People, Culture & Employment Governance · 4 May 2027
A genuine, well-justified operational reason to make a role redundant is necessary. It is not sufficient. A recent Fair Work Commission decision confirmed directly that even a business restructure becomes an unfair dismissal if the required consultation did not happen, regardless of how legitimate the underlying business reason was.
The Three Conditions, All Required Simultaneously
Under section 389 of the Fair Work Act, a dismissal only qualifies as a genuine redundancy, and therefore falls outside the unfair dismissal jurisdiction, if three conditions are all satisfied at once: the role is no longer required due to changes in operational requirements, the employer has complied with any consultation obligations in the applicable award or enterprise agreement, and redeployment within the organisation or an associated entity would not have been reasonable in the circumstances. Missing any one of these three, even while satisfying the other two, is enough to expose the association to a successful unfair dismissal claim.
The Misconception That Costs Small Associations The Most
Associations with fewer than fifteen employees frequently assume the small business exemption protects them broadly from redundancy risk. It does not. The exemption applies specifically and only to redundancy pay under the National Employment Standards. Consultation obligations under an applicable modern award still apply in full, and small business employees remain able to bring unfair dismissal claims after twelve months of employment. A recent Fair Work Commission decision confirmed this directly and specifically: making even a single position redundant in a small business does not exempt the employer from its consultation obligations, and the Commission found a dismissal unfair precisely because consultation was skipped, even though the underlying selection reasoning may have been valid. An association employing fewer than fifteen people that skips consultation because the position count feels too small to warrant the formality has not avoided a legal obligation. It has simply not yet discovered it still applies.
The Redeployment Duty Is Broader Than Most Employers Assume
consideration of redeployment requires the employer to actively identify any role that exists, or could reasonably be made available, rather than passively waiting to see whether the affected employee applies for an advertised vacancy. An association cannot rely on the absence of a formal application as evidence that redeployment was properly considered. This connects directly to the delegation of authority discipline discussed earlier in this series: whoever is managing a redundancy process needs authority and a genuine, proactive obligation to assess redeployment options across the organisation, not simply the authority to announce a decision already made.
- Confirm all three genuine redundancy conditions are satisfied before any redundancy communication happens, since a legitimate operational reason alone does not protect the organisation if consultation or redeployment consideration is missing.
- Never assume the small business exemption removes consultation or unfair dismissal exposure, since it applies specifically and only to redundancy pay under the National Employment Standards.
- Apply full consultation obligations even where only a single position is being made redundant, given recent Fair Work Commission decisions confirming this applies regardless of how small the reduction is.
- Actively identify and assess potential redeployment opportunities across the organisation, rather than treating the absence of an employee application for an existing vacancy as sufficient evidence redeployment was considered.
- Seek legal advice before communicating any redundancy decision, even where the operational reasoning feels entirely clear-cut, given how procedurally exposed this specific area of employment law is.
Redundancy governed well protects both the affected employee's entitlements and the organisation from a costly, avoidable unfair dismissal claim. The cost of getting the process right is consistently smaller than the cost of an association discovering, after the decision has already been communicated, that one of the three required conditions was quietly missed.
This is one of the practical governance topics built into our Board Director course — alongside the papers, tools and frameworks that turn the principle into your board's actual practice. Explore the course →
— Annie