STAFF of Myuna Bay Sport and Recreation Centre have been told of future employment options, including voluntary redundancies or relocation to other centres in the state.
Office of Sport CEO Matt Miller met with staff and Lake Macquarie MP Greg Piper on Wednesday to outline options after the centre closed last week.
The NSW government agency told employees that remediation work to eliminate risks associated with the nearby ash dam, or the relocation of the closed centre to a site nearby, could not be achieved within two years.
"Matt Miller explained that work, health and safety obligations to keep staff and clients safe meant that there was no alternative but to shut the centre immediately when presented Origin Energy's advice," an Office of Sport spokesperson said.
"The Office of Sport is having ongoing discussions with Origin Energy about compensation.
"This includes identifying how long the remediation work would take to make the site safe to resume use, or the opportunity to build another site nearby.
"As neither of the above options can be completed within the next two years, staff have been presented with their future employment options, which included voluntary redeployment to other Sport and Recreation Centres or voluntary redundancies if staff are unable to travel to a different centre."
Staff had only met with their union less than 24 hours earlier, expressing hope of a return to the Myuna Bay centre which has been operating for more than six decades.
While permanent staff will be on full pay while arrangements are made, casual staff who had about 100 days of work rostered at the centre for the rest of the year will be without that work.
Mr Piper said Mr Miller had told him "the site would not be stripped and it was going to be held there with the option of reopening it at sometime in the future".
He said the "military-like" action by the Office of Sport to close the centre had relied solely on the Origin-commissioned report, which Labor's spokeswoman for sport Lynda Voltz said no other other government agency had been provided with.
"My view is, you've got some risk there but you've got a report that no one else has seen," Mr Piper said.
"This has all been driven by Origin Energy.
"Could it not be that it should have been peer reviewed, could it not be looked at by other organisations before you run around like chicken little and the sky's falling [in]?"
Premier Gladys Berejiklian failed to answer a series of questions from the Newcastle Herald on Wednesday, including whether she or former Sports Minister Stuart Ayres knew of Origin Energy's ash dam concerns before the centre's closure.
"The Premier has met with Greg Piper to hear his concerns," said a spokesman for the Premier.