In December 2025, one of Australia’s largest employers was convicted and fined $188,000 over a workplace death. The hazard was not a forklift, a ladder or a faulty machine. It was a performance management process.
That case, involving the Commonwealth Department of Defence, is a sharp reminder of where workplace safety has moved. Psychosocial hazards (the parts of work that can harm people’s mental health) are now treated by regulators in much the same way as physical hazards. And the businesses most likely to be caught out are not necessarily the ones with a toxic culture. Often they are well-meaning employers who assume an employee assistance program and a bullying policy are enough.
This guide skips the legislative jargon and focuses on what psychosocial hazards look like in a real business, what recent cases tell us, and the practical steps that are most likely to keep your people safe and your business out of trouble.
Key takeaways
- It’s a safety issue, not just an HR issue: Employers have a duty to manage psychosocial risks in the same way they manage physical risks.
- Regulators are acting: Recent enforcement includes a conviction, prohibition notices that paused university restructures, and multi-million dollar civil claims.
- Support is not the same as prevention: An EAP, wellbeing app or mental health training may help, but they do not fix the source of the risk on their own.
- Ordinary processes carry risk: Restructures, performance management and workplace investigations are some of the highest risk moments for psychological harm.
- Small steps add up: Consulting workers, redesigning high-pressure work and training managers may go a long way toward compliance.
What Are Psychosocial Hazards?
A psychosocial hazard is anything in the design or management of work, or in workplace interactions, that may cause psychological harm. Stress is the body’s response. The hazard is whatever is causing it.
Safe Work Australia’s model Code of Practice lists 14 common psychosocial hazards. It is easier to think about them in four groups:
- The job itself: high or low job demands, low job control, lack of role clarity, and remote or isolated work.
- The people: bullying, harassment (including sexual harassment), conflict or poor workplace relationships, and violence or aggression from customers or clients.
- The organisation: poor support, poorly managed organisational change, inadequate reward and recognition, and poor organisational justice (for example, unfair or inconsistent decisions).
- The environment and events: a poor physical environment (noise, heat, cramped spaces) and exposure to traumatic events or material.
Most workplaces have several of these at once, and they tend to compound. A team that is short-staffed (high demands), unsure who owns which tasks (role clarity) and dealing with angry customers (aggression) faces a much higher combined risk than any one hazard suggests.
Why psychosocial safety is now a boardroom issue
The numbers
According to Safe Work Australia’s 2025 Key WHS Statistics, mental health conditions made up 12% of serious workers’ compensation claims in 2023-24. Those claims have increased by 161% over the past 10 years, and workers with a mental health claim typically spend almost five times longer off work than those with other injuries. For employers, that may mean higher premiums, long absences and costly replacement hiring.
The cases
Recent cases show that regulators and courts are looking closely at how employers run everyday processes:
- Department of Defence (2025): A RAAF technician died by suicide in 2020 after being placed on four work plans over six months. Comcare alleged that supervisors had not been trained to recognise the psychological risks of the performance management tool. Defence pleaded guilty and was fined $188,000, along with an adverse publicity order. It was the first time a Commonwealth employer had been convicted for failing to manage psychosocial risks.
University of Technology Sydney (2025): SafeWork NSW issued a prohibition notice that temporarily stopped the university from releasing a restructure proposal to staff, following a complaint about psychological risk and inadequate consultation. The notice was lifted within days, after the university changed how and when it would communicate the proposal.
Macquarie University (2025): SafeWork NSW issued an improvement notice covering two faculties, requiring the university to consult workers and identify hazards and risks as part of a restructure.
Western Sydney Local Health District (2025): SafeWork NSW prosecuted the health district over how it handled complaints and grievances involving two nurses. The prosecution was withdrawn after a three-week hearing, but the case still shows that regulators are prepared to take complaint handling to court.
The common thread is not bad intentions. In each case, the risk came from a normal business process (a performance plan, a restructure, a disciplinary process or a complaint investigation) that was not designed or run with psychological safety in mind.
Our experience
We recently advised a Brisbane-based logistics company that was planning a restructure following the loss of a major contract. Several psychosocial risk factors stood out. The affected staff had high workloads for months, there was no planned consultation, and the remaining team members were highly likely to take on extra work (on top of their already overtime hours) with no clear plan for how it would be shared or reasonably managed.
We helped the client develop a consultation plan and a documented psychosocial risk assessment. As a result, the restructure proceeded without complaints to the regulator, and the client now uses the same process for future changes.
Done this way, the restructure definitely took a little longer, but the business significantly reduced its risk of a regulator stepping in, a workers’ compensation claim, or losing the staff it wanted to keep.
Not sure where your psychosocial risks are? Most employers aren’t, and that’s usually where problems start. Our employment team can review your policies, processes and upcoming workplace changes, and give you a practical plan that fits the size of your business.
Five myths that may be putting your business at risk
Myth 1: "We have an EAP, so we're covered"
An employee assistance program supports people after they are struggling. The law is focused on preventing harm in the first place by eliminating or minimising the risk at its source. An EAP is a useful part of the picture, but it is unlikely to be enough on its own.
Myth 2: "We need to appoint a psychosocial hazards officer"
There is no general legal requirement to appoint a designated psychosocial hazards officer. Giving someone clear ownership of psychosocial risk may be good practice, but the legal duty sits with the business, and officers (such as directors and senior executives) must exercise due diligence to make sure it is met.
Myth 3: "Mental health training ticks the box"
Training is valuable, but it does not change the work itself. In Victoria, the new regulations go further and say that information, instruction and training should not be the main control measure where better options are reasonably practicable. If the problem is chronic understaffing, a resilience workshop is unlikely to fix it.
Read more in our guide to performance managing an employee with a mental health condition.
Myth 4: "Performance management is exempt"
Reasonable management action carried out in a reasonable way remains a legitimate part of running a business. But as the Defence case shows, the way a process is designed and run may itself create a psychosocial risk. Clear expectations, realistic timeframes, support options and trained managers may reduce that risk significantly.
Myth 5: "We're too small for this to apply"
Psychosocial duties apply to businesses of all sizes. What is reasonably practicable for a 12-person firm is likely to look different from a large corporate, but a small business is still expected to identify the risks and take sensible steps to manage them.
The law
In 2022, Safe Work Australia amended the model WHS Regulations to deal expressly with psychosocial risks, and published a model Code of Practice. Every state and territory now has specific psychosocial regulations or guidance in place. Victoria was the last major jurisdiction to act, with the Occupational Health and Safety (Psychological Health) Regulations 2025 commencing on 1 December 2025.
In practice, the requirements across Australia are broadly similar: identify the hazards, eliminate or minimise the risks so far as reasonably practicable, consult workers, and review your controls when things change. Separately, the positive duty under the Sex Discrimination Act 1984 (Cth) requires employers to take reasonable and proportionate measures to prevent sexual harassment, which overlaps heavily with psychosocial risk management.
How to manage psychosocial hazards at work: a 5-step plan
Step 1: Spot the hazards
Look at your workplace data (overtime, leave, turnover, complaints, exit interviews and workers’ compensation claims) to find hot spots. A team with rising sick leave and two resignations in a quarter is telling you something.
Step 2: Ask your people
Consultation is a legal requirement and is often the fastest way to find the real problem. Short pulse surveys, team discussions and health and safety representatives may surface issues that data alone does not show.
Step 3: Assess the risk
Consider how often the hazard occurs, how long it lasts, how severe it is and how hazards combine. Pay particular attention to high-risk moments such as restructures, redundancies, performance management and investigations.
Step 4: Fix it at the source
Prioritise changes to how work is designed and managed, such as adjusting workloads, clarifying roles, improving rosters or changing how customer aggression is handled. Use training and support services alongside these changes rather than instead of them.
Step 5: Check it's working
Review your controls regularly and whenever something changes, such as a new system, a complaint, an incident or a restructure. Keep records of what you did and why, because documentation is often what an employer relies on if a regulator comes asking.
Psychosocial hazards examples: what this looks like in real workplaces
Hazard | What it may look like | A control that targets the source |
High job demands | An accounts team running month-end with two vacancies and regular 60-hour weeks | Temporary cover, reprioritised deadlines and a cap on sustained overtime |
Lack of role clarity | Two managers giving a new hire conflicting instructions | Written role descriptions and a single reporting line |
Customer aggression | Retail or reception staff abused by customers with no escalation process | Clear escalation steps, the right to end abusive calls, and incident follow-up |
Poor change management | A restructure announced by email with no consultation period | Early consultation, a clear timeline and access to support during the process |
Poor organisational justice | Investigations that drag on for months without updates | Defined timeframes, regular updates and a support person for all parties |
Remote or isolated work | A field worker with no regular check-ins | Scheduled contact, a buddy system and an easy way to raise concerns |
Worried about psychosocial risk in your business? Whether you are planning a restructure, managing a difficult complaint or want to check your policies are up to date, Prosper Law’s employment team can help you put a practical, defensible plan in place. Contact us to book a consultation.
Frequently asked questions
What are the most common psychosocial hazards in the workplace?
The most common include high job demands, low job control, lack of role clarity, poor support, poorly managed change, bullying, harassment, conflict, and aggression from customers or clients.
Is workplace stress a psychosocial hazard?
Not exactly. Stress is the reaction. The psychosocial hazard is the cause, such as an unmanageable workload or ongoing conflict. If stress is frequent, prolonged or severe, it may lead to psychological or physical harm.
Can performance management be a psychosocial hazard?
It may be, depending on how it is designed and carried out. Reasonable performance management is a normal part of running a business, but unclear expectations, unrealistic timeframes, a lack of support or untrained managers may turn it into a significant risk.
Do small businesses have to manage psychosocial risks?
Yes. The duty applies to businesses of all sizes, although what is reasonably practicable may depend on the size and resources of the business.
Do we need a psychosocial risk assessment?
You need to identify psychosocial hazards and manage the risks, and a documented assessment is generally the most practical way to show you have done this. It does not need to be complicated, but it should be specific to your workplace.
Do the new Victorian psychosocial regulations apply to my business?
If you employ people in Victoria, the Occupational Health and Safety (Psychological Health) Regulations 2025 are likely to apply to you from 1 December 2025. They follow a similar approach to the rest of Australia, with some Victorian-specific requirements.
What are the penalties for failing to manage psychosocial hazards?
Penalties depend on the jurisdiction and the seriousness of the breach. They may include fines, enforceable undertakings, adverse publicity orders and, for the most serious offences, penalties in the millions of dollars. Officers may also face personal liability, and civil claims for psychological injury may be significant.
Last updated: 14 October 2026.
You should obtain advice specific to your circumstances before acting.
About the Author
Farrah Motley
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