This decision of the Fair Work Commission deals with some of the tricky legal issues which arise for small businesses seeking to rely upon the genuine redundancy defence.
“[9] The third matter that I must be satisfied of under s 396 is whether the dismissal was a
case of genuine redundancy (see s 396(d) and 385(d)). The parties are in dispute about this
matter. I must decide this question before considering the merits of Mr Li’s application and I
turn to this matter in the analysis that follows from paragraph [13] of this decision.
4 Transcript PN273.
5 DHB 47.
6 Transcript PN271.
7 Transcript PN239.
8 Transcript PN241.
9 DHB 71.
10 DHB 15.
11 DHB 18.
12 Transcript PN200.
13 DHB 17.
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[10] Before doing so, I record that the final matter that I must be satisfied of under s 396 is
whether the dismissal was consistent with the Small Business Fair Dismissal Code (Code).14
Section 388(2) of the Act provides that a dismissal was consistent with the Code if (a)
immediately before the time of the dismissal or at the time the person was given notice of the
dismissal (whichever happened first), the person’s employer was a small business employer,
and (b) the employer complied with the Code in relation to the dismissal. The definition of
‘small business employer’ is in s 23. A national system employer is a small business employer
at a particular time if it employs fewer than 15 employees at that time.
[11] The respondent submits that it employed less than 15 employees at the relevant time.
The respondent’s accountant, Mr Louis Huang, appeared on its behalf and gave evidence that
the respondent employed 10 part time or full-time staff and 3 casual staff. He relied on copies
of the respondent’s payroll data in support of this position. Mr Li does not challenge the
number of part time or full-time staff however he does challenge that respondent’s submission
that there were only 3 casual staff employed at the time of his dismissal.15
[12] I am satisfied on the material before the Commission that the respondent had fewer
than 15 employees at the time of Mr Li’s dismissal.16 Mr Li has not led any evidence to
contradict this view. Accordingly, I find that the respondent was a small business employer at
the time of Mr Li’s dismissal. However, even if this conclusion is wrong, it has no bearing on
this application. As the Full Bench in Orientile Pty Ltd v Zhang17 has made clear, if a small
business employer does not establish its argument that a dismissal is a case of genuine
redundancy, the question of whether the dismissal is unfair falls for determination under s 387
of the Act (which are the provisions that apply to non-small businesses) rather than the Code:
If a small business employer does not establish that the dismissal is a case of genuine redundancy, the
question of whether the dismissal is unfair falls for determination under s. 387 of the FW Act, rather
than the provisions of the Code. In summary, the Code does not provide a fallback position to allow a
small business employer to plead that a dismissal is a case of genuine redundancy, and that in the
alternative, the dismissal was consistent with the Code. This is because the Code applies only to
dismissals for reasons of conduct or capacity of the employee or dismissals without notice for serious
misconduct.
Was Mr Li’s dismissal a case of genuine redundancy?
[13] Under s 385 of the Act, a dismissal cannot be unfair if it was a case of genuine
redundancy, which is defined in s 389 as follows:
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone
because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise
agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been
14 Fair Work Act 2009, s 396(c).
15 Transcript PN167.
16 DHB 89, 172.
17 [2026] FWCFB 162 at [25].
[2026] FWC 2674
4
reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.
[14] Section 389 of the Act was recently considered by the High Court in Helensburgh
Coal Pty Ltd v Bartley.18 Steward J relevantly explained as follows:19
128 Section 389(1)(a) has two parts. The first turns on the existence of a decision
in fact made by an employer. It is the decision to no longer require a person’s
job to be performed by anyone. That is a choice which cannot be set aside or
second-guessed. It is one reserved to the employer to make and no-one else.
But it can only be made for a particular reason.
129 The second part of s 389(1)(a) supplies that reason. It is that the job has ceased
to be needed “because of changes in the operational requirements of the
employer’s enterprise”. However, an employer is at liberty to determine what
those changes might be, or if they are needed. That is because it is the
employer’s “enterprise” which is in issue. The decision to make changes is not
qualified by any requirement of reasonableness, and it cannot otherwise be
challenged in the FW Commission, assuming it to be genuine. It is in that
sense that the capacity to render a position redundant has been likened to an
employer’s “prerogative”. As Ryan J observed in Jones v Department of
Energy and Minerals:
“[I]t is within the employer’s prerogative to rearrange the organisational
structure by breaking up the collection of functions, duties and responsibilities
attached to a single position and distributing them among the holders of other
positions, including newly-created positions.”
(citations omitted)
Was Mr Li’s job no longer required to be performed by anyone because of changes in the
operational requirements of the respondent’s enterprise?
[15] As the plurality in Helensburgh Coal said, s 389(1)(a) of the Act – which considers
whether the job is no longer required to be performed – ‘does not look to whether the
employee’s position, in terms of job title, was no longer required, but whether their “job”, in
the sense of the nature of the work they performed, was no longer required. Section 389(1)
refers to a decision by the employer and no one else.’20
[16] The respondent’s position is that between 2023 and 2025, it experienced significant
revenue decline and sustained operating losses. Mr Huang produced financial statements for
the respondent which demonstrate a financial loss of over one million dollars in 2024.21
Further, Mr Huang relied upon a cash movement report which demonstrated that in the first
18 [2025] HCA 29.
19 Ibid at [128]-[129].
20 Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29 at [30] (Gageler CJ, Gordon and Beech-Jones JJ).
21 Transcript PN171-178; DHB 140-142.
[2026] FWC 2674
5
financial quarter of 2025, the respondent had a cash management loss of $92,000.22 The
respondent’s bank statement for the period October to December 2025 demonstrates a
residual sum of what Mr Huang described as ‘only $35,973.76 left in our balance at the end of
the year 2025.’23
[17] The respondent says that Mr Li’s role has ceased to exist in its organisation, and
limited tasks were absorbed as incidental duties by another employee. The respondent says
that Mr Li’s role has not been replaced due to what is described as low active production runs
and poor financial performance.
[18] Mr Li rejects that his job was no longer required and said that the organisation
structure diagram before the Commission demonstrates that the quality control role is still
required.24
[19] I accept the evidence of Mr Huang about the operational reasons for the respondent’s
decision. The reasons he provided for Mr Li’s redundancy were rational and convincing, and
supported by cogent materials demonstrating the company’s financial status. The respondent
restructured its relevant operations to, amongst other things, reduce labour costs by
redistributing the duties of quality control officer, such that Mr Li’s stand-alone job no longer
exists. It was open to the respondent to rearrange its organisational structure, including by
breaking up the collection of quality control and assurance duties held by Mr Li’s role and
distributing them among other employees, as the High Court has confirmed. I am satisfied
that the respondent no longer required Mr Li’s job to be performed as a stand-alone role and is
not being performed by anyone else.
[20] The evidence demonstrates, and I find, that the respondent no longer required Mr Li’s
job to be performed by anyone because of changes in the operational requirements of its
enterprise. It follows that the criterion in s 389(1)(a) of the Act is satisfied.
Was there an obligation upon the respondent to consult?
[21] Section 389(1)(b) of the Act requires the Commission to consider whether the
respondent has complied with any obligation in a modern award or enterprise agreement that
applied to Mr Li’s employment to consult about the redundancy. As earlier noted, it is not in
contest that there is no enterprise agreement that applied to Mr Li in his employment.
[22] Mr Li gave evidence that he performed quality control and quality assessment duties
in relation to a variety of matters such as packing, manufacturing, work attire and hygiene.25
In its written materials, the respondent stated that Mr Li was not covered by a modern award
or enterprise agreement in relation to his employment. A copy of Mr Li’s employment
agreement is before the Commission and it states on the cover page ‘Award free,’ ‘Permanent
employee,’ ‘Salary only’ and ‘This contract has been prepared on the assumption that no
modern award applies to the employment of the employee.’26
22 Transcript PN189-190; DHB 143-144.
23 Transcript PN194; DHB 145.
24 Transcript PN203; DHB 159-160.
25 Transcript PN270-273.
26 DHB 54.
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[23] While it was not contended by Mr Li that he was covered by a modern award in his
employment, the hearing provided a facility for the parties to address the Commission’s
concerns about this issue.27 Taking into account the submissions advanced, I am satisfied that
the Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing
Award) applied to Mr Li. In summary, clause 4.1 provides that the Manufacturing Award
covers employers in ‘manufacturing and associated industries and occupations’ who employ
employees covered by the classifications in the award. For relevant purposes, clause 4.8(a)(i)
defines ‘manufacturing and associated industries and occupations’ to include ‘the
manufacture, making, assembly, processing, treatment, fabrication and preparation of…the
products…or the materials or substances…or any products…made from, or containing, the
materials or substances set out in clause 4.9.’ Clause 4.9 lists the products and materials
covered. The list includes non-food grocery products including soap, soap powders and
extracts, glycerine, oils and vaseline, items broadly used in the manufacture of beauty and
personal care products.
[24] The Manufacturing Award provides various classifications for manufacturing
employees performing quality control and assurance procedures, duties or techniques (see
A.4.3 through to A.4.10 for instance). Noting the matter was not the subject of argument
before me, it is unnecessary to determine with specificity which classification level would
have applied to Mr Li. It is sufficient for the purposes of this application to conclude that I am
satisfied, on the material before the Commission, that the Manufacturing Award applied and
that it contained an obligation to consult about redundancy. This finding is limited to the
material before the Commission insofar as it concerns Mr Li. I make no finding as to whether
the Manufacturing Award applies within the respondent’s business beyond the role held by
Mr Li. For completeness, the fact that Mr Li’s employment agreement purports to be an
‘Award free’ contract does have the effect of contracting out of any consultation obligations
under the award, nor was this argued.
[25] Consultation about major workplace change is addressed at clause 41 of the
Manufacturing Award. Relevantly, clause 41.1 requires an employer to give notice to and
engage in discussions with affected employees if it has made a definite decision to make
major changes in production, program, organisation, structure or technology that are likely to
have significant effects on employees. Clause 41.2 requires that an employer must give all
relevant information about the changes in writing to affected employees for the purposes of
discussion. ‘Significant effects’ is defined in clause 41.5 to include termination of
employment. These obligations applied to the respondent.
[26] It is not in dispute that Mr Li attended a meeting with the respondent and its
employees on 26 May 2025 at which employees were informed that restructuring was under
consideration. Thereafter, a final decision was communicated to Mr Li on 1 September 2025
during a meeting with the General Manager at which he was advised that his employment
would cease with immediate effect by reason of redundancy. He was then provided with a
copy of the termination letter. There is no material before the Commission demonstrating that
Mr Li received, in writing, all relevant information about the change and any other matters
contemplated by clause 41.2 of the Manufacturing Award. The only available conclusion on
the evidence is that Mr Li was not provided with information about these matters in writing
for the purposes of discussion, as required.
27 Transcript PN262-288.
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[27] For the purposes of s 389(1)(b) of the Act, that the evidence before the Commission
does not support a finding that the respondent complied with its obligation to consult about
the redundancy. It follows that the criterion in s 389(1)(b) of the Act has not been satisfied. I
say more about the impact of this conclusion later in this decision.
Would it have been reasonable in all the circumstances for Mr Li to be redeployed within the
respondent’s enterprise or the enterprise of an associated entity?
[28] The question of whether redeployment of an employee within the respondent’s
enterprise (or the enterprise of an associated entity) is considered reasonable will depend on
the circumstances that existed at the time of the dismissal.28 The term ‘redeployed’ in s 389(2)
is be given its ordinary and natural meaning, which is to ‘transfer to another job, task or
function.’29
[29] Mr Li says that he was not offered other options or opportunities but was simply
dismissed.30 The respondent submits that it considered moving Mr Li to its warehouse team
but only ‘minimal tasks’ were required such that there was insufficient work to justify
redeployment. It therefore concluded that no suitable alternative positions were available for
Mr Li.
[30] There is no evidence before the Commission that allows a finding that there was a job,
or a position, or other work within the respondent’s enterprise (or that of an associated entity)
to which it would have been reasonable in all the circumstances to redeploy Mr Li.
Accordingly, I am satisfied, and I find for the purposes of s 389(2) of the Act that it was not
reasonable in all of the circumstances for Mr Li to be redeployed within the respondent’s
enterprise or the enterprise of an associated entity.
Conclusion on genuine redundancy
[31] I earlier found that the respondent did not discharge its consultation obligation in
accordance with s 389(2) of the Act. Accordingly, the dismissal of Mr Li was not a case of
genuine redundancy. Having made this finding, I am required to consider the merits of Mr
Li’s unfair dismissal application.” Li v Cosmetic Laboratories (Aust) Pty Ltd [202