On 6 August 2025, the High Court of Australia unanimously decided that the Fair Work Commission is permitted under section 389(2) of the Fair Work Act (the Act) to inquire into whether or not an employer could have made changes to how their workforce is used so as to create or make available a position for an employee who would otherwise be made redundant. In particular, this included roles being performed by contractors.
The Court confirmed that redeployment does not require there to be a current vacant position. The idea of redeployment can include reorganising the workforce, changing how contractors are used, or insourcing work, insofar as those are reasonable in all the circumstances.
The Court also emphasised that while “enterprise” in the Act has a defined meaning (business, activity, project or undertaking) and that nature cannot be changed by the inquiry, how the employer uses its workforce is part of what can be looked at when asking whether redeployment is reasonable.
Why this matters
This is a major clarification (and tightening) of what employers must do (or at least consider) when planning redundancies:
- employers can no longer rely solely on the argument that there was no vacant position for redundant employees. Even if there was no formal vacancy, if a contracted role exists doing the same or similar work, the FWC can consider whether that could have been performed by an employee.
- employers with mixed or “blended” workforces — employees plus contractors or labour hire — are especially exposed.
- redundancy processes must include assessing whether it was possible (and reasonable) to change contractor arrangements, insource, shift responsibilities, or otherwise rearrange workforce deployment.
NB: the Court’s decision does not mean that every redundancy must lead to replacing contractors with employees. What matters is whether it would have been reasonable in that particular set of circumstances. The business context, nature of the enterprise, contract obligations, timing, impact, cost etc. all matter.
Practical takeaways
If you are thinking about making redundancies (or are already in that process), consider the following:
- before finalising any redundancy decision, conduct a comprehensive audit of roles currently performed by contractors or via outsourcing – are they “as needed” or ongoing, and whether or not the employee can perform the same role.
- document the redeployment inquiry (i.e. what roles are considered, what are contractors doing, can the contracted roles be terminated, can other roles be shifted reasonably etc.)
- comply with consultation obligations.
- evaluating the “reasonableness” from all angles, including costs, training, business strategy, operational risk, policies, consistency and whether or not changing contractor arrangements would disrupt the business.
- review contractor roles and termination provisions.
In essence, if an employer has contractors doing work that could easily be done by an employee, they should ask whether those contractor roles could have been used to redeploy and employee instead of making them redundant.
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Photo credit – Ciphr – https://www.ciphr.com/
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