Regulator in New South Wales halts job cuts due to concerns about psychological work safety

The University of Technology Sydney (UTS) has recently found itself at the centre of a significant development in Australian workplace safety regulations. The New South Wales (NSW) safety regulator, SafeWork NSW, issued a prohibition notice, halting UTS's redundancy process due to concerns about psychological harm to workers.

The decision marks the first reported instance in NSW where a prohibition notice was used to halt a managerial process such as an organizational restructure involving redundancies. This move could set a precedent for future redundancy processes in Australia, emphasizing the growing importance of psychological safety in workplaces.

The NSW Personal Injury Commission has previously awarded compensation and medical expenses to an employee who incurred a psychological injury due to an organizational restructure. This decision underscores the potential risks that employers face when conducting redundancies without adequate consideration of psychological safety.

Conducting a genuine redundancy process can expose employers to the risk of successful psychological injury claims. The Commission found that the employer's defense of taking reasonable management action was not sufficient, as 'reasonableness' must weigh the rights of employees against the object of employment.

The psychosocial hazard regulations under the Work Health and Safety legislation were first introduced in NSW in 2022 and have since been rolled out across other Australian states and territories. These regulations treat psychological safety issues in the same way as physical safety issues, giving safety regulators the specific power to intervene in cases where there is a serious risk to psychological health.

In the case of UTS, the redundancy process was deemed a psychosocial hazard by SafeWork NSW, as it posed a serious and imminent risk of psychological harm to some workers. The regulatory body issued the prohibition notice after the National Tertiary Education Union (NTEU) at UTS contributed to the consultation process, which led to the raising of safety concerns and the engagement in a consultation that highlighted workplace hazards.

The prohibition notice was lifted after UTS agreed to extend consultation timelines and change the nature of communications regarding the redundancy process. Employers, when planning an organizational restructure, should maintain accurate and detailed records of steps taken to ensure psychological safety for affected employees. This includes conducting risk assessments, consulting with workers, providing supports, and setting reasonable timelines for consideration of restructure, redeployment, and consultation information.

The use of a prohibition notice to halt a redundancy process could have implications for employers in future redundancy processes in Australia. It underscores the need for employers to prioritize psychological safety in their restructuring processes and to be proactive in managing potential risks to their employees' mental health.

Moreover, unions are increasingly using psychological safety as an industrial strategy. Union officials can use the opportunity of being onsite to speak to workers and put pressure on employers during enterprise bargaining periods. The NTEU, for instance, played a key role in the UTS consultation process, highlighting the potential for unions to influence workplace safety practices.

Recently, the High Court has also decided that the Fair Work Commission can inquire into the possibility of redeploying an employee instead of retrenchment. This decision further emphasizes the shifting landscape of employment law in Australia, with a growing focus on employee welfare and the prevention of psychological harm.

In conclusion, the case of UTS serves as a reminder for employers to prioritize psychological safety in their restructuring processes. By taking proactive measures to manage potential risks to their employees' mental health, employers can not only avoid regulatory intervention but also foster a healthier and more productive work environment.

Regulator in New South Wales halts job cuts due to concerns about psychological work safety