Leaked documents reveal a crisis in the £15bn Crossrail project, Europe's largest construction site, with industrial relations close to collapse and workers too scared to report injuries for fear of being sacked. Crossrail's managers are accused of photographing or videoing contractors' staff who may be in danger and emailing it to others "with unmasked glee".

The culture at the site of the east-west rail link is "almost entirely counterproductive" to delivering the project safely, on time and on budget, according to a damning internal analysis seen by the Observer. It adds that injured workers are "afraid to report due to the likelihood of being laid off".

The rail link being built between Heathrow and Reading to the west of London and Abbey Wood and Shenfield in the east, has been blighted by delays and injuries, including the death of Rene Tkacik, 43, on the site last month. Now a leaked assessment of the project, commissioned by construction companies tunnelling under Whitechapel and the city of London last year, paints a picture of a project veering towards disaster.

The report was compiled by independent consultants MindSafety, on the direction of Balfour Beatty, BeMo Tunnelling, Morgan Sindall and Vinci Construction, the companies behind BBMV, the joint venture developing two parts of the Crossrail project on sites at Whitechapel and Finsbury Circus.

Entitled Cultural Overview – Crossrail Project, the document praises the good intentions of those managing and working on the two sites and claims the situation is not irreparable, but condemns a culture in which "individuals cannot move and work freely as they are constantly looking over their shoulders and in fear of reprisals".

"Man-marking" of construction company managers by executives at Crossrail Ltd, the publicly owned company overseeing the project, is said to have created a culture all the way down the ranks in which workers are terrified of reporting mistakes and safety incidents.

"The intention of the client [Crossrail] is to get the job done safely, on time and with a healthy financial position on completion," the report says. "The reality is that the methods used on-site are almost entirely counterproductive to this. The relationship between client and contractor seems to be strained almost to breaking point.

"A common theme throughout the visit surrounded the idea that the client was 'policing' the contractor – trying to catch them out at every turn. Reports of spying and underhand tactics came flooding to us."

Under the subtitle "The secret photographing/videoing of incidents as they unfold", the document adds: "These acts have done more to damage morale and client perception than anything else. The negative spy culture is hard to understand and even harder to justify. To actively watch people who may be in danger, photograph or video it and then email it around with unmasked glee is not the way to keep the project safe."If the onlooker sees a potential danger, sits back and videos it and then shares it by email, it is little wonder that the safety culture is struggling. In many ways the onlooker is just as complicit by their inaction."

The report warns that workers are overstretched and often inexperienced, yet says, the feedback to staff is "almost entirely based on what is wrong, who is to blame and how we can keep everyone in their place". It says: "The reaction of people toward an incident is having a detrimental effect on the want or need to report back. The term 'knee-jerk' was used frequently…

"The client and contractor are disjointed in their views and reactions when such an incident occurs. In fact they are miles apart… injured workers are afraid to report due to the likelihood of being laid off. They are asked to report everything, but there is a major backlash when they do. The workers feel now any incident will be overplayed and the subsequent knee-jerk reaction and form filling will result in potential dismissal."

Labour MP John McDonnell said he would call in parliament this week for urgent action from the government. The report has been leaked ahead of Workers' Memorial Day on Monday, during which silent vigils will be held outside sites where workers have been killed. McDonnell said: "The report supports the workers' own assessment that a bullying management style is jeopardising health and safety, with workers worried about even reporting safety issues for fear of a knee-jerk reaction in this blame culture."

Helen Clifford, a solicitor for Leigh Day, who represents clients injured on construction sites, called for the Health and Safety Executive to investigate practices on the Crossrail site.

A spokesman for the construction companies said: "The report commissioned by BBMV 12 months ago does not reflect a poor safety culture at that time. The draft report only contained contributions from a limited number of people and was not sufficient to give a true and accurate reflection of our Whitechapel and Finsbury Circus sites."

A spokesman for Crossrail defended its methods on site, adding: "Crossrail refutes this inaccurate description and has enjoyed a good working relationship with BBMV throughout. Crossrail's safety record is better than the UK construction industry average."