Genuine redundancy: the three tests

By Stefan Savva, Founder · Checked against the Fair Work Ombudsman and the Fair Work Commission on 28 October 2026 · 6 min read

A redundancy is genuine under section 389 of the Fair Work Act when three things are true: you no longer need anyone to do the job because of a change in how the business operates, you met any consultation duty in the award or enterprise agreement, and it would not have been reasonable to move the person into another job in your business or a related company. Pass all three and the person cannot bring an unfair dismissal claim. Fail one and they may.

This guide takes each test in turn, shows the common ways employers fail them, and explains what a claim can cost. It is general information, not legal advice. The Fair Work Ombudsman does not decide whether a particular redundancy is genuine; the Fair Work Commission does, if a claim is made.

Test 1: The job is no longer needed

The first test is that you no longer require the person's job to be performed by anyone, because of changes in the operational requirements of the business (Fair Work Act 2009, section 389).

Note what this asks. It is about the job, not the person's performance. The Fair Work Ombudsman lists typical changes: new technology or automation, a fall in sales or production, closing a site, moving interstate or overseas, or a restructure after a merger.

The job can be gone even if some of its tasks remain. If the tasks are spread across other staff, or a new system does them, that can still be a genuine redundancy. What fails the test is replacing the person: the same job under a new title, a contractor brought in to do it, or someone hired into it soon after.

Ask yourself: if I listed what this person does each week, would anyone be hired or contracted to do most of it?

Test 2: You consulted as required

The second test is that you complied with any obligation in a modern award or enterprise agreement to consult about the redundancy. Almost every award and agreement has a consultation clause, so for most staff this test applies.

This is the test employers fail most easily, because it is about process rather than business reasons. A redundancy can be entirely justified and still not be genuine because consultation was skipped, rushed or done after the decision was final. Our guide to redundancy consultation explains what the clauses require and how to record it.

If the person is covered by no award and no agreement, there is no consultation obligation under this test, and it is passed by default.

Test 3: Redeployment was not reasonable

The third test works in reverse. A dismissal is not a genuine redundancy if it would have been reasonable in all the circumstances to redeploy the person within your business, or within the business of an associated entity.

The question is not whether a perfect role existed. It is whether there was a role the person could reasonably do, perhaps with some training, that you could have offered. The Fair Work Commission asks whether redeployment would have been reasonable in all the circumstances. Things that usually bear on that include:

the size of the business and any related companies
the jobs that were open or about to open
the person's skills, qualifications and experience
whether the role was in a place they could reasonably get to

Look before you decide, and write down what you looked at. If a suitable role exists, offer it. The person can decline, and a redundancy can then go ahead.

What a non-genuine redundancy can cost

If a redundancy fails any test, the person may be able to apply to the Fair Work Commission for unfair dismissal. They must apply within 21 days of the dismissal taking effect (Fair Work Commission). To be eligible, they generally need at least 6 months of service with you, or 12 months if you are a small business with fewer than 15 employees, and must earn under the high income threshold or be covered by an award or agreement (Fair Work Ombudsman).

If the Commission finds the dismissal unfair, it can order reinstatement or compensation. Compensation is capped at 26 weeks' pay or half the high income threshold, whichever is lower. Beyond the money, a claim costs management time, legal fees and goodwill with the staff who stay.

A small business that follows the Small Business Fair Dismissal Code is protected for dismissals that meet the Code. The Code treats a genuine redundancy as not unfair, so the three tests still matter.

A short self-check

Before any letter goes out, you should be able to answer yes to each of these:

I can write the business reason the job is no longer needed in two sentences.
No one will be hired or contracted to do this job.
I have read the consultation clause that covers this person and followed it.
I have notes of each consultation meeting.
I looked for other roles in the business and any related company, and recorded what I found.
The person was chosen using criteria I can explain, applied the same way to everyone.

If any answer is no, pause. Fixing the process now is far cheaper than defending it later.

After the decision

A genuine redundancy is still a hard day for the person leaving. Paying what is owed on time, giving a fair reference and helping them find their next role all reduce the chance they feel the decision was unfair, whatever the law says. Changing Careers gives each person you nominate twelve weeks of help with their next role, from A$599 per person.

Common questions

What are the three tests for a genuine redundancy?

A genuine redundancy under section 389 of the Fair Work Act needs three things: the job is no longer needed because of operational change, the employer met any award or agreement consultation duty, and redeployment was not reasonable.

Can a redundancy be genuine if some tasks remain?

A redundancy can still be genuine when some tasks remain, if they are spread across other staff or done by a new system. It fails when someone is hired or contracted to do the same job.

How long does an employee have to claim unfair dismissal?

An employee has 21 days from the day the dismissal takes effect to apply to the Fair Work Commission for unfair dismissal.

What can the Fair Work Commission order if a redundancy is not genuine?

If the Fair Work Commission finds the dismissal unfair, it can order reinstatement or compensation, capped at 26 weeks' pay or half the high income threshold, whichever is lower.