Close to 80 New South Wales public servants are facing Christmas on the scrapheap as Treasurer Mike Baird dilly-dallies on a contract extension offered to his department by the federal Fair Work Ombudsman.

Staff at NSW Industrial Relations — the body charged with guarding employees across the state from dodgy bosses — have been told there is no guarantee of work when the state government’s contract with the Commonwealth expires at the end of the year.

An internal email sent by NSW Industrial Relations executive director Vicki Telfer last week, and obtained by Crikey, stated that no new files will be opened between now and Christmas. Telfer apologised to stressed staff that have found their careers hanging by a thread and suggests they call an employee assistance line.

Telfer said that “no decision has been made in relation to the FWO contract” owing to recent machinery of government changes that last year slashed the number of NSW government departments from 13 to nine. A brief on the balls-up is currently before state cabinet.

About half of the 78 roles under threat are investigator or inspector positions spread out across struggling outposts in rural and regional NSW. The NSWIR contract is jointly funded by the Commonwealth and NSW — the federal government’s contribution accounts for 40 positions, while the state government pays for the remainder.

A spokesman for the Fair Work Ombudsman told Crikey this morning that no decision has been made on the future of the contract. “We have offered the option of extending the current contract and we are waiting for advice,” they said.

Since the Gillard government’s Fair Work Act passed in 2009 the Commonwealth has held jurisdiction over private sector IR in NSW. However, NSW then entered into a contract with the federal regulator to continue to perform compliance functions, including investigations, audits and employer education.

The work is voluminous — according to data for the week ending September 17, inspectors commenced 45 complaint files and closed 60 files. Close to 350 active files are currently held by NSWIR. There are suggestions the work could be absorbed in the medium-term by the FWO, that currently employs its own staff in the state.

One NSWIR employee told Crikey the atmosphere inside the office was poisonous: “Staff are almost resigned to the fact that they are almost certainly to be made redundant at Christmas time; they have stopped giving us work to do. Our main concern is not being told, so we can at least look for other work.” Just eight work weeks remain before the annual summer shutdown.

The blow-up is expected to hit the NSW parliament today, with Opposition Leader John Robertson’s office preparing a series of penetrating questions for Baird, who was handed the IR portfolio last month in a Barry O’Farrell reshuffle.

Last month, 40,000 NSW public sector workers took to the streets to protest O’Farrell public service cuts in the recent state budget and an anaemic 2.5% pay increase that could only be exceeded through productivity gains. A smaller follow-up strike went down three weeks ago with the Public Service Association orders banning the action.

The experience of NSW mandarins has been repeated across the nation. A Crikey analysis earlier this year found that 38,000 public service jobs had been chopped at federal and state levels over the past few years. Last month, Campbell Newman in Queensland added a massive 14,000 cuts to that number and an incoming Tony Abbott government has flagged cuts of at least 12,000 from the federal bureaucracy.

A spokesperson for Baird’s office didn’t provide comment before deadline.