Guidance: Restructures and redundancies – avoid “snap decisions”

Restructures are a common feature of business operations and may involve changing roles, redeploying employees or making positions redundant. However, employers should take care to ensure decisions remain grounded in legitimate operational reasons and are not influenced by an employee exercising a workplace right.

A recent Federal Court decision serves as a reminder that even where a restructure is otherwise genuine, poor decision-making during the process can expose an employer to significant liability.

Recent case:

In Gavin v Svitzer Australia Pty Ltd (Relief) [2026] FCA 1582, the Federal Court awarded significant compensation after finding an employer had taken adverse action against an employee during a restructuring process.

The employee’s role was being restructured, and the employer had been exploring options to retain him in an alternative position. However, the Court found the process changed “almost overnight” when a senior HR manager became frustrated with the employee’s response to the proposed role and considered him “not grateful enough” for the efforts being made to preserve his employment.

The Court concluded the redundancy decision was effectively a “snap decision” influenced by irritation at the employee’s conduct and exercise of workplace rights.

Importantly, the Court found this contravened s 340 of the Fair Work Act 2009, which prohibits an employer from taking adverse action against an employee because they have exercised, or propose to exercise, a workplace right.

Although reinstatement was not practical because the position no longer existed, the employer was ordered to pay compensation for economic loss, future economic loss, $15,000 in general damages for distress and humiliation, and a $20,000 civil penalty.

Key takeaways for employers

1. Avoid emotional decision-making: Decisions made out of frustration or irritation can expose employers to significant legal risk.
2. Document legitimate business reasons: Ensure restructuring and redundancy decisions are supported by clear operational and commercial reasons.
3. Respect workplace rights: Employees are entitled to ask questions, raise concerns and participate in consultation processes without fear of adverse consequences.
4. Follow the process through: A well-planned restructure can be undermined if decision-makers depart from established processes without a valid reason.
5. The costs can be significant: In addition to lost wages, employers may face damages, penalties and legal costs where adverse action is established.

If you have any questions about restructures, redundancies or workplace rights, please contact the Workplace Relations Team:

📞 (02) 6175 5900
📧 workplace@mba.org.au