Contractor shake-up continues as the bar is raised for ‘genuine redundancies’

By Fay Calderone and Abby Wright

The full Federal Court decision of Helensburgh Coal Pty Ltd v Bartley [2023] FCFCA 45 provided a timely reminder employers cannot get complacent in their efforts to find redeployment options for employees who are to be made redundant.

In this case, 22 employees brought unfair dismissal proceedings against Helensburgh Coal following an operational restructure, which left approximately 90 employees redundant. Helensburgh Coal raised a jurisdictional objection arguing the dismissals were genuine redundancies.

Background

Helensburgh Coal Pty Ltd (Helensburgh Coal) engaged two companies as contractors, Nexus Mining Pty Ltd (Nexus) and Mentser Pty Ltd (Mentser), who were to provide various services around the mine. At the time of the redundancies, Helensburgh Coal had a five-year agreement with Mentser, and had recently extended the contract with Nexus for a further 12 months.

The CFMMEU, the union representing the applicants, argued the applicants should‘ve been redeployed to site positions which were already filled by employees of Mentser and Nexus. Helensburgh Coal argued employees cannot reasonably be redeployed into positions which aren’t vacant to begin with.

Following a lengthy litigation process over two years, Commissioner Riordan of the Fair Work Commission (Commission) determined it would‘ve been reasonable in all circumstances for Helensburgh Coal to insource its work to employees who would‘ve otherwise been made redundant, even if those positions were already filled by the employees of the two contractors.

Importantly, two key findings were critical to the Commission’s decision to rule in favour of the employees:

  • it would’ve been reasonable for Helensburgh Coal to insource the work performed by contractors. Helensburgh Coal had systems in place to insource work, as it had done so before, and further, Helensburgh Coal had chosen to extend the contract with Nexus by a further 12 months instead of saving the roles for the redundant employees; and
  • the redundant employees could've performed the role of the contractors. Most of the work undertaken by the contractors was deemed to not have been specialist work. Following a competency assessment, it was held it could be performed by the redundant employees, with minimal retraining.

Federal Court appeal

Helensburgh Coal brought the proceedings to the Federal Court, on the ground the Commission had incorrectly applied the test to determine what would’ve been ‘reasonable in all the circumstances’ when considering redeployment.

The Federal Court dismissed the application. It found the Commission correctly used their discretion to take all circumstances into account. Justice Raper in her judgment acknowledged the consequences of this decision, that a position doesn’t necessarily have to be ‘vacant’ for redeployment to be reasonable. However, her Honour commented further it would be ‘rare’ for such circumstances to be reasonable.

Now the jurisdictional objection has been finally resolved, the unfair dismissal proceedings will proceed in the Commission.

Key takeaways from this case

The reasonableness of redeployment is determined on a case-by-case basis.  What is reasonable for one employer may not be reasonable for another.

In this case, the facts were highly unusual. Justice Raper noted it would be very rare for the Commission to consider it reasonable, in all the circumstances, for an employer to insource positions that are already filled by contractors to employees who would otherwise face redundancy.

What does this mean for employers?

  • They should think creatively and not cut corners when it comes to identifying redeployment options.
  • They must carefully consider the redeployment options available, including into roles performed by contractors and labour hire employees.
  • Redeployment options should explore avenues to bring in-house tasks currently outsourced to contractors. Additionally, employers should assess positions that make become vacant, such as those resulting from impending retirements or the conclusion of contracts or outsourcing arrangements.

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