Redundancy as a Psychosocial Hazard
Poorly managed redundancies are a psychosocial hazard. Here's how to restructure from a safety perspective.
- Poorly managed restructures and redundancies are a psychosocial hazard under Australian WHS law.
- SafeWork NSW halted a UTS redundancy process in September 2025 over psychological harm.
- Employers must consult affected workers before restructure decisions are finalised.
- Employees who keep their jobs face workload, guilt and job insecurity risks too.
- An EAP supports staff, but prevention and documented risk assessment are also required.
How compliant is your business, really?
Redundancy is a recognised psychosocial hazard in Australia when the restructure behind it is poorly planned, communicated, supported or managed. Safe Work Australia classifies this as poor organisational change management, one of the hazards every person conducting a business or undertaking (PCBU) must manage under work health and safety (WHS) law.
A decision to cut roles can be lawful while the process still breaches WHS duties. In September 2025, SafeWork NSW used a prohibition notice to pause one.
Is redundancy a psychosocial hazard?
Yes. A redundancy process becomes a psychosocial hazard when it is poorly planned, communicated, supported or managed, which Safe Work Australia's Model Code of Practice: Managing Psychosocial Hazards at Work classifies as poor organisational change management.
The hazard sits in the process, so the same restructure can be low or high risk depending on how it is run. A redundancy round becomes hazardous through decisions such as:
- Silence. Long gaps between the first announcement and any decision
- Surprise. Short-notice meetings with no agenda or support person
- Finality. Language suggesting outcomes are settled before consultation ends
- Overload. Remaining staff absorbing departing colleagues' work without extra resourcing
- Inconsistency. Different messages from different managers or channels
Poor change management rarely acts alone. It amplifies other hazards, especially high job demands, low job control and poor support.
Can a safety regulator stop a redundancy process?
Yes. Under the WHS Act, an inspector can issue a prohibition notice to stop any activity involving a serious risk from immediate or imminent exposure to a hazard, and that now includes a redundancy process.
On 2 September 2025, SafeWork NSW issued a prohibition notice to the University of Technology Sydney (UTS). The university had invited around 800 staff to meetings the next day about a proposal to cut roughly 150 academic roles. Staff complaints cited short notice, inadequate consultation and "finalistic" language.
UTS extended consultation timelines and changed its communications, and SafeWork NSW confirmed compliance within days. Legal commentators called it the first known use of a prohibition notice to halt a redundancy process. The case reflects a wider psychosocial health crisis in Australian universities, and NSW employers should also check the NSW psychosocial code of practice.
What does WHS law require when you restructure?
WHS law requires a PCBU to identify, assess and control psychosocial risks from a restructure so far as is reasonably practicable, and to consult affected workers before decisions are made. These duties apply in addition to consultation obligations under the Fair Work Act 2009, modern awards and enterprise agreements. See PCBU responsibilities for who holds them.
Check the psychosocial hazard laws in Australia for each state where you employ staff.
Why do redundancies cause psychological harm?
Redundancies cause harm mainly through prolonged uncertainty, loss of control and sudden changes to workload and relationships, affecting far more people than those who leave. Three groups carry distinct risks:
- Employees leaving. Shock, financial stress and pressure to decide on redeployment quickly
- Employees staying. Higher workload, survivor guilt and fear of the next round
- Managers delivering news. Repeated difficult conversations while facing their own uncertainty
Remaining staff are most often overlooked, because departing colleagues' work rarely disappears. Sustained overload is a direct path to burnout, which makes how to prevent employee burnout part of restructure planning. Psychological injury claims also tend to involve longer time off work than most physical injuries.
How do you assess psychosocial risk before announcing redundancies?
Assess psychosocial risk as part of the business case, before any announcement, using workforce data and consultation to identify who is exposed, how severely and for how long. A documented assessment is the first evidence a regulator will ask for.
Baseline your workforce before the change, then track the same measures throughout. Useful signals include:
- Leave patterns. Rising unplanned absence against your employee absenteeism statistics baseline
- EAP utilisation. Spikes in demand, especially within specific teams
- Pulse surveys. Falling scores on consultation, clarity and job security items
- Anonymous reports. Concerns raised about process, communication or workload
- Exits. Resignations among staff outside the affected roles
A team with falling clarity scores and rising leave needs intervention before the next consultation stage.
What steps reduce psychological harm during a redundancy process?
Three controls do the most to reduce harm: assessing before announcing, consulting before deciding, and communicating on a fixed cadence. Each removes a hazard at its source.
1. Assess before you announce
Complete a documented psychosocial risk assessment alongside the financial case. Name the affected groups, the likely hazards and the controls you will use, then review the assessment at each decision point as the process moves from proposal to outcome. Our guide to what a psychosocial risk assessment involves sets out each step in more detail.
2. Consult before decisions are final
Under the WHS Act, consultation must happen while worker input can still change the outcome. Explain the reasons for the change, give realistic time to respond, allow support persons in meetings and record how feedback shaped the decision. Genuine consultation also supports Fair Work redundancy requirements, including the duty to consider redeployment to other roles.
3. Communicate on a fixed cadence
Set a clear timetable for updates and keep to it, even when there is nothing new to report. Give reasonable notice of meetings, tell people about individual outcomes privately and in person, and brief managers before staff hear anything. Prepare managers with a short script, likely questions and their own access to support before any announcement.
How do you support employees who stay and those who leave?
Support both groups with practical and psychological measures, and treat the remaining workforce as still exposed to risk after the last redundancy is confirmed. Support for leavers usually ends at exit, while risk for those who stay can rise in the months that follow.
Effective post-redundancy support includes:
- Workload reset. Redesign roles and drop work that will not continue
- Clear future state. Confirm whether further rounds are planned
- Leaver support. Outplacement, references and separation paperwork completed promptly
- Professional support. EAP access for leavers, stayers, managers and families
Knowing what an employee assistance program covers helps you position counselling as one layer of a wider plan.
Frequently asked questions
Is a redundancy "reasonable management action" for workers compensation?
It can be, provided the redundancy is reasonable and carried out in a reasonable way. Tribunals judge the process as well as the decision.
Workers compensation laws exclude psychological injuries caused by reasonable management action. The NSW Personal Injury Commission has awarded compensation where a genuine redundancy was handled too abruptly. NSW reforms passed in 2025 and 2026 redefine this defence.
Is an EAP enough to manage psychosocial risk during a restructure?
An EAP alone falls short. It supports people once stress has begun, while the WHS duty requires you to prevent harm through risk assessment and controls.
Regulators expect upstream controls such as consultation, realistic timelines and workload planning. An EAP works best when staff know how to access it before announcements begin.
What records should employers keep during a restructure?
Keep records of the psychosocial risk assessment, consultation, controls and monitoring. They show what you identified, what you did and whether it worked.
Useful documents include meeting notes, feedback and responses, communication timelines, manager briefings and pulse survey results. Create records as the process runs, because evidence assembled afterwards carries little weight with a regulator.
When should consultation start in a restructure?
Consultation should start once a change is proposed and before any decision is final. Workers need a real opportunity to influence the outcome.
The WHS Act requires consultation when proposing changes that may affect health or safety. Awards and enterprise agreements add their own triggers, usually once a definite decision is made. Starting early satisfies both.
Who is accountable for psychosocial risk during a restructure?
The PCBU holds the primary duty, and officers such as directors and senior executives must exercise due diligence to ensure it is met.
HR, WHS teams and consultants do much of the work, while accountability stays with the organisation and its officers. Boards should scrutinise the psychosocial risk assessment as closely as the financial case.
Does poor change management only apply to redundancies?
Poor change management applies to any workplace change, including new technology, roster changes, relocations, mergers and new reporting lines.
A new scheduling or tracking system rolled out without consultation or after-hours support can create the same hazard as a restructure. The same steps apply: assess, consult, communicate and review.
Restructures will keep coming. If you want to see the psychosocial risk before you announce, support every employee through the change and show regulators you acted, Foremind brings it together in one place.
Answers to the frequently asked questions.
Our last EAP was barely touched. Why would this be different?+
Most EAPs go unused because of how they're accessed, not because staff don't need them. Phoning a stranger, explaining yourself, then waiting weeks is enough to stop most people before they start. Foremind removes all three steps: staff see real counsellor profiles, pick someone themselves, and book the same day.
If you already have a provider, the question worth asking is what your current utilisation is. Most traditional EAPs sit in low single digits, which means you're paying for cover your people aren't reaching. If yours is being used, staff can get seen quickly, and it covers your psychosocial obligations, there's no reason to move. If not, it's worth knowing what you're getting for the spend.
Do you offer 24/7 support?+
Yes. A 24/7 after-hours crisis line means staff can reach someone immediately at any hour, including nights and weekends.
Counselling appointments are also available outside standard business hours, so shift-based and on-call teams aren't limited to a nine-to-five window. Those are two different things, and it's worth checking any provider offers both rather than just the crisis line.
Are your EAP counsellors based in Australia?+
Yes. Every practitioner on the platform holds current membership with an Australian professional body and practises under Australian standards, codes of ethics and disciplinary frameworks. There are no offshore call centres.
Practitioners hold membership with the Australian Counselling Association, the Psychotherapy and Counselling Federation of Australia, or the Australian Association of Social Workers, along with a current Working with Children or Vulnerable People Check.
How much does an EAP cost?+
Pricing is usually per employee per month, based on total headcount rather than how many people use the service. Costs vary widely depending on whether sessions are bundled in and whether compliance tooling is included.
A more useful comparison is cost per employee who actually uses it. An EAP with 2% utilisation can work out several times more expensive per person helped than one that gets used. Foremind offers pay-as-you-go, inclusive session plans and compliance-inclusive plans, with discounted pricing for not-for-profits and charities.
For full breakdown of our plans, see our EAP pricing page or request a quote for a tailored proposal.
What information does an employer receive about EAP usage?+
Nothing that could identify anyone. All counselling is completely confidential and all reporting is anonymous - you'll never see who booked, when, or what was discussed.
What you do see is the aggregated picture: how many people are using it, what psychosocial risks are prevalent in the business, and which teams are under pressure. Enough to know the investment is working and where to act, never enough to identify a person. Reporting thresholds mean small teams can't be reverse-engineered from the data.
Does having an EAP meet an employer's psychosocial duty of care?+
No. An EAP is a control measure, and a valuable one, but it only addresses harm after it has occurred. It doesn't identify hazards, assess risk, or evidence that controls are working.
Australian WHS law requires you to identify psychosocial hazards, assess the risk, control it so far as is reasonably practicable, and review whether those controls are working — with documented evidence at each step. Offering counselling on its own leaves three of those four steps undocumented.
Foremind covers both in one platform. See how the compliance side works in our product tour.