- Published
In a landmark decision, the High Court has upheld the Federal Court’s ruling that the dismissal of 22 workers at Helensburgh Coal’s Metropolitan Mine in 2020 was not a genuine redundancy, thereby breaching the Fair Work Act 2009.
The case — Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 underscores critical lessons for employers navigating redundancy processes, especially in heavy industries like mining where operational changes are frequent.
Background
In mid 2020, Helensburgh Coal faced significant operational and financial challenges during the early stages of the COVID 19 pandemic. The company had previously engaged labour hire companies, Nexus in August 2018 and Menster in March 2020, to perform work at the mine.
A drop in the coal price led the company to reduce production, requiring only four crews instead of the usual five. While the company committed to insource some of the work being done by Nexus, it did not do so for all roles.
Ultimately, a total of 90 permanent employees were made redundant, with 47 employees, including the 22 litigants, not agreeing to their termination. A major point of contention in the case was whether Helensburgh Coal was required to restructure its operations to free up work for otherwise redundant employees. The company argued it only had to consider whether any jobs were available at the time of the dismissals.
The Federal Court found that, despite the terminations, similar work continued to be performed by subcontractors, meaning the roles were still effectively being carried out. The High Court upheld these findings, confirming that the dismissals did not meet the legal criteria for genuine redundancy under the Fair Work Act 2009 and were therefore unlawful.
Straight from the Fair Work Act 2009 cth section 389:
389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s 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 any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.
The case will now return to the Fair Work Commission, where Helensburgh will still have to defend each unfair dismissal claim individually. The Commission will decide on appropriate remedies for the affected workers, such as reinstatement or compensation (dependent upon case outcomes).
Key Case Considerations for Employers
- Subcontractors Performing Identical Work
The court found that while permanent employees were made redundant, similar roles were being performed by subcontractors. This raises questions about the genuineness of the redundancy, as the work was still being carried out within the organisation. Employers must ensure that redundancies are not merely a cost-cutting measure disguised as operational necessity.
- Timing and Economic Factors
The dismissals occurred during the early stages of the COVID-19 pandemic, a period marked by economic uncertainty. While economic downturns can justify redundancies, employers must demonstrate that all reasonable alternatives, including redeployment and retraining, are considered before resorting to dismissal.
- Labour Hire and Outsourcing Practices
The case highlights the complexities of labour hire arrangements and contractors. Employers should be cautious when outsourcing work that could be performed by existing employees, as this may lead to claims of unfair dismissal if not managed transparently and in accordance with the Fair Work Act 2009.
This isn’t the first time Helensburgh Coal’s redundancy decisions have come under scrutiny.
Back in 2016, the Fair Work Commission dealt with similar claims relating to the same mine. In that case, there were 6 applicants that claimed unfair dismissal, but the Commission accepted that the redundancies were genuine and made it clear that the outcome would have been different if contractors were still performing the same work.
In other words, this business had already been warned. The latest case shows what can happen when that warning isn’t regarded.
You can read the 2016 case here – Hillen, Eamon v Helensburgh Coal Pty Ltd – [2016] FWC 5471
Practical Steps for Employers When Considering Redundancies
- Conduct a Thorough Redeployment Assessment: Before initiating redundancy, assess whether affected employees can be redeployed to other roles within the organisation, including those occupied by contractors.
- Engage in Meaningful Consultation: Ensure that all consultation discussions are genuine, with employees provided adequate time and information to consider alternatives.
- Review Labour Hire Arrangements: Evaluate whether outsourcing roles that could be performed by existing employees is justifiable and compliant with the Fair Work Act 2009.
- Document All Decisions and Communications: Maintain comprehensive records of all steps taken during the redundancy process, including consultation, assessments, and decisions made.
- Seek Expert Advice: Consult with experienced HR professionals to navigate complex redundancy situations and ensure compliance.
The Helensburgh Coal case serves as an important reminder for employers, emphasising the importance of adhering to legal obligations and best practices in redundancy processes. A common oversight we are seeing across the industry. By learning from this case, employers can better manage workforce changes and mitigate legal risks.
If you require assistance in reviewing your redundancy process or need guidance on compliance with the Fair Work Act 2009, please contact us for expert support tailored to your organisation’s needs.
Get in touch with our team today to discuss how we can help.
Stay up to date with all the upcoming changes via our Linkedin or sign up to our ‘Employer Update’ newsletter.
