In the appeal decision of Orientile Pty Ltd v Carson Q Zhang [2026] FWCFB 162, the Full Bench of the Fair Work Commission (FWC) affirmed small businesses are subject to the same consultation obligations as large employers when undertaking the redundancy process.
Genuine redundancy and consultation requirements
As employers will appreciate, there are inherent legal risks associated with termination of employment. In the context of redundancies, to mitigate these legal risks, employers ought to comply with the definitions and obligations set out in the Fair Work Act 2009 (Cth) (FW Act).
Section 389(1)(a) of the FW Act confirms that, for an employee to be made genuinely redundant, it must be established the employee’s role is no longer required to be performed by anyone due to operational changes. This can include the role ceasing to exist in its entirety or the role being distributed among other employees. Furthermore, pursuant to section 398(1)(b) of the FW Act, for an employee to be made genuinely redundant, it must be established the employer complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
To discharge the obligations and objectively establish the employee’s role is no longer required to be performed by anyone, employers must go through the ‘redundancy consultation’ process, in which:
- the employee is informed of the proposed restructure/redundancy;
- the employee is provided with all relevant information;
- the employee is afforded the opportunity to respond to the proposed restructure/redundancy and put forward any mitigating circumstances/alternatives to termination (including redeployment, which the employer must consider prior to any termination); and
- the employer must genuinely consider, and engage with, the matters raised by the employee.
Case history
In May 2025, Orientile Pty Ltd (Orientile), a small business was found to have unfairly dismissed a sales representative. The former employee alleged:
- his position was not genuinely redundant, as Orientile failed to undertake the redundancy consultation process (therefore it could not establish his position was no longer required to be performed by anyone); and
- he was entitled to the redundancy consultation process under the FW Act and the Storage Service and Wholesale Award 2020 (the Award), which covered his employment. Relevantly, the Award contained a ‘consultation’ clause, which required employers to engage their employees in consultation when a major workplace change was proposed.
The former employee’s arguments were accepted by the FWC, including that the employer had unreasonably failed to consult with the individual, and Orientile was ordered to pay compensation to the employee (in the amount of $31,652.93 which represented a 4-week period during which a consultation process could have occurred and then a further 12 weeks’ salary). Orientile was also ordered to pay the employee superannuation contributions.
In considering appropriate compensation, although section 119 of the FW Act (which requires employers to make redundancy payments) does not apply to small businesses, the FWC still used it as a ‘guide’. Hence, with almost 15 years of service, the employee received the 12 weeks compensation – being the maximum redundancy pay available under the FW Act.
Appeal
Under the FW Act, it is not a case of unfair dismissal if the dismissal was consistent with the small business fair dismissal code (the Code). Relevantly, the Code contains a ‘checklist’, that can assist employers in complying with their procedural fairness obligations when effecting terminations. Where an employer satisfactorily completes the Code, this is often accepted by the FWC as a defence to an unfair dismissal claim.
Notwithstanding the Code, section 387 of the FW Act sets out the issues the FWC must consider when determining whether a dismissal was ‘harsh, unjust or unreasonable’. As a high-level summary, the issues include, but are not limited to:
- whether there was a valid reason for dismissal; and
- whether the employee was notified of this valid reason for dismissal.
The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting dismissal is also a factor the FWC must consider.
Following the initial decision, Orientile commenced an appeal alleging the nature of his business (i.e. the fact it was a small business) was not appropriately considered when the FWC determined that Orientile failed to appropriately consult the former employee. Orientile considered the redundancy consultation process was not required of small businesses, and that completion of the Code ought to have been accepted as a jurisdictional defence to the unfair dismissal claim.
In considering the appeal, the Full Bench accepted the case raised novel issues in respect of whether the ‘size’ of the employer should be taken into account when determining compliance with redundancy/consultation obligations.
The Full Bench determined:
- in the case of Orientile, as the employer failed to undertake the redundancy consultation process, it could not establish the former employee’s position was genuinely redundant. Accordingly, the FW Act and the Award were breached; and
- while the Code would generally apply in small business unfair dismissal matters, when termination is not due to genuine redundancy, the question of whether the dismissal was unfair must be determined having regard to all the factors set out in section 387 of the FW Act. In other words, small business cannot rely on the Code in and of itself as a blanket defence to an unfair dismissal claim, as the FWC is still required to consider section 387 of the FW Act.
Key takeaways
The appeal confirmed the size of an employer does not diminish, excuse, or otherwise lessen the definition, or procedural requirements of a genuine redundancy. The Full Bench further confirmed that the FW Act does not include a separate redundancy regime for small businesses that reduces or limits an employer’s obligations under the Award, nor does it provide an exemption to the Award’s consultation obligations.
In respect of the Award itself, there is no exemption for small businesses from the obligation to consult an employee about major workplace changes. The Award’s provision requiring consultation does not excuse non-compliance on the basis that the employer is a small business with limited resources. Accordingly, small business employers remain subject to the same consultation obligations as all other employers covered by the Award.
The Full Bench commented that if an employer wishes to rely on the protection afforded by a genuine redundancy, and therefore be shielded from an unfair dismissal claim, it must comply with all applicable consultation obligations. In Orientile’s case, its failure to consult meant that it could not establish the dismissal was a genuine redundancy. As a result, the Full Bench affirmed that the dismissal was unfair, notwithstanding Orientile may have had a valid operational reason for the redundancy.
What does this mean for employers?
The Full Bench decision reminds small businesses that they are not exempt from consultation obligations when implementing redundancies. Prior to undertaking a restructure/redundancy process, it is important employers refer to and consider their obligations under the FW Act and any applicable industrial instruments to discharge their obligations and mitigate legal risks.
If you need any assistance or guidance with the redundancy process or would like further information regarding the above, please contact our Employment Law team.
This article was co-authored by Senior Associate, Bronte Jackson and Solicitor, Chelsea Huth.
