FWC ruling spotlights risks of hiring during redundancy – and why procedural fairness must go beyond checklist, says lawyer
Following a ruling by the Fair Work Commission (FWC) over a claim of fake redundancy, the case raised a critical question: What makes a redundancy genuine?
HRD spoke with Antonia Tahhan, Senior Associate at Chamberlains Law Firm, to explore the legal and procedural essentials.
“Dismissals are genuine when the business no longer requires an employee’s job to be performed by anyone because of operational requirements or change and the employer has to have compiled, with any obligations imposed by an award or enterprise agreement, to consult about the redundancy,” Tahhan said.
“It’s a two-pronged definition – the use of the word ‘and’ means both requirements must be met.”
It’s after the FWC ruled that hiring during the notice period of the previous employee undermines the employer’s claim they were facing financial difficulty.
“Financial difficulty is a reason for making someone redundant – operational changes can result in a restructure and the decision that some roles may not be needed or can be amalgamated,” Tahhan told HRD, “but determining it’s not needed isn’t where employer obligations end.”
Tahhan added that other avenues should be explored, such as redeployment, before a redundancy decision is made – but simply offering financial constraints as a reason for this isn’t enough.
During the hearing, held earlier this year, the worker argued her employer used the claim to justify her dismissal, while continuing to advertise for new staff positions. She also claimed possible age discrimination, suggesting her supervisor had made concerning comments about her age.
Despite multiple hearing notices and contact attempts, the employer failed to participate in any of the proceedings, leaving the FWC to decide the case based solely on the worker's evidence and submissions – in which they ruled the dismissal was unfair.
The Fair Work Ombudsman states that a redundancy happens when either an employer doesn’t need an employee’s job to be done by anyone or becomes insolvent or bankrupt.
Redundancy can happen when the business “introduces new technology, slows down due to lower sales or production or closes down,” according to the government website.
When dealing with the dismissal of an employee, Tahhan told HRD it’s important to ensure clear communication between employer and worker – instead of just ensuring requirements are met.
“It’s not just a tick box exercise,” she emphasised, “the employee should be given a bonafide opportunity to influence the whole process. It’s not necessarily a requirement to consult if an award or enterprise agreement isn’t in place, but case law tells us that in the case of procedural fairness – speaking with employees removes any doubt of what’s going on.”
Tahhan also emphasised the importance of ensuring the procedure is fair, saying, “The first step in a restructure process is to consult with potentially excess employees, informing them of the change and its impact.”
“Meetings should occur during business hours, with the option to bring a support person. It must cover operational needs, proposed changes, redeployment options, and allow employees to provide feedback. Employers must also clearly communicate that the outcome may include job loss, ensuring the process is transparent, fair, and considers all alternatives before making any final decisions.”
The hearing, conducted by Commissioner Wilson, found that the fact the employer – Lucky 88 Enterprises Pty Ltd – was hiring whilst a redundancy notice was being served undermined key arguments that the company was struggling financially.
The process of ‘hiring whilst firing’ can often have a negative impact on other employees, according to Tahhan.
“Perception-wise, you’re always going to have an issue when you’re hiring whilst firing. People will question if it’s genuine if both are going on at the same time, but that doesn’t necessarily make it true. What’s being considered is whether the responsibilities or collection of duties is required. Aspects of the job itself might still be needed.”
“Simply hiring other workers in areas of the business where there is a need doesn't prevent or undermine the redundancy process - but it does create a perception among employees, naturally that the business mustn't be suffering financial constraint.”
The key in this process, according to Tahhan, is the necessity to be open and clear in communication with members of staff whilst creating clear diagrams of restructure – looking at where more resource is needed and where there is excess.
The FWC’s ruling reinforces a critical message for employers: a genuine redundancy is not just about operational need—it’s about process, communication, and fairness. Failing to consult, overlooking redeployment options, or sending mixed signals through concurrent hiring can all erode the legitimacy of a redundancy claim.
