforce, such as:
- policies, plans, processes, procedures;
- the business’ choices including using contractors or a blend of both employees and contractors;
- contract terms with contractors, such as daily hire or a long-term fixed commitment;
- practical considerations, such as the need to further train an employee in order that they can be redeployed; and
- anticipated changes, such as another employee going on leave or retiring, a contract expiring, or a position being performed by a contractor while an employee is hired.
Importantly, the Court confirmed that the Fair Work Commission was ‘permitted to make the inquiry into 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 an employee who would otherwise have been redundant’.
Key messages
When looking at redeployment, what is reasonable in the circumstances will need to be considered on a case-by-case basis. Employers should not limit the enquiries made for redeployment to positions which are vacant. If it is reasonable in all of the circumstances, the employer will need to consider the insourcing of work and the reduction of the contractor workforce. If an unfair dismissal application is filed, the Fair Work Commission can inquire into whether the employer could have made changes in how it uses its workforce, including with respect to the use of contractors.
Please contact our workplace relations team if you require any advice regarding restructures or redundancies.
