When business demand drops, employers often look for ways to reduce labour costs quickly. One common instinct is to reduce a full-time employee’s hours and move them to part-time work.
In Australia, that approach carries significant legal risk if it is not handled carefully. A reduction in hours is not just an operational decision – it can amount to a termination of employment, triggering redundancy pay and exposing the business to unfair dismissal and underpayment claims.
The position is slightly different when it comes to reducing a part-time employee’s hours which you can read about here.
Full-time hours are not optional
A full-time employee’s hours are a fundamental term of their contract. Reducing those hours affects wages, leave accruals, job security and employment status. Because of this, an employer cannot unilaterally reduce a full-time employee’s hours simply because there is less work available.
The Broadlex case: a cautionary example
In Broadlex Services Pty Ltd v United Workers’ Union, a cleaning company lost part of a client contract and no longer required a cleaner to work full-time hours. The employer informed the employee that her role would be reduced from full-time to part-time.
The Federal Court held that the employer had terminated the original full-time contract. Since the full-time job was no longer required, the termination amounted to a redundancy, even though the employee continued working in a reduced role. For this reason, the employer was required to pay notice and redundancy pay.
The safest way to move a full-time employee to part-time is by genuine agreement. This requires consultation, transparency and the ability for the employee to refuse without pressure. Consent must be real, not assumed.
When reduced demand really means redundancy
If the business genuinely no longer needs a full-time role and agreement cannot be reached, the situation must be treated as a redundancy. Employers must comply with consultation, notice and redundancy pay obligations.
How we can help
We assist employers to manage workforce changes lawfully and pragmatically. We can assess risk, structure lawful reduced-hours arrangements, manage redundancy processes, draft variation agreements and defend claims if disputes arise. Get in touch with us to know more about your options. Call us on 1300 882 386 or email us.
The information contained in this post is current at the date of editing – 08 April 2026.
