The cut backs have "nothing to do with profitability", a spokesperson told ZDNet.
The ISP claims the retrenchments come ahead of a major deal with an Australian content provider to be announced in the coming weeks.
The agreement will clear the way for OzEmail to focus on its core competencies--connectivity and IP dial-up--the ISP said.
"We are focusing on our core business which is connectivity and IP dial-up, so we have to streamline and move away from our in-house content provision," the spokesperson said.
OzEmail, which has approximately 400 staff in Australia, advised fifty staff to "pack their bags" on Thursday 28 June, according to one employee.
OzEmail would not confirm the exact number of staff cuts but said the retrenchment package includes outplacement and counselling services.