Restructuring a role without ending employment raises complex legal questions for HR. Here are four factors to keep in mind when dealing with a partial redundancy.

When business conditions change, roles often need to change with them. But what happens when an employee’s role is changed so much that it no longer resembles the job they signed up for? Can an organisation change someone’s hours, pay or responsibilities without triggering redundancy obligations?

While not an official legal term recognised by the Fair Work Act, ‘partial redundancy’ has become a common shorthand among HR practitioners to describe circumstances where an employer attempts to reduce or modify an employee’s role due to a change in business needs.

“It’s understood to be an agreed arrangement whereby somebody accepts different contractual arrangements in preference to being made redundant,” says Will Snow, Director at Snow Legal.

In many cases, role changes can be negotiated collaboratively with an employee, allowing the relationship to adapt without conflict, he says.

However, the situation becomes much more complex when the change is not mutually agreed upon. This can raise difficult questions for HR about legal entitlements, contractual limits and consultation obligations.

Below, Snow outlines four legal considerations for HR when considering a partial redundancy.

1. Can a reduction in hours or pay necessitate a redundancy payment? 

Redundancy payments can only arise when employment has been terminated, says Snow. However, in cases of partial redundancy, an employee might argue that a substantial reduction in hours or pay constitutes termination of employment, since their original role no longer exists.

This was tested in a Federal Court decision in 2020 where a cleaner’s hours were reduced from 38 to 20 per week. While the employer argued that the employment relationship had continued, the court found that the change created a “fundamentally different relationship” and amounted to termination, meaning the employee was entitled to redundancy pay.

Whether or not an employee can make this argument will depend on how significantly their role was changed, says Snow.

“You can introduce small changes, but if you are imposing a reduction in salary hours or a big change in seniority or perceived attractiveness of the work, [they might say], ‘This is not my role and I need to be made redundant,’” he says.

2. What limits do employment contracts place on role changes?

The extent to which an employer can modify an employee’s role without a dispute arising often hinges on the terms of the employment contract, says Snow.

“The wording is really important,” he says. “If you’re doing a restructure or tweaking someone’s role, the question is always: What is their position description and what does their current contract say?

“In a contract, you often see things like, ‘The employer may, after consultation with you, change your job role and your responsibilities.’ But it gets a lot harder if those changes are more significant.”

While these clauses might support minor structural changes like updating a position title, they typically don’t allow unilateral changes to core elements such as pay or working hours, he explains. 

Role changes that fall outside the scope of the contract might expose the business to claims of breach of contract or constructive dismissal.

As a result, employers should ensure changes remain within the scope of the role as originally agreed and avoid implementing changes to pay or hours without written agreement from the employee.

“Even though there might be a certain inevitability about the change, you’ve still got to allow time in your process to be influenced and to take on feedback.” – Will Snow, Director, Snow Legal

3. What are employers’ consultation obligations before changing a role?

Employers should refer to contracts to determine how much notice they’re required to give before a role change, says Snow. During this time, thorough consultation with the employee should take place to minimise the risk of conflict arising.

“Consultation means giving information about the change and what we’re proposing to do in writing, then giving that person time to think about it and allowing time to take on their feedback before a decision is made,” he says.

“Even though there might be a certain inevitability about the change, you’ve still got to allow time in your process to be influenced and to take on feedback.”

He also advises employers to explain the reason for the change in business needs, even where not strictly required.

“You don’t necessarily need to go through it in a lot of detail,” he says. “But without a business reason, people might think they’re being targeted because of age or gender, or because they’ve raised a concern about something. So make sure the decision makes sense to them.”

4. What if a partial redundancy is not permanent?

Temporary changes to an employee’s role, such as reduced hours or pay for a given period, may seem less legally risky than permanent restructures. However, if not clearly documented and time-bound, these short-term arrangements can create long-term complications.

Situations like this are common in project-based or contract-driven industries where work volume fluctuates significantly, says Snow. However, when handled poorly, they can leave employees feeling pressured to accept and maintain unfavourable changes to their role, eroding trust and increasing the risk of a legal claim. 

“A lot of employees might agree to it, and over time that [then] becomes their new role,” he says. “In a year’s time, it might be very hard for them to say, ‘Actually, I can’t afford to maintain my lifestyle or support my family on these arrangements, and I really want to be made redundant.’”

As a result, it’s important to consult the employee on any temporary role change, explain the reason for the change and establish clear parameters.

“If I was the employee agreeing to it, then I would want to have something in writing like, ‘This is a three-month interim special measure, which we’ll jointly review at the three-month mark,’” says Snow.

Proactive communication and carefully documented agreements not only safeguard the business, but also ensure employees feel respected and included in the process.

“Manage it respectfully and courteously,” says Snow. “When you’re imposing changes on people, it might be legal, but it can also result in people getting upset, resigning, gossiping – it can become a real distraction.”

 All information, content and materials available on this site are for general informational purposes only. The contents of this article do not constitute legal advice and should not be relied upon as such.

Consultation during a redundancy or a role change can often raise sensitive issues. Improve your ability to navigate complex discussions with confidence by signing up for AHRI’s Having Difficult Conversations short course.