Did the High Court just force me to replace my contractors with employees in a redundancy situation?

No. But it is still a matter that employers will need to show they considered and were unable to reasonably implement.

The High Court Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 found that, when considering a ‘genuine redundancy’, FWC can consider, amongst the range of factors, whether there is a genuine redundancy or whether it would have been reasonable to redeploy an employee to a role otherwise performed by a contractor.

Our Take

Don’t panic. Whilst we anticipate that a number of commentators are likely to suggest the High Court decision means that “outsourcing is dead”, that is just not the case. The decision really means that employers need to be able to show, amongst a range of considerations that their particular business is dealing with, that they at least considered the potential that an employee should have been redeployed into the role currently being performed by a contractor and it was unreasonable to do so.

There is no ‘new rule’ - rather it is just a broadening of factors which FWC can consider. How an employer uses its workforce to operate its enterprise will be a case-by-case issue – yes we are back to assessing “What is reasonable?”. Forced redeployment of a person at the expense of another person's position is still a very significant step to take and does not immediately scream “reasonable outcome” to most people.

Action Items:

• Employer considering restructures and redundancies are going to have to be more cautious particularly when dealing with contractors and considerations involving sourcing.

• Avoid just reviewing only ‘vacant positions’ when considering potential redeployment.

• Be guided by what is reasonable in all the circumstances, including but not limited to:

  • the attributes of the otherwise redundant employee, such as their skill set, experience, training and competencies.

  • attributes of the employer's enterprise that concern its workforce, such as:

    • anticipated changes, such as another employee going on parental leave or retiring, a contract expiring, or a position being performed by a contractor while waiting for an employee to be hired;

    • practical concerns, such as whether redeployment would require the employee to undergo further training;

    • contract terms, such as whether contractors are on "as needs" contracts and whether the contractors are on daily work orders or on some long-term fixed commitment;

    • decisions regarding the nature of its workforce, such as whether it has a blended workforce of both employees and contractors;

    • business choices, such as a decision to terminate a contract in the future and a decision to persist with using contractors;

    • plans; processes; procedures and;

    • its policies, including appetite for risk.

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