Redundancies were once mostly heard about in the news, often linked to struggling, unheard-of industries or isolated company restructures. Then came the pandemic, when job losses became widespread, and many Australians experienced the emotional and financial shock of sudden unemployment for the first time.
Now, years after the height of the pandemic, many employees hope for a return to stability. But reality is still telling a different story.
Redundancies remain common across sectors, with recent reports revealing that 68% of Australian workers fear being made redundant. Add to that the growing anxiety around AI-triggered job cuts and the pressure to constantly upskill to avoid becoming obsolete.
It’s clear that job insecurity hasn’t gone away but has simply evolved, often shaped by automation and changing skill requirements. If you’re a leader in a company that has recently made roles redundant or is preparing to do so, now is the time to prioritise supporting your employees through what can be an incredibly difficult period.
Redundancy and Mental Health Connection: Real or Imagined?
The mental health impacts of job insecurity and redundancy are not just real but also well-documented. Interestingly, most studies also cite physical health impacts, both short-term and long-term.
Involuntary job loss has been linked to poorer psychological and physical well-being, especially among blue-collar workers who may face greater financial strain and fewer re-employment options (National Mental Health Commission).
Unemployment has also been found to disrupt a person’s sense of identity, purpose, and vision for the future (BMC Public Health Journal).
Additionally, in a report published on the Parliament of Australia’s website, insecure work was linked to stress, anxiety, higher risks of coronary heart disease, higher incidences of hypertension and high cholesterol, and fear of reporting injuries in their workplace.
The risks can also become life-threatening if left unaddressed. Studies show that income loss is associated with increased rates of panic attacks and depressive episodes. An analysis by the University of Sydney revealed that nearly 10% of suicides from 2004 to 2016 were linked to unemployment or underemployment.
Even employees who remain after redundancies can suffer. Many experience “survivor's guilt,” emotional exhaustion, and fear of being next. If not acknowledged, this can lead to low morale, disengagement, lower productivity, and a breakdown of psychological safety. As discussed in previous guides, the legal element of psychological safety is becoming an increasingly relevant concern for leaders.
Best Practices for Supporting Mental Health During Redundancies
When an employee exits via redundancy, they’re often left to navigate grief, fear, and identity loss while facing an uncertain job market. Supporting staff through this transition isn’t just about softening the blow, but about treating them with care, dignity and honesty. In some cases, it may also protect you from legal claims related to unfair dismissal or psychological injury workplace claims.
Below are some tips to lead with care during the difficult time of role redundancies.
1. Communicate Early, Clearly, and Compassionately
Employees can handle difficult news. However, what can break their trust is secrecy, delay, or mixed messages. I recommend being transparent about what’s happening, why it’s necessary, and how decisions are being made. Plus, the earlier your employees are informed, the sooner they can start searching and preparing for their next role.
Clear and honest communication also reassures retained employees. When staff see that you are proactively addressing concerns and changes and handling them with care and respect, they’re more likely to remain engaged and trust that their leaders are acting with integrity.
2. Use Respectful, Human Language
The words you use in a redundancy conversation can shape how someone experiences the entire process. For example, saying “the role has been made redundant” instead of “you’ve been made redundant” helps separate the person from the decision and protects their dignity. You should also avoid corporate speak or vague terms that can feel empty or dismissive. Instead, encourage managers to be clear, sincere, and compassionate.
These small but meaningful language choices can reduce shame and soften the emotional impact.
3. Offer Mental Health Support Before, During, and After the Redundancy
Mental health support should be embedded in the redundancy process, not offered as an afterthought. Make it easy for staff to access mental health therapy through EAP or even a conversation with a leader. Ideally, support should be offered proactively and remain available for weeks after the transition.
This care should also extend to retained employees and managers. Those delivering the news may carry emotional weight, and “survivors” often feel guilt or anxiety. Proactive support, including debriefs and reminders to use EAP services, can help protect the well-being of the whole team.
4. Provide Practical Career and Growth Support
Losing a job can shake a person’s sense of direction and self-worth. Providing practical tools like career counselling, CV writing support, recommendation letters, and retraining options can help exiting employees regain confidence and see the change as a transition, not a failure. These services can also help restore a sense of control, which is critical for protecting mental health.
I also recommend offering upskilling or professional development opportunities to staff in retained roles. This not only signals that the organisation is still investing in its people, but also helps ease fears of future job loss. Supporting growth on both sides of a restructure can inspire trust, motivation, and long-term engagement.
5. Support Managers Through the Process
Managers often have to announce the redundancy news while managing their own stress. Without support, this can lead to burnout, guilt, or long-term emotional strain. They may feel isolated or unprepared, especially if they’ve never had to initiate such conversations before.
It’s a must to equip leaders with practical tools and emotional support, like talking points, workplace mental health training, and access to counselling or debriefs. When managers feel supported, they’re more likely to lead with care, protect team morale, and model steady, compassionate leadership even through uncertainty.
Final Thoughts
Redundancy is never just a business decision. It affects real people: those who leave, those who stay, and the leaders tasked with delivering the news. Depending on how they're handled, these moments can either erode trust or strengthen it.
Approaching workforce transitions with care, honesty, and mental health support helps preserve not only individual well-being but also the integrity of your workplace culture. Even outside periods of change, having clear, proactive mental health policies signals that your organisation values its people. It reflects a culture grounded in care, one that earns loyalty, builds resilience, and supports lasting engagement.
