My Employer has Hired a Cheaper Person to Replace my Role. Do I have a Claim for Compensation?

My Employer has Hired a Cheaper Person to Replace my Role. Do I have a Claim for Compensation?

If an employer has hired someone to replace your role purely because they can hire that person at a lower cost then you may be entitled to compensation due to the redundancy not being genuine. Section 389 of the Fair Work Act 2009 (CTH) deals with genuine redundancies. A genuine redundancy is where an employer is dismissed from a role which is no longer required by the business. This may be done as a result of changing operational requirements of the business in what is commonly known as a “restructuring”. A claim for an unfair dismissal will not succeed in instances where there has been a genuine redundancy.

Sometimes an employer may decide to dismiss you and hire someone in your role. The employer may do this for a number of reasons but more often than not the driving force will be cost. Particularly in times of economic turmoil, employers will look to increase margins and reduce costs where they can.


There are three factors that form a genuine redundancy:


  • The employer no longer requires the employee to carry out their duties as changes in the operations of the business have made their position unnecessary.


  • The employer consults with the employee in relation to the redundancy as per their obligations under an award or enterprise agreement.


  • It was not possible to deploy the employee in another part of the business.


Operational shifts in the business can come in a variety of forms, some of those being:


  • Downturn in market conditions.


  • Technological changes in the industry.


  • The firm moves offshore.


  • The business decides to target a different market.


  • Restructuring to the organization to improve efficiency.


It is important to show that the employee who was hired in your place has the same responsibilities, functions and duties as you did. A genuine redundancy will still be found in circumstances where the employee’s duties have been shared between remaining staff but not when someone is specifically hired to carry out the same job.

Should you require assistance with your litigation matter, please give us a call for a free assessment.  Our contact details are:

Berrigan Doube Lawyers

Melbourne: (03) 9600 2577

Sydney: (02) 9251 6699

Brisbane: (07) 3229 0707

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