Genuine redundancy under section 389: consultation, redeployment and the unfair dismissal shield

The section 389 definition

Section 389 of the Fair Work Act 2009 establishes a definition for a ‘case of genuine redundancy’ which, if met, provides a complete defence to an unfair dismissal claim. This definition outlines specific conditions that must be satisfied for a dismissal to be considered a genuine redundancy.

Under section 389(1)(a), a dismissal is a genuine redundancy when the employer no longer requires the person’s job to be performed by anyone. This lack of requirement must be due to changes in operational requirements. Furthermore, section 389(1)(b) stipulates that the employer must also have complied with any consultation obligations outlined in a modern award or enterprise agreement.

Critically, a dismissal does not constitute a genuine redundancy if redeployment was a viable option. Section 389(2) states that if it would have been reasonable to redeploy the person within the employer or an associated entity, the dismissal cannot be considered a genuine redundancy.

Operational requirements

Operational requirements for a genuine redundancy arise when changes occur within a business. These changes can include restructure, technological change, downsizing, outsourcing or business closure. Crucially, the test for redundancy focuses on whether the job itself is no longer required to be performed, irrespective of whether a specific employee is needed to do it.

Even if the work previously performed by an employee continues, it can still constitute a redundancy if that work is reallocated to other roles within the organisation. This demonstrates that the position, not the employee, has ceased to be required.

Employers must ensure that any situation presented as a redundancy is genuinely such. Attempting to disguise a performance-based dismissal as a redundancy will not shield the employer from unfair dismissal liability.

Consultation obligations in modern awards

Most modern awards include a consultation clause addressing major workplace change. These clauses typically require employers to notify affected employees of proposed changes, discuss the changes with them, and consider any matters raised by the employees or their representatives.

The consultation process outlined in these award clauses is a mandatory step. Even if the consultation process would not have altered the ultimate outcome of a redundancy, a failure to properly consult can render the redundancy not 'genuine'.

The Fair Work Commission has clarified that the consultation duty is a precondition for an employer to rely on the section 389 defence. This means the duty must be fulfilled before the employer can assert the defence, regardless of whether the consultation was substantively fair.

Redeployment within the enterprise

The employer must consider whether redeployment is possible before a redundancy is declared genuine. This consideration extends to roles within the employer’s enterprise and any associated entity. workplace investigation timer

'Reasonable' redeployment options can encompass modified duties, retraining, and relocation, where those options are appropriate given the employee’s skills and the available positions. The determination of what constitutes a 'reasonable' redeployment is a factual question for the Commission.

Failure to offer reasonably available redeployment opportunities can undermine a redundancy’s genuineness. If redeployment was reasonably available but not offered, the employee may have grounds to pursue an unfair dismissal claim. This obligation applies to all employers, including small business employers (fewer than 15 employees) who are exempt from National Employment Standards redundancy pay.