BACKGROUND: The healthy context paradox, originally described with respect to school-level bullying interventions, refers to the generation of differences in mental wellbeing amongst those who continue to experience bullying even after interventions successfully reduce victimisation. Using data from the INCLUSIVE trial of restorative practice in schools, we relate this paradox to the need to theorise potential harms when developing interventions; formulate the healthy context paradox in a more general form defined by mediational relationships and cluster-level interventions; and propose two statistical models for testing the healthy context paradox informed by multilevel mediation methods, with relevance to structural and individual explanations for this paradox. METHODS: We estimated two multilevel mediation models with bullying victimisation as the mediator and mental wellbeing as the outcome: one with a school-level interaction between intervention assignment and the mediator; and one with a random slope component for the student-level mediator-outcome relationship predicted by school-level assignment. We relate each of these models to contextual or individual-level explanations for the healthy context paradox. RESULTS: Neither model suggested that the INCLUSIVE trial represented an example of the healthy context paradox. However, each model has different interpretations which relate to a multilevel understanding of the healthy context paradox. CONCLUSIONS: Greater exploration of intervention harms, especially when those accrue to population subgroups, is an essential step in better understanding how interventions work and for whom. Our proposed tests for the presence of a healthy context paradox provide the analytic tools to better understand how to support development and implementation of interventions that work for all groups in a population. TRIAL REGISTRATION: Current Controlled Trials, ISRCTN10751359 .