Same Job, Fewer Hours? Not So Fast

Redundancy Confirmed in Baya Casal

In Baya Casal v Deputy Commissioner of Taxation [2025] FCA 87, the Federal Court confirmed that a taxpayer was entitled to treat her termination payment as a genuine redundancy, despite the employer offering an “alternative” role.

The twist? The alternative role had the same duties, but with reduced hours, changed days, and lower pay. The Court found that wasn’t equivalent — and the taxpayer’s original role was, in fact, redundant.

What happened?

The taxpayer worked as an early learning assistant at a school. After a restructure, her employer:

Offered her a new role with different working days, fewer hours, and reduced income
Stated that her original position was being dissolved
Gave her the option of either redeployment or redundancy

She declined the redeployment and took the redundancy. The Commissioner challenged the treatment, arguing that because the duties were largely the same, the position wasn’t truly redundant.

The Court’s view

The Federal Court rejected the Commissioner’s reasoning.

Key findings included:

Redundancy is not limited to job titles or duties — it also involves conditions of employment, including days, hours, and remuneration.
A change that results in substantially altered working terms can mean that the new role is not equivalent to the old one.
A position involving reduced hours and different working patterns was not an “appropriate alternative”.

Therefore, the termination payment met the definition of a genuine redundancy under section 83-175 of the ITAA 1997, and the associated tax concessions applied.

Why this matters

For HR, payroll, and tax advisers, this case clarifies that:

Redundancy doesn’t require the job to disappear entirely — it requires a material change in the role offered or retained.
Employers cannot avoid redundancy treatment simply by renaming or reshaping a role with less favourable terms.
Employees who reject inferior offers may still qualify for concessional tax treatment on termination payments.

Practical guidance for employers and advisers

When managing restructures and terminations:

Ensure that any alternative roles offered are genuinely equivalent — same duties, same hours, same remuneration.

If the role changes in a way that materially affects the employee’s work pattern or income, be prepared for a redundancy classification.

Document the rationale for the restructure, the nature of alternative roles, and the employee’s response.

Consider seeking a private ruling in grey-area cases where the tax treatment of the payment is significant.

Final Thoughts

This decision highlights the importance of viewing employment roles holistically. Tasks and duties are just one piece — the structure, stability, and conditions of the role are just as critical when assessing whether a genuine redundancy has occurred.

When in doubt, always ask: Would a reasonable person view this as a continuation of the same job — or the end of one and the offer of another?