A pay cut does not make a role redundant

A dismissal of a person from their employment on grounds of redundancy will be exempt from the Fair Work Act 2009 (Cth) (FW Act) unfair dismissal scheme if, among other things, the dismissal is the result of the employer deciding it no longer requires the person's job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise.

The decisions of the courts and the Fair Work Commission (FWC) show that, for the exemption to apply, the changes need to be genuine, i.e. not contrived to end the employment of someone for reasons relating their work performance. However, the changes don’t have to be reasonable; an employer is free to decide that the work performed by an employee in a role should be redistributed to other roles, either existing or new, regardless of how silly this is. If these changes result in the person being left with no duties, or the duties and responsibilities of the position are so substantially altered that they are largely stripped of their original functions, the position becomes redundant.

In Demin v Tuggeranong Vikings Swim Club (2026), the Fair Work Commission (FWC) considered a case where an employer, faced with a poor financial position, decided that it could no longer pay an annual salary of $110,000 to an employee in a particular role, but could pay $65,000. The employer claimed the situation resulted in the redundancy of the role, with redeployment to the role attracting the lower salary. The title and duties of the role did not change, and the organisational structure of the employer wasn’t rearranged.

In those circumstances, the FWC concluded the role was still required and the genuine redundancy exemption did not apply.

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