Suitable alternative employment: your obligations before making a redundancy

Before you dismiss an employee because their role is no longer needed, the Fair Work Act 2009 (Cth) (the FW Act) places obligations on you that many small and medium businesses discover only after a claim lands. A redundancy is only a "genuine redundancy" if you have complied with any consultation obligations that apply and you have genuinely considered whether the employee could be redeployed into another suitable role, including within associated companies. Miss those steps and the dismissal is open to challenge as an unfair dismissal, with reinstatement or compensation of up to around $95,000 on the line.

This guide sets out who the obligation applies to, what triggers it, the specific duties you must perform, and what happens if you get it wrong.

Who the obligation applies to and what triggers it

The redeployment and consultation obligations arise from the unfair dismissal provisions of the FW Act, which apply to national system employers. In practice that is most Australian private sector employers, including companies, partnerships, sole traders and not-for-profits that employ staff.

The trigger is a dismissal where the employer no longer requires the person's job to be performed by anyone because of changes in the operational requirements of the enterprise: s 389(1)(a) of the FW Act. That covers classic redundancy situations, including:

• restructures and role redesign, where duties move or teams merge
• technology or process changes that remove the need for a position
• closing, relocating or consolidating sites
• cost reduction that shrinks headcount or rostered hours

Two thresholds are worth knowing before you plan. First, if you employ fewer than 15 employees you are a small business employer for the FW Act: s 23. Small business employers are exempt from the redundancy pay scale under the National Employment Standards (s 121) and can rely on the Small Business Fair Dismissal Code, but the genuine redundancy definition still requires consultation and a reasonable redeployment check. Second, an employee who is not covered by an award or enterprise agreement and earns above the high income threshold, $190,100 from 1 July 2026, cannot bring an unfair dismissal claim at all: s 382. High earners do not remove the obligation; they just narrow who can enforce it.

Duty 1: Comply with your consultation obligations

A dismissal is not a genuine redundancy unless the employer has complied with any obligation in a modern award or enterprise agreement to consult about the redundancy: s 389(1)(b) of the FW Act. Most modern awards contain a consultation clause requiring the employer to notify employees about major workplace change that is likely to have significant effects on them, including redundancy, to discuss the change, and to consider any views the employees raise before a final decision is made.

Practically, this means you should:

• issue written notice of the proposed change early, before decisions are final
• provide enough information for employees to respond meaningfully
• invite feedback and genuinely consider it, even if you do not accept it
• keep minutes of meetings and records of what was raised and how you responded

If your business operates under an enterprise agreement, check its consultation clause carefully. Agreement clauses vary and sometimes impose specific steps, timeframes or information requirements that go beyond the award model term. Failing to follow the clause to the letter is enough on its own to destroy the genuine redundancy defence.

Duty 2: Genuinely consider redeployment

Even where the job is genuinely gone and consultation was proper, the dismissal is not a genuine redundancy if it would have been reasonable in all the circumstances for the employee to be redeployed within your enterprise or the enterprise of an associated entity: s 389(2) of the FW Act.

The test is objective, applied at the time of the dismissal, and it bites harder than many employers expect. The search is not limited to vacant positions on a current org chart. In Helensburgh Coal Pty Ltd v Bartley [2024] FCAFC 45, the Fair Work Commission found that 22 mine employees made redundant were not in genuine redundancy because they could have been redeployed to work that was then being performed by contractors at the same mine, and the dispute was pursued through the Full Court of the Federal Court. The case illustrates that redeployment can extend to work currently performed by others, and that a narrow or box-ticking search will not survive scrutiny.

What a genuine search looks like:

• list current vacancies and roles that are likely to open soon
• consider roles that could reasonably be created by adjusting duties, teams or rosters
• check vacancies across associated entities, including related companies in a group
• record every role considered and the reasons a role was unsuitable or suitable

The assessment is about what it was reasonable for you to do, not what the employee preferred. A role at a different level, in a different location, or with different hours can still be a reasonable redeployment option if the overall package is fair in the circumstances.

Duty 3: Assess whether a role is suitable

There is no single statutory definition of "suitable alternative employment". The Fair Work Commission looks at the whole picture, so you should assess each candidate role against the same criteria you would use to hire into it:

• Skills, qualifications and experience: Can the employee perform the inherent requirements of the role, immediately or with reasonable training? You do not need a perfect match, but the role should not set the employee up to fail.
• Pay and conditions: Comparable remuneration is ideal. A lower salary does not automatically make a role unsuitable, but a large reduction needs genuine justification and, ideally, agreement. Check that the award or agreement classification, loadings and minimums are met.
• Hours and rosters: Are the proposed hours reasonable for the employee's circumstances? Where hours are being reduced to create a role, consider job sharing and confirm the arrangement meets minimum entitlements.
• Location and travel: A role within reasonable commuting distance, or one you can support with hybrid or remote arrangements, is more likely to be suitable. Substantial relocation may require assistance or a trial period to be reasonable.
• Status and security: A move from permanent to casual or fixed-term work, or from senior to junior, can still be suitable if the overall offer is fair and the role is genuinely available long-term. Be transparent about any limitations.

If a short training period will close a skills gap, build it into the offer. A reasonable training plan can turn a marginal candidate into a clearly suitable one, and the Commission will ask whether you considered it.

Duty 4: Offer the role properly and vary the contract

When you have identified a suitable role, make a written offer with enough detail for the employee to make an informed decision: position description, hours, classification, pay, location and start date. Include any training, trial or review period, and give the employee a fair timeframe to consider and ask questions.

If the employee accepts, formalise the change. Use a signed variation letter or an updated contract to record the new role, duties, hours, location or pay. Do not simply impose the change unilaterally: varying a contract without agreement can be a breach of contract and can generate its own claim. Where the change is substantial, updating and reissuing the full employment contract is often cleaner.

Where redeployment is into an associated entity, structure the move deliberately. Transferring employment between related companies can affect service recognition and redundancy entitlements: under s 122(2) of the FW Act, if service with the first employer counts as service with the second, the employee is not entitled to redundancy pay from the first employer. Document the transfer and confirm how service and entitlements are recognised so the position is clear to everyone.

Duty 5: If no suitable role exists, finalise lawfully

Where there is genuinely no suitable alternative, the redundancy process must still be completed lawfully. You must give the required notice of termination or payment in lieu under s 117, and pay redundancy pay under the scale in s 119 of the FW Act where it applies:

• 4 weeks for at least 1 but less than 2 years of service
• 6 weeks for 2 to 3 years, rising to 8 weeks at 4 years
• 10 weeks at 5 years, 13 weeks at 7 years, 16 weeks at 9 years
• 12 weeks for 10 or more years of service

Small business employers with fewer than 15 employees are exempt from this scale unless their award or agreement provides otherwise: s 121. Redundancy pay is calculated at the employee's base rate of pay for ordinary hours.

Also be aware of what happens if the employee refuses an offer. Under s 122(3) of the FW Act, an employee who rejects an offer of employment from another employer that is on terms and conditions substantially similar to, and considered on an overall basis no less favourable than, their current terms, and that recognises their service, is not entitled to redundancy pay from the first employer. Refusal of a genuinely suitable internal role is assessed differently and is a nuanced area, so take advice before processing payments or finalising a dismissal in that situation. Keep considering redeployment right up to the termination date.

Consequences of getting it wrong

If a dismissal is not a genuine redundancy, an employee who meets the eligibility tests can claim unfair dismissal under s 385 of the FW Act. An application must be lodged within 21 days of the dismissal taking effect: s 394. The Fair Work Commission can order reinstatement, or compensation where reinstatement is not appropriate.

Compensation is capped at the lesser of the remuneration the employee received in the 26 weeks before the dismissal or half the high income threshold: s 392. With the threshold at $190,100 from 1 July 2026, the maximum compensation for a dismissal around that time is about $95,050. On top of any compensation ordered, you may still owe the redundancy pay and notice you were trying to avoid, and you will carry the cost of defending the claim.

Compliance checklist

Run through each step before any redundancy decision takes effect:

• Confirm which award or enterprise agreement covers the employee and read its consultation clause
• Issue written notice of the proposed change before final decisions are made
• Hold genuine consultation meetings, consider feedback and keep records
• Search for vacancies and potential roles across your business and associated entities
• Assess each role against skills, pay, hours, location and status, and document your reasoning
• Consider whether reasonable training could bridge any skills gap
• Make a detailed written offer and give a fair timeframe to respond
• Formalise acceptance with a signed variation letter or updated contract
• If no suitable role exists, calculate notice and redundancy pay correctly, and check small business exemptions
• Keep a redeployment log: roles considered, assessments, offers made and outcomes

Where a lawyer helps

A lawyer is most useful before you finalise the decision, not after a claim is filed. An employment lawyer can review your award or agreement consultation clause, stress-test whether your redeployment search would survive scrutiny, help you assess borderline suitability questions, and draft the variation letters, offers and transfer documents. If a claim has already been lodged, they can assess the merits, manage the 21-day window and the conciliation process, and defend the genuine redundancy argument. Given the potential exposure of a compensation order, a short review of the process before termination is usually the most cost-effective protection.

The redeployment question you must be able to answer

The duty employers most often miss is not consultation, which is visible and procedural, but the redeployment search, because it is easy to assume no other role exists without actually checking and documenting it. Before any redundancy, ask yourself the question the Commission will ask: which roles did we consider, in which entities, and why was each one unsuitable for this employee? If you cannot answer that from written records, the redundancy is not yet defensible. Start with an audit of vacancies across your group, including work currently performed by contractors, and build the redeployment log before you give anyone notice.