Appendix D of Evolve: The Operating Model AI Demands (Hodgson, 2026) sets out the APS workforce transition framework for agencies moving from project-based delivery to a product operating model. The legislative instruments cited in this appendix are specific to the Australian Public Service — but the structural logic governing how workforce populations are identified, classified, and transitioned applies to any jurisdiction undertaking comparable workforce redesign. This companion page draws directly from Appendix D to make the implementation detail accessible alongside the broader argument of the book.
In Brief
- Three workforce populations must be identified before any classification decisions: product-fit employees, reskillable employees, and those whose positions are genuinely excess.
- Public Service Act 1999 sections 19A and 23 establish the classification and assignment authorities that must precede product team structure decisions.
- Fair Work Act 2009 section 389 requires genuine redundancy to meet three conditions; the redeployment test is most often contested.
- SFIA v8 and the APS Workforce Plan 2025-30 together determine which capability gaps can be closed through internal development.
A product operating model does not redistribute existing roles across a different reporting structure. It reconstitutes the conditions under which work is done, which means the workforce must be reconstituted accordingly. The employment law framework governing APS agencies provides the mechanisms for that reconstitution, but those mechanisms must be applied in the right sequence and with a clear understanding of which employee populations each decision affects. An agency that applies the mechanisms in the wrong order will produce legally compliant decisions that still fail to achieve the structural outcome the model requires.
D.1 Three structurally distinct workforce populations must be identified before any classification decision
The transition to a product operating model produces three structurally distinct workforce populations. They are not differentiated by seniority or function, but by their relationship to the new model: whether the model requires them, can absorb them with reskilling, or has no structural place for them. Identifying all three populations before making any classification or redeployment decisions is the foundational step of any legally defensible transition.
The first population consists of product-fit employees: those whose existing skills, experience, and working preferences align with the accountabilities of product teams. They typically have backgrounds in policy design, service delivery analysis, or technology implementation, and have developed the cross-functional orientation that product work demands. For this population, the transition requires reclassification and realignment, not retraining. The employer’s obligation is to identify them early, move them into product team structures with appropriate authority, and avoid treating them as interchangeable with the broader workforce.
A product operating model cannot generate the institutional knowledge it needs from scratch. Product-fit employees carry the contextual understanding of user needs, legacy system constraints, and ministerial accountability that government product teams must have to function. An agency that fails to identify and retain this population before the transition is underway will not recover that knowledge once it leaves. Identifying and retaining the first population is the first structural priority of any transition, not a secondary HR matter.
The second population consists of reskillable employees: those whose current roles are displaced by the transition but whose capability profile and demonstrated learning behaviour indicate they can develop the skills required in the new model within a defined timeframe. Identifying this population requires a structured capability assessment against the role profiles defined for product teams, not a performance review, which measures different things and produces different decisions. The capability assessment framework for this work is addressed in D.4, where the intersection with SFIA v8 and the DTA’s workforce plan is described in detail.
The assessment for the second population has two dimensions. The first is current capability: what skills does the employee currently hold, and at what level of proficiency? The second is learning velocity: based on prior development history, how quickly does this employee develop new capabilities when given structured development support? Both dimensions matter because reskilling within a transition timeframe requires a realistic estimate of how much capability can be built in how much time. An assessment that identifies capability gaps without estimating development velocity cannot produce a credible reskilling plan.
The third population consists of employees whose current roles do not exist in the new model and whose capability profile does not support reskilling within the transition timeframe or within the agency’s resourcing constraints. This population triggers the excess employee pathway under Australian employment legislation. The determination of excess is a structural decision about the organisation, not a performance finding about the individual; the legal risk of conflating those two things is significant. The excess employee pathway is addressed in D.3.
The three populations are not fixed at the outset. An agency that invests in the capability assessment and development infrastructure described in D.4 will move employees from the third population to the second. An agency that fails to make that investment will default to the excess employee pathway for a larger population than the structural redesign actually requires. That outcome follows from underinvestment in workforce transition planning, not from structural necessity.
D.2 Classification decisions cannot trail structural design — the PSA framework does not accommodate retrospective classification
The classification and decision-rights framework for APS workforce redesign is established by the Public Service Act 1999 (Cth), specifically sections 19A and 23 (Commonwealth of Australia, 1999), read with the Australian Public Service Commission (APSC) Directions 2022 (practitioner-verify: APSC Directions 2022).
Section 23 of the Public Service Act 1999 (Cth) establishes the Secretary’s authority to assign duties to APS employees. In a product operating model transition, this authority is the primary mechanism for moving employees into new roles and team structures without triggering the excess employee pathway. The assignment of duties must be consistent with the employee’s classification level, which shapes the classification decisions that must precede any significant redeployment. An agency that attempts to assign product team accountabilities to employees at classification levels that do not accommodate those accountabilities will find that the legislative framework creates a ceiling that structural intent alone cannot lift.
Section 19A establishes the framework within which classification decisions are made during periods of workforce change, providing the authority relevant to agency restructuring and the movement of employees whose positions are affected by structural redesign. Classification decisions under the Act are not simply administrative. They determine which employees are subject to which employment conditions, which roles require external recruitment versus internal redeployment, and which positions are correctly scoped within the new operating model’s accountability structure. Getting the classification sequence right is a prerequisite for the transition to function as intended, not a procedural formality that can be addressed after structural decisions are made.
Section 25 of the Public Service Act 1999 (Cth) governs the engagement of APS employees: the legislative authority under which agencies bring staff into the service, whether on ongoing or non-ongoing terms. Where the reskillable population cannot fill all product team positions within the transition timeframe, s.25 determines the engagement pathway for external recruitment — the classification basis, employment terms, and any conditions the engagement is subject to. Agencies that defer this planning until roles are vacant lose the lead time that the engagement process requires.
The APSC Directions 2022 provide the procedural framework that sits over these legislative powers (practitioner-verify: APSC Directions 2022). The Directions establish the processes by which agencies must exercise their classification and assignment authorities, including the consultation requirements, timeframes, and documentation standards that govern restructuring decisions (practitioner-verify: APSC Directions 2022). The Directions also specify how agencies must engage with employees whose positions are affected by restructuring before classification decisions are finalised, a consultation obligation that is separate from the excess employee consultation requirements under the Fair Work Act 2009 (Cth). Non-compliance with the Directions creates administrative risk independent of substantive legal exposure. An agency can make a structurally correct decision and implement it in a way that is administratively deficient, and that deficiency creates its own pathway to liability.
In product operating model transitions, classification decisions cannot trail structural decisions. An agency that designs its product team structure, defines role accountabilities, and then attempts to classify existing employees into those roles retrospectively will find that the legislative framework does not accommodate that sequence. Classification must be defined as part of the structural design process. Agencies that treat it as a downstream administrative task create the conditions for disputes and workforce friction that earlier investment in role definition would have prevented.
Decision rights in the new model must also be documented at the classification level. In a project-based structure, decision rights typically follow seniority and working relationships rather than defined accountability. A product operating model makes those rights explicit: product teams require clearly defined authority over product direction, resourcing, and delivery. Those authorities must be expressed in role definitions that are legible within the classification framework.
This is where many agency transitions encounter their first serious impediment. The product team accountabilities that make the model functional — the authority to prioritise a product backlog, to trade off delivery scope against user need, to make resourcing decisions without seeking approval for each one — cannot always be expressed in the generic role classifications the existing framework uses. The answer is to invest in the role definition work that makes those accountabilities legible within the classification framework; abandoning the product accountability model is not the alternative worth considering. That work is underscoped at the outset of almost every transition, and the result is classification disputes and workforce friction that earlier role definition investment would have prevented.
D.3 The excess employee pathway is a last resort within a deliberately sequenced process — it is not the default mechanism for workforce adjustment
When an employee’s position becomes surplus to agency requirements as a result of a restructure, the Fair Work Act 2009 (Cth) section 389 (Commonwealth of Australia, 2009) establishes the conditions under which redundancy is genuine and the pathway the agency must follow.
Section 389 defines genuine redundancy as the situation where the employer no longer requires the job to be done by anyone, the employer has complied with any obligation in an applicable modern award or enterprise agreement to consult about the redundancy, and it was not reasonable in all the circumstances to redeploy the employee. All three conditions must be met. A redundancy that satisfies two of the three conditions is not genuine under the Act, and the employment protections that attach to a genuine redundancy do not apply.
In a product operating model transition, the most contested of these conditions is the third: whether redeployment was reasonable in the circumstances. The legislative test is objective. It examines whether reasonable redeployment options existed and were genuinely available, not whether the agency made an effort. An agency that has not identified and assessed the reskillable population before making excess determinations will have difficulty demonstrating that it satisfied this condition. The sequence established in D.1 matters legally, not only operationally.
The consultation requirement in section 389 creates an obligation that runs parallel to the structural transition itself. Modern awards and enterprise agreements in the APS context require notification and consultation before positions are declared excess. Consultation under the Act is not a form-filling exercise. The documentation, defined timeframes, and formal engagement with employee representatives are necessary but not sufficient; the consultation must substantively engage employee input. A process that ticks the form boxes without substantively engaging employee concerns fails the legal test and creates exposure to unfair dismissal claims.
The decision to declare an employee excess must be made at the appropriate level of authority. In APS agencies, that authority typically rests with the Deputy Secretary or Secretary, depending on the employee’s classification level. Delegating the decision to line management below the appropriate authority level is a consistent process error that creates administrative and legal risk. The error is more common in transitions where structural design is managed separately from workforce implementation, leaving implementation staff without clear guidance on which decisions require which authority levels.
Agencies should treat the excess employee pathway as a last resort within a deliberately sequenced process, not as the default mechanism for workforce adjustment. The pathway is legally available and correct when applied properly, but it carries administrative burden and workforce relations risk, and it removes employees who may carry institutional knowledge the new model needs. The right sequence is to identify the reskillable population, invest in development pathways for that population, and bring the excess employee pathway in only for those the reskilling process cannot accommodate within the transition timeframe.
D.4 SFIA v8 and the APS Workforce Plan 2025-30 together determine which capability gaps can be closed through internal development
SFIA v8 and the APS Data, Digital and Cyber Workforce Plan 2025-30 together determine which capability gaps an agency can close through internal development and which require external recruitment: a distinction that shapes both the reskilling investment and the workforce transition timeline. Treating these frameworks as reference material rather than as decision inputs is the most common planning error in APS workforce transitions.
The Skills Framework for the Information Age version 8 (SFIA Foundation, 2021) provides the skills taxonomy that covers the technical and professional skills required in digital and technology-enabled product teams. In the context of APS workforce transitions, SFIA serves two distinct functions. First, it provides the baseline role definitions for product team positions that agencies can use as the starting point for classification work under section 23 of the Public Service Act 1999 (Cth). The SFIA skill descriptors at each responsibility level describe what is expected of practitioners at that level with sufficient precision to inform role definitions that are legible both operationally and within the classification framework. Second, SFIA provides the assessment framework for identifying the reskillable population: it compares an employee’s current capability profile against target role requirements at a level of specificity that generic job description matching cannot achieve.
The SFIA v8 framework is not a direct fit for all APS contexts. The framework was developed for the commercial technology sector and carries assumptions about team structure, role boundaries, and technology ownership that require translation for government delivery. Applying SFIA without contextual adaptation for government delivery is a reliable path to unworkable role frameworks. The translation work requires both SFIA expertise and APS delivery experience. Agencies that have treated these as separate domains and engaged external advisers for the SFIA component without internal capacity to validate the APS translation have produced role frameworks that are SFIA-compliant and operationally unworkable. The SFIA framework is sound; the failure is in applying it without the APS delivery knowledge the translation requires.
Australia’s Digital Transformation Agency (DTA) APS Data, Digital and Cyber Workforce Plan 2025-30 situates SFIA capability development within the broader APS workforce strategy (Digital Transformation Agency, 2025). The plan identifies where APS agencies currently lack capability and sets cross-agency expectations for how those shortfalls will be met across the planning horizon. The plan’s most decision-relevant contribution for product operating model transitions is its workforce pipeline projections: it identifies which capability cohorts are currently undersupplied in the APS labour market and which are likely to remain constrained through the plan period.
The plan’s workforce pipeline projections are decision inputs, not background context. An agency that designs a product workforce framework dependent on capabilities the plan identifies as structurally undersupplied is designing against the evidence. The plan’s supply projections determine which capability gaps are realistic candidates for internal development within the transition timeframe and which require external recruitment. Agencies that do not use this information when making those determinations will discover the supply constraints through failed recruitment and extended vacancies rather than through planning.
The structural interaction between SFIA capability definitions and the PSA classification framework is the point at which D.4 connects back to D.2. Classification decisions must reflect the capability requirements of product team roles, and capability requirements must be defined before classification decisions are made. An agency that begins the classification work before the SFIA-informed role definitions are complete will produce classifications that do not fit the operational reality of the model it is building. Getting the sequencing right costs substantially less than correcting misaligned classifications after the fact, given the consultation and documentation obligations that revisiting PSA-authority decisions entails.
What this means for agency heads and programme directors
- Workforce population identification is a legal prerequisite, not an HR activity — classification and redeployment decisions made before the three populations are mapped are structurally incorrect and legally exposed.
- Classification must be built into structural design from the outset — the Public Service Act framework does not accommodate retrospective classification, and treating it as a downstream administrative task is the leading source of workforce disputes in operating model transitions.
- The redeployment test under Fair Work Act s.389 is an objective legislative standard — agencies that have not structured a genuine reskilling pathway before declaring positions excess are at risk of not meeting that standard.
- SFIA v8 is a planning framework, not a reference taxonomy — agencies that treat it as descriptive rather than decisional will discover the gap between their workforce and the model’s requirements through failed recruitment rather than through planning.
- The APS Workforce Plan 2025-30 supply projections are decision inputs — designing a product workforce framework dependent on capabilities the plan identifies as structurally undersupplied is planning against the evidence.
References
- Commonwealth of Australia. (1999). Public Service Act 1999 (Cth). https://www.legislation.gov.au/Series/C2004A00538
- Commonwealth of Australia. (2009). Fair Work Act 2009 (Cth). https://www.legislation.gov.au/Series/C2009A00028
- Digital Transformation Agency. (2025). APS data, digital and cyber workforce plan 2025-30. https://www.dta.gov.au/help-and-advice/digital-workforce-and-ICT-skills
- Hodgson, M. (2026). Evolve: The operating model AI demands. Zen Ex Machina.
- SFIA Foundation. (2021). SFIA version 8: Skills framework for the information age. https://sfia-online.org
