SafeWork orders temporary pause on redundancies due to psychological risk

For the first time, SafeWork NSW has intervened in a redundancy process on mental health grounds, reflecting the growing weight placed on psychological risk in work health and safety law.

Editor’s note, 10 September 2025: SafeWork NSW’s prohibition notice pausing the university’s redundancy plans has now been lifted.

In an unprecedented move, SafeWork NSW ordered a pause on job cuts at a university due to a “serious and imminent risk of psychological harm”.

The health and safety watchdog issued a prohibition notice to the university last week, halting a planned restructure that would make around 150 roles redundant.

This marks the first time SafeWork has issued a prohibition notice like this in response to a psychological risk.

“We often see the regulator intervene when there are risks to physical safety, such as on construction sites,” says Lauren Brouwer-French, Senior Associate at Harmers Workplace Lawyers. “Whereas here, they’re taking a proactive approach to preventing psychological harm. 

“While this is the first time the regulator has, as far as I am aware, intervened in a redundancy process on mental health grounds, it’s not surprising given that the regulator is now placing a lot more focus on risks to psychological and psychosocial safety.”

This order raises important questions about how far employers must go to manage mental health risks during an organisational restructure. Below, Brouwer-French offers guidance for HR.

Staff complaints revealed psychological risk

While SafeWork NSW has not released a full report on the reasons for the prohibition notice, the Sydney Morning Herald reports that the watchdog was made aware of several complaints from university staff about the cuts. 

These included inadequate consultation regarding the changes, short-notice meeting invitations that left employees unprepared and communications that used “finalistic” language suggesting outcomes were already determined, despite legal obligations to engage in meaningful consultation with affected employees. 

Employees reportedly said these actions had led to heightened anxiety, a “culture of fear” and concerns that prolonged uncertainty was contributing to psychological distress. The complaints prompted an investigation which culminated in the prohibition notice.

“The regulator has very broad powers in relation to investigating health and safety in workplaces, but it can’t be in every workplace at once,” says Brouwer-French. “So the evidence they rely on often includes direct accounts from people or individuals who are impacted by the process.”

While the notice has halted the restructure in the short term, that doesn’t mean it will never go ahead, she adds.

“A prohibition notice is issued in circumstances where the inspector believes that an activity is occurring or may occur, which involves a serious risk to the health and safety of a person. 

“If the inspector forms that view, they’ve got the power to issue a direction prohibiting a person or business from carrying on the activity until the inspector is satisfied that the risk has been remedied.”

“Businesses need to clearly communicate the reason for a restructure and the impact on people’s employment before the decision is made.” – Lauren Brouwer-French, Senior Associate, Harmers Workplace Lawyers

What does this decision mean for employers?

This decision highlights the growing weight regulators are placing on psychosocial safety, and serves as a warning that the expectations set by the 2023 psychosocial hazards Code of Practice are now being tested and enforced.

“SafeWork is definitely increasing its focus on psychosocial hazards in the workplace,” says Brouwer-French. “Part of its goals through to 2026 are to implement training in businesses around these risks where it can, but the regulators have also flagged that they will be focusing on compliance, particularly in large businesses.

“For example, SafeWork has flagged that inspectors who are completing work health and safety visits in businesses with 200 or more workers will also complete a psychosocial check at the same time. And if the inspector identifies a lack of appropriate action being taken to comply with the legislation, they may take regulatory action and prosecute accordingly.”

This decision may well prompt employers to re-examine their redundancy processes to ensure alignment with this new legal landscape.

“The obligations around restructures haven’t changed per se, in that employers are still obliged to meet the same relevant consultation obligations set out in awards, enterprise agreements and the Fair Work Act,” says Brouwer-French.

“But now there are additional risks that employers have to take into account. They need to be aware that there are risks to psychosocial safety in the restructure process, and they need to take steps to mitigate or eliminate those risks as far as reasonably practicable.”

What’s more, employers should be keeping thorough records of how they have assessed, addressed and monitored these risks, she says – both to protect employees and to demonstrate compliance if they are challenged.

How far can employers be expected to go in mitigating psychosocial risks during redundancies?

Redundancies almost always lead to some degree of stress and anxiety among employees, making it difficult for psychosocial hazards to be eliminated from the process entirely. 

That said, the inevitable challenges attached to redundancies do not excuse poor risk management, says Brouwer-French.

“The legislation imposes a high bar in that it requires the risks to be mitigated or eliminated ‘as far as reasonably practicable’,” she says. “And that does require proactive steps from employers.”

While strategies will vary significantly depending on the workplace, she says there are three essential elements that a risk mitigation plan should include: 

1. Mechanisms to assess risks. This may include consulting with health and safety experts, running anonymous employee surveys and conducting structured psychosocial risk assessments.

Read HRM’s article on how to conduct a psychosocial risk assessment.

2. Strategies to mitigate risks. For example, scheduling consultation meetings with adequate notice, empathy and transparency in communications, offering external support and ensuring managers are trained to have supportive conversations.

3. Mechanisms to test their effectiveness. Employers should check whether interventions are working by gathering employee feedback, monitoring wellbeing-related metrics such as absenteeism and reviewing whether risks identified in earlier assessments have reduced.

Most employers are aware that consultation is required during a restructure or redundancy process. However, Brouwer-French stresses that consultation must be early and meaningful in order for employers to meet their obligations.

“Businesses need to clearly communicate the reason for a restructure and the impact on people’s employment before the decision is made,” she says. “There needs to be a genuine opportunity for people to explain the impact of the restructure on them and suggest alternative [courses of action], and thoughtful consideration should be given to those suggestions.

“When it comes to the final decision, it needs to be communicated in a way that’s thoughtful and empathetic, and steps should be taken to ensure that there’s psychological support available – whether that’s through an employee assistance program or another measure. Offering that support to employees is really important.”

Although company restructures will always involve uncertainty, a well-rounded approach like this can help keep psychological risk to a minimum.

All information, content and materials available on this site are for general informational purposes only. The contents of this article do not constitute legal advice and should not be relied upon as such.

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