A childcare operator made a role genuinely redundant. The position was no longer needed. But they skipped a critical procedural step: proper consultation with the affected employee. The Fair Work Commission ruled the dismissal unfair, awarding $45,000 compensation.

Why? Because under the Fair Work Act 2009, redundancy consultation is not optional. It’s a mandatory procedural requirement before termination. Miss this step, and even a genuine redundancy becomes unfair dismissal. The employer loses — and pays.

This July 2026 case is identical to a second recent decision where a small tile importer tried to argue that business size should soften consultation rules. The Fair Work Commission Full Bench rejected this firmly on 1 July. Fair Work Act applies equally to large employers, SMEs, small businesses (5–20 staff), and sole traders. No exceptions based on size.

If your business is considering redundancies in 2026, this is the week to understand what “consultation” actually means under Fair Work law — and why getting redundancy consultation wrong costs $45,000–$79,250 in compensation, plus legal fees. Getting it right costs $1,000–$3,000 in process time.

WHO Made the Mistake: The Childcare Operator Case (July 2026)

A childcare operator (20–30 staff) restructured operations and decided one management role was no longer needed. The role was genuinely redundant — no alternative position existed, no other staff could fill it, and business need for that function had disappeared.

But the operator skipped consultation. No meeting with the employee. No discussion of alternatives. No advance notice the role was at risk. Just a termination letter saying the role was redundant.

The employee applied to the Fair Work Commission for unfair dismissal on 15 July 2026. The FWC agreed: despite genuine redundancy, the lack of procedural fairness made dismissal unfair. Compensation: approximately $45,000 (6 months’ ordinary time earnings at that level).

WHAT Went Wrong: The Redundancy Consultation Checklist

The childcare operator failed five critical steps:

1. No advance notice — Employee had no warning role might be redundant
2. No genuine consultation — No meeting to discuss reasons, timeline, or alternatives
3. No documentation — No record of any conversation, decision-making, or consideration of alternatives
4. No alternative exploration — No attempt to find other roles or redeployment options
5. No fair notice period — Termination immediate or very short (not 2–4 weeks minimum)

Skipping even one of these consultation steps shifts the case from “fair redundancy” to “unfair dismissal.”

WHEN and WHERE: Timeline and FWC Decision Date

Decision date: 3 July 2026, Fair Work Commission

Application filed: 15 July 2026 (approximately 10–15 days after termination)

FWC hearing: July–August 2026

Outcome: Dismissal found unfair; compensation ordered ($45,000+)

Under the Fair Work Ombudsman guidance on redundancy, employers must allow at least 2–4 weeks between redundancy notice and final termination. Immediate termination — even with pay in lieu of notice — is treated as procedurally unfair.

WHY the FWC Found It Unfair: The Legal Test

Section 389(1A) of the Fair Work Act 2009 defines unfair dismissal as a dismissal that is “otherwise harsh, oppressive or unjust.” This is separate from whether redundancy itself exists.

The Fair Work Act sets out the test:

1. Genuine redundancy exists: Yes ✅ — The role was no longer needed
2. Procedural fairness applied: No ❌ — No consultation before decision
3. Consultation occurred before (not after) redundancy decision: No ❌ — Decided unilaterally, then terminated
4. Alternatives explored: No ❌ — No attempt to redeploy or find other roles
5. Fair notice and time provided: No ❌ — Too short or immediate

Result: Unfair dismissal found. Even though redundancy was genuine, the *process* failed. Compensation awarded.

HOW: Step-by-Step Consultation and Redundancy Process

Step 1 — Make the Business Decision (Before Speaking to Employee)

Document why the role is genuinely redundant: automation, restructure, branch closure, cost-cutting, market changes, consolidation. This decision happens in management first — the employee should not find out by surprise.

Step 2 — Notify and Consult (1–2 Weeks After Decision)

Hold a formal meeting with the employee within 1–2 weeks. Have HR or a manager present. Discuss:

• Why the role is redundant (business reason)
• Timeline and process (how long until termination)
• Alternatives (other roles, redeployment, part-time, flexible options)
• Employee response time (give 7–10 days to respond)
• Entitlements (redundancy pay calculation, leave payout)

Provide written documentation of the redundancy proposal. Best practice: send a letter after the meeting confirming what was discussed.

Step 3 — Consider Employee Feedback (7–10 Days)

The employee may raise:

• Other roles they could fill internally
• Reasons the role isn’t genuinely redundant
• Personal circumstances (visa, caring responsibilities)

You don’t have to agree, but you *must* consider genuinely. Document your response to each point in writing.

Step 4 — Explore Alternatives (Concurrent with Consultation)

Check:

• Are there other vacancies in the business?
• Could the employee be trained for a different role?
• Could the role be part-time or casual instead of full-time?
• Could the employee accept lower pay in a different position?
• Could the employee be redeployed to another office/location?

Even if no suitable roles exist, document that you looked.

Step 5 — Issue Formal Redundancy Notice (After Consultation)

Once consultation is complete, send a formal letter with:

• Redundancy effective date (at least 2–4 weeks away)
• Redundancy pay calculation (1 week per year of service, capped at $79,250)
• Accrued leave payout
• Any unpaid wages
• Final day of employment
• References contact

Step 6 — Pay All Entitlements (On or Before Final Day)

Redundancy pay + accrued annual leave + long service leave (if eligible) + unpaid wages = total termination payment. Ensure all sums are calculated correctly under the relevant modern award or enterprise agreement.

THE TILE IMPORTER CASE: Small Business Size Doesn’t Exempt You

On 1 July 2026, the Fair Work Commission Full Bench decided another redundancy case involving a small tile importer (under 50 staff).

The employer argued: “We’re a small business. Surely redundancy consultation rules are softer for us?”

The FWC rejected this. Full Bench ruling:

“The Fair Work Act applies equally to employers of all sizes. There is no small-business exemption from redundancy or consultation requirements. An employer with 5 staff has the same procedural obligations as an employer with 500 staff. Business size does not soften the law.”

This is critical for Australian SMEs: if you employ 2–20 staff and consider redundancy, you must follow the exact same process as large employers. No shortcuts.

WHAT “Genuine Redundancy” Means (And Doesn’t)

Genuine redundancy:

• The business no longer requires that role to be performed by anyone
• Examples: automating a data-entry function, closing a branch, consolidating two roles into one
• The business decision is real, not a pretext

NOT genuine redundancy (don’t misuse it for these):

• Performance issues → use performance management / performance improvement plans
• Personality clashes → use performance management or discipline
• Employee refuses part of duties → use discipline/termination for misconduct
• Business downturn → yes, can be genuine, but process still must be fair
• Role redesign with similar work → consider redeployment first; may not be genuine

If the FWC suspects you used “redundancy” as a cover for unfair treatment, discrimination, or retaliation, the dismissal will be found unfair — and you’ll also face general protections or discrimination claims on top.

DOLLAR COST: What Unfair Dismissal Liability Looks Like

If FWC finds redundancy unfair:

• Compensation: $45,000–$79,250 (up to 6 months’ ordinary time earnings, capped)
• Legal and FWC fees: $2,000–$5,000 per side
• Reinstatement (rare but possible) or notice period wages
• Reputational damage and HR disruption
• Total exposure: $50,000–$90,000+

Cost of proper redundancy process:

• HR time for consultation, documentation: 10–20 hours
• Notice period wages (if on full pay): $1,000–$3,000
• Employment lawyer review: $500–$1,500
• Total cost: $1,500–$5,000

The maths: Spend $3,000 upfront on proper process, or spend $70,000 in FWC compensation and legal fees? The choice is obvious.

MODERN AWARD AND AGREEMENT REDUNDANCY RULES

Check your award or enterprise agreement — many impose redundancy notice and consultation requirements *longer* than Fair Work Act minimums.

Common award notice periods:

• Retail: 4–8 weeks (depending on length of service)
• Manufacturing: 6–8 weeks
• Hospitality: 2–4 weeks
• Professional services: 8–12 weeks
• Transport: 4–6 weeks

If your award says 8 weeks’ notice and Fair Work Act says 4 weeks, you must give *8 weeks*. Award requirements override and supersede Fair Work Act minimums.

REDUNDANCY DURING PROBATION: Simpler But Still Fair

If the employee is in their probation period (usually 3–6 months), redundancy is simpler:

• Notice period may be shorter (check your contract/award)
• Consultation can be more abbreviated
• But genuine redundancy must still apply

Even during probation, don’t skip all consultation. A brief discussion confirming the role is genuinely redundant is still expected.

NEXT STEPS FOR EMPLOYERS CONSIDERING REDUNDANCY

1. Confirm genuine redundancy — Write down exactly why the role is no longer needed. Get management agreement.
2. Check your award/agreement — Look up redundancy notice periods, consultation clauses, and any special rules.
3. Plan consultation — Decide: who (HR + manager), when (1–2 weeks after decision), how long (give employee 7–10 days to respond).
4. Get legal advice — Have an employment lawyer review the redundancy proposal before any notification. Especially if large numbers affected or if the role-holder is in a protected category (discrimination risk).
5. Document everything — Every meeting, email, feedback, and decision. Documentation is your defence.
6. Calculate entitlements — Redundancy pay (1 week per year, capped $79,250) + accrued leave + unpaid wages = total liability.

Fair Work Commission cases like the childcare operator decision turn on process, not just business need. Follow the steps, and you’re protected. Skip them, and even a genuine redundancy becomes unfair dismissal.

For expert redundancy strategy from an employment lawyer, explore Fair Work Centre redundancy resources or start a membership to access a dedicated adviser. Call 1300 161 828 for a free 20-minute consultation.