A recent Full Bench decision of the Fair Work Commission in Orientile Pty Ltd v Zhang [2026] FWCFB 162 has reinforced an important lesson for small business employers: small businesses are not exempt from consultation obligations when making positions redundant.
The Facts
Carson Zhang had worked as a sales representative for Orientile Pty Ltd for almost 15 years. Facing declining sales, the business decided to reduce its sales team from three representatives to two. Mr Zhang was called into a meeting and informed that his employment was terminated due to redundancy, all on the same day.
Orientile argued that it was a small business and had effectively consulted with Mr Zhang during the meeting where his employment was terminated. The Commission disagreed.
The Key Issue: Consultation
The Full Bench confirmed that, to establish a genuine redundancy, an employer must comply with any applicable consultation obligations contained in a modern award or enterprise agreement.
Specifically, the Full Bench held:
- Small businesses are not exempt from modern award consultation obligations.
- The fact that only one employee is being made redundant does not remove the obligation to consult. A redundancy can still have significant effects on both the affected employee and remaining staff.
- Partial, technical or substantive compliance is not enough. If consultation obligations are not met, the redundancy will not be a “genuine redundancy” for unfair dismissal purposes.
The Full Bench was particularly clear that there is no discretion to overlook a failure to consult simply because the employer is a small business or because the redundancy decision itself was commercially justified.
Decision and Outcome
The Commission accepted that Orientile had genuine operational reasons for reducing its workforce. However, the employer failed to consult before making and implementing the dismissal decision.
Orientile’s argument that it had valid selection criteria was also rejected.
The dismissal was found to be unfair, and the employee was awarded more than $31,000 in compensation for two main reasons:
- It awarded 4 weeks wages to reflect the period during which the employer should have undertaken a proper consultation process in accordance with its Award obligations; and
- It awarded a further 12 weeks wages having regard to Mr Zhang’s 15 years of long and loyal service, his significant contribution to the growth of the business, the financial impact of losing his job, and the time likely required to secure alternative work. In assessing the additional 12 weeks, the Commission used the redundancy pay scale from the Fair Work Act notwithstanding that the employer was a small business and not otherwise required to pay statutory redundancy pay.
What Employers Should Take Away
This decision is a timely reminder that:
- If you want to rely on the genuine redundancy exemption, consultation is not optional.
- Consultation obligations are “not onerous”, particularly for small businesses with relatively few employees. However, failing to comply can expose an employer to an unfair dismissal claim, even where the redundancy itself is commercially justified.
- The genuine redundancy defence is only available where all statutory requirements (including consultation) have been strictly complied with.
If you would like further information or wish to discuss the decision, consultation obligations, or any matters specific to your workplace, please contact our Employment Team on (02) 4927 2900.