When an organisation announces a restructure, the focus naturally falls on the people leaving. Legal compliance, redundancy entitlements, consultation obligations — the checklist is long and the stakes are high. But while HR teams are managing exits, something quieter is happening on the other side of the office. The people who remain are watching. And what they see will shape your organisation for years to come.
This is the overlooked dimension of redundancy: the impact on surviving employees. And in Australia's current climate, it's a risk that no HR leader can afford to ignore.
Australia's Redundancy Reality in 2026
Redundancy is no longer an exceptional event reserved for seismic economic downturns. It has become a structural feature of how Australian organisations operate.
In 2025, 268,000 Australians were retrenched, the highest number since the post-pandemic rebound — representing a national retrenchment rate of 1.9%, up from a record low of 1.3% in 2023. According to the Australian HR Institute (AHRI), 27% of employers were planning further cuts in the September 2025 quarter, and 19% were still anticipating redundancies heading into March 2026.
The triggers are varied: cost pressures, automation investment, aged care and health sector restructuring, funding changes across not-for-profits, and post-pandemic demand normalisation across manufacturing and distribution. Health and education, historically considered among the most stable sectors, recorded 26% redundancy intentions in AHRI's data for 2025–2026, a surprising shift that signals no industry is insulated.
In this environment, the capacity to manage workforce transitions well, repeatedly, compassionately and strategically is now a core HR competency.
The 15–20% Productivity Drop Nobody Talks About
When a redundancy announcement is made, the employee experience rightly takes centre stage. But the productivity cost to the remaining workforce is both immediate and significant.
Research consistently finds that teams experience a 15–20% productivity drop during restructuring periods. Remaining employees absorb redistributed workloads, often without clarity on new expectations. Morale takes a hit. Anxiety about further cuts circulates through informal channels faster than any official communication can counter it. And key institutional knowledge, the kind that lives in relationships and experience, not in job descriptions, walks out with departing colleagues.
This is what organisational psychologists sometimes call "survivor syndrome": the complex mix of guilt, anxiety, reduced engagement and eroded trust experienced by employees who keep their jobs after others don't. Left unaddressed, it compounds. Teams that feel uncertain about their future, or who witnessed colleagues being treated without dignity on their way out, become disengaged, risk-averse, and eventually become more likely to leave voluntarily.
The irony is that organisations invest significant resources in managing redundancies, yet often underinvest in the very thing that protects the return on that investment: the wellbeing and engagement of the employees who remain.
What Remaining Employees Are Actually Watching
It is tempting to assume that surviving employees are simply relieved. In reality, they are evaluating.
They are watching how their former colleagues are treated during the process. They are listening to how leaders communicate — and whether the messaging is honest or evasive. They are noting whether departing employees were given genuine support to move forward, or simply handed a letter and a desk box. Every observable detail becomes a data point that employees use to answer the question they are really asking: "If it were me, would this organisation treat me with respect?"
This is why outplacement is not merely a benefit for departing employees. It is a visible, tangible signal to everyone still in the building.
Companies that invest in outplacement support consistently report stronger engagement scores among remaining staff, alongside reduced unemployment insurance outlays and faster career landings for those who depart. The investment in departing employees directly shapes the experience of those who stay.
The Employer Brand Dimension
Beyond internal culture, there is the question of what happens externally.
Australian employees are increasingly visible online. Glassdoor reviews, LinkedIn posts, and word-of-mouth within tight industry networks mean that how an organisation handles a redundancy round is rarely a private matter. A poorly managed process, even if legally compliant, can damage your employer brand in ways that affect your ability to attract talent long after the restructure is complete.
Conversely, organisations that handle transitions with care and invest in supporting their people through outplacement earn a reputational dividend. Outplacement has shifted from being viewed as a discretionary cost to a strategic workforce tool, with employer branding pressure from investors, talent markets, and consumer audiences pushing organisations to demonstrate that their approach to people remains humane, even in difficult moments.
This has particular relevance in sectors like health, education, and not-for-profit, where mission and values are central to both employee identity and public trust. In these environments, the alignment between stated values and observable actions during a restructure is scrutinised with particular intensity.
What Effective Outplacement Actually Looks Like
Not all outplacement services are created equal. The distinction between transactional and genuinely human-centred support matters, both for the individuals going through it and for the message it sends to those watching.
Effective outplacement goes well beyond handing someone a resume template and access to a job board. It encompasses:
- Personalised career coaching — one-on-one support that helps individuals identify their strengths, define what they genuinely want next, and build a compelling personal brand for the job market
- Emotional and psychological support — acknowledging that redundancy, regardless of the business rationale behind it, is a personal experience that affects confidence, identity, and wellbeing
- Practical job search skills — LinkedIn optimisation, interview preparation, networking strategy, and navigating the modern recruitment landscape
- Leader and manager support — coaching managers on how to have difficult conversations with empathy and consistency, reducing the risk of poorly handled notification conversations that become unfair dismissal claims or reputational incidents
- Communications advisory — helping HR and People & Culture teams plan and sequence announcements in ways that are clear, honest, and appropriately compassionate
The quality of this support is what employees see. A program that feels genuine, that adapts to the individual rather than running them through a standardised process, sends a fundamentally different message than one that treats outplacement as a checkbox.
The Legal Dimension Is Tightening
For HR Directors, there is an additional compliance consideration that has sharpened considerably in recent years.
Since January 2025, intentional underpayment of entitlements is a criminal offence in Australia, carrying prison terms of up to 10 years for individuals and multi-million dollar fines for companies. Redundancies that are not genuine (where a role re-emerges shortly after, or where consultation obligations were not properly followed), expose organisations to unfair dismissal claims.
These risks make the quality of the redundancy process a legal issue as much as a cultural one. And organisations that handle redundancies well, with thorough consultation, fair process, and genuine support for departing employees, are substantively less exposed.
A Strategic Shift Worth Making
The case for investing in outplacement is no longer purely humanitarian, though the humanitarian argument remains important. It is strategic.
Organisations that treat departing employees well protect the engagement and productivity of those who stay. They reduce legal exposure. They strengthen their employer brand at precisely the moment it is most vulnerable. And they signal to their entire workforce, in a way that no internal communications campaign can replicate, that the organisation's stated values are not conditional on convenience.
The Australian outplacement services market is forecast to grow at a CAGR of 4.80% through to 2034, driven by increasing recognition among organisations that workforce transition support is a genuine business investment. The HR leaders who understand this earliest will build more resilient, more engaged, and more adaptable organisations.
In a labour market where redundancy has become routine, the question is no longer whether your organisation will face a restructure. It is whether you will be ready to handle it in a way that strengthens rather than erodes what you've built.
