Psychosocial hazards in the workplace: Legal obligations, enforcement trends and what employers need to know

Psychosocial safety has moved decisively from the margins of workplace health and safety (WHS) into the regulatory spotlight. What was once treated as a ‘softer’ people issue is now firmly recognised as a core WHS, governance and compliance risk. Legislative reforms across Australia, coupled with a marked increase in enforcement activity, leave little room for doubt: regulators expect organisations to manage psychosocial hazards with the same discipline and accountability as physical safety risks.

Psychosocial hazards are no longer optional considerations or matters that can be addressed through broad policies or employee assistance programs alone. Regulators are looking for demonstrable risk identification, effective controls and ongoing reviews. For organisations that have not yet embedded psychosocial risk management into their WHS frameworks, the risks are escalating, not only for workforce wellbeing but also for legal, financial and reputational exposure.

What are psychosocial hazards and why do they matter?

Psychosocial hazards are defined by SafeWork Australia as anything with the potential to cause psychological harm. These hazards commonly arise from:

• excessive or unreasonable work demands
• poor job design or role clarity
• ineffective organisational change management
• low support from supervisors or peers
• bullying, harassment or aggression
• exposure to traumatic events.

While organisations have long owed a duty to protect workers’ psychological health, regulatory expectations have shifted significantly in recent years. Historically, there has been heavy reliance on general policies or employee assistance programs as a reactionary measure.

Regulatory attention has been driven in part by the economic cost of mental health injury claims. A SafeWork Australia report[1] noted that mental health injuries made up 12% of serious injury claims in 2023-24, representing an increase of over 14% from the year prior. In terms of financial cost, the median compensation paid for mental health injuries was four times the median compensation across all serious claims[2]. The highest proportion of claims were attributed to bullying and harassment (27.5%), work pressure (25.2%) and exposure to workplace violence (16.4%)[3].

Increased regulation has been accompanied by more active enforcement. Regulators are increasingly:

• initiating investigations based on individual complaints
• issuing improvement notices requiring systemic change
• scrutinising whether risk controls are effective in practice.

In NSW, this shift is particularly visible. As of March 2026, 20 SafeWork NSW inspectors have been appointed with a specific focus on psychosocial safety, signalling that this area is now a sustained regulatory priority.

The legal framework and recent developments

Australia’s legal framework for psychosocial safety has developed rapidly and progressively.

New South Wales became the first jurisdiction to implement a dedicated Code of Practice for managing psychosocial hazards in 2021. Other jurisdictions followed with Western Australia in 2022, Tasmania, Queensland and the Commonwealth in 2023 and most recently Victoria in late 2025.

Amendments to the Model Work Health and Safety Regulations commenced from October 2022, requiring organisations to:

• identify psychosocial hazards
• implement control measures to eliminate risks so far as reasonably practicable, or otherwise minimise them
• monitor and review the effectiveness of those controls.

This creates a broadly consistent national approach to psychosocial risk management albeit with some jurisdictional differences. The consistent regulatory message across all states and territories is that psychosocial hazards need to be taken seriously and organisations must be able to show how risks are identified, controlled and reviewed, not simply acknowledged.

A recent prosecution of the Department of Defence demonstrates the need to consider psychosocial risks across the employment lifecycle, particularly when undertaking processes that are likely to have a negative impact on a person’s mental health. When undertaking performance management processes, organisations should consider psychosocial risks that might arise and give due consideration to appropriate controls once risks are identified. The Department of Defence was recently convicted of breaches of the Work Health and Safety Act 2011 (Cth) related to a failure in managing risks to psychological health during the administration of performance management policies and procedures. In bringing charges, the Regulator alleged that the psychosocial risks associated with performance management were serious and foreseeable through existing policies and guidelines.

Additionally, the Industrial Relations Commission handed down its decision in Secretary, New South Wales Department of Education v SafeWork NSW (No 2) in March 2026. The Department sought a review of two improvement notices issued by SafeWork in relation to the management of psychosocial hazards in the workplace. The investigation commenced following a complaint made by an employee of the Department. The Commissioner, in deciding that the notices were valid, made a few important points, including:

1. The fact that only one individual employee complained about a psychosocial hazard did not mean that the employer had any less of a duty to address that hazard. The duty to minimise risk applies even where different employees may be differently affected by the hazard.
2. It was reasonable for SafeWork to issue a notice relating to all the Department’s workplaces, despite the investigation only concerning one employee in one workplace, because the notice related to a general risk resulting from a systemic issue.

Key Takeaways

In light of increased enforcement by WHS regulators, organisations should prioritise psychosocial hazards.

If you have yet to address psychosocial safety in the workplace it is essential that you:

• have an up-to-date risk assessment focusing on specific risks unique to your workplace
• review existing policies to ensure that psychosocial hazards are adequately addressed and workplace processes and procedures appropriately consider potential psychosocial hazards
• consult workers as part of the risk assessment and more broadly in relation to how risks are managed within the organisation
• implement targeted training to provide leaders with the necessary skills to intervene and help them to take accountability for managing potential risks.

If you have already undertaken the above steps, we recommend that you consider implementing further layers of psychosocial resilience by:

• investigating the effectiveness of your policies and procedures to manage risks, which may include seeking anonymous feedback from workers
• reviewing available data and statistics in relation to claims and complaints and identify any gaps or hotspots where improvement is required
• driving continuous improvement.

Psychosocial hazards are now a central feature of WHS regulation and enforcement in Australia. With clearer legal obligations, dedicated regulatory resources and an increasing willingness to investigate, issue notices and prosecute, expectations have never been higher. Regulators are no longer satisfied with intention or awareness, they are requiring evidence that psychosocial risks are actively identified, controlled and reviewed in practice.

For organisations, this represents both a legal imperative and an opportunity. Those that take a proactive, structured and data‑driven approach to psychosocial safety will not only be better prepared for regulatory scrutiny but will also be better placed to reduce claims, improve engagement and strengthen leadership accountability. As enforcement activity continues to intensify, psychosocial safety should be treated as an ongoing priority, one that is embedded into everyday decision‑making, resourcing and organisational culture, not addressed only after issues arise.

Gadens Workplace Advisory and Disputes team can assist with any queries you have in relation to managing psychosocial safety in the workplace and advising on how best to mitigate risks.

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Authored by:

Kiri Jervis, Partner
Siobhan Mulcahy, Partner
Natalie Lambropoulus, Graduate

[1] Snapshot: Psychological health and safety in the workplace, SafeWork Australia, February 2024.

[2] ibid

[3] Ibid