No free pass for small business in redundancy

An employee who is dismissed as a result of their position being made redundant can challenge the dismissal under the Fair Work Act 2009 (Cth) unfair dismissal laws if the employer does not meet its consultation and redeployment requirements. To rely on the genuine redundancy exemption from unfair dismissal that is provided for dismissals on grounds of redundancy, the employer must comply with the consultation obligations under a relevant modern award or enterprise agreement, and have reasonably considered redeployment of the employee.

The recent decision of the Fair Work Commission (FWC) in Orientile Pty Ltd v Zhang (2026) has confirmed that compliance with consultation obligations is required for all employers seeking to rely on the genuine redundancy exemption, regardless of their size. The fact that only one position is being made redundant does not exempt an employer from its consultation obligations because the decision to make a single position redundant in a small business is likely to affect remaining employees, particularly if the work undertaken by a person in that position will be redistributed among remaining employees. The removal of a position from a workplace may also impact career progression and opportunities for remaining employees. Such a decision will also have a significant impact on the person to be dismissed as the result of a position being made redundant.

In this case, the redundancy arose when the employer determined that one of three salesperson roles had to be made redundant due to a downturn in business. The employer selected the role occupied by the poorest performer for redundancy. The FWC observed that it would have required little, if any, effort for the employer to meet the award obligation to consult the three salespersons about all the matters relating to the redundancy prior to dismissing the applicant on the ground of redundancy.

The employer did not take any steps to even attempt to meet the award obligations to consult the salespersons about the redundancies, including the selection criteria it intended to use. The FWC ruled the fact that the criteria may have been valid does not excuse non-compliance with the consultation obligations in the award. Other options, such as voluntary redundancy and job sharing, could have been explored if the obligations had been met. Therefore, the dismissal was found to be unfair.

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