Psychosocial hazards at work: an employer’s guide

Psychosocial hazards are anything in the way work is designed, managed or carried out that can cause psychological harm, and Australian employers now have a positive legal duty to manage them. Under the model Work Health and Safety (WHS) Regulations, a person conducting a business or undertaking must eliminate or minimise psychosocial risks so far as is reasonably practicable, the same standard that applies to physical hazards (Safe Work Australia).

This guide explains what psychosocial hazards are, what the law now requires, and the four steps Australian HR and WHS leaders can take to control the risk.

A psychosocial hazard is a hazard that arises from or relates to the design or management of work, the working environment, the equipment at a workplace, or workplace interactions and behaviours, and that may cause psychological or physical harm. Put simply, it’s a feature of work that can make people unwell.

The duty isn’t new. Australian WHS law has always defined “health” to include psychological health. What changed in 2022 is the detail: the model WHS Regulations were amended to spell out the obligation explicitly, and Safe Work Australia published a dedicated Code of Practice on managing psychosocial hazards (Safe Work Australia).

Safe Work Australia identifies a consistent set of hazards. The ones HR leaders see most often are:

• High job demands or low job demands
• Low job control
• Poor support from supervisors or co-workers
• Lack of role clarity
• Poor organisational change management
• Inadequate reward and recognition
• Poor organisational justice
• Traumatic events or material
• Remote or isolated work
• Poor physical environment
• Violence and aggression
• Bullying
• Harassment, including sexual harassment
• Conflict or poor workplace relationships

Most psychological injuries come from a combination of these, building up over time, rather than a single event.

The penalties are real: in late 2023 a Victorian employer was fined close to A$380,000 for failing to take adequate steps to identify or assess psychosocial risk and address a toxic workplace culture (HFW). The 2022 changes placed a positive duty on employers to proactively identify and control psychosocial risk, rather than react after someone is harmed, and the Code of Practice is admissible in court as evidence of what a reasonable employer should have known and done.

How the duty applies depends on your state, so HR teams running multi-state workforces need to check each jurisdiction:

Jurisdiction	Position
NSW, Qld, WA, Tas, SA, ACT, NT, Commonwealth	Adopted the model WHS framework with psychosocial provisions. NSW has since strengthened its rules under the Work Health and Safety Regulation 2025, including mandatory use of the hierarchy of controls.
Victoria	Has not adopted the model WHS laws, but operates its own positive duty to manage psychosocial hazards.

The case for acting isn’t only legal. The Productivity Commission estimated that mental ill-health and suicide cost Australia around $200 to $220 billion a year, including roughly $39 billion in lost productivity through absenteeism, presenteeism and reduced participation (Productivity Commission).

The portion tied directly to work is significant. The Centre for Future Work put the cost of workplace-associated mental illness at $15.8 billion to $17.4 billion a year (The Australia Institute). And the return on prevention is well established: PwC found that for every dollar spent on an effective mentally healthy workplace action, employers gain an average of $2.30 through higher productivity and fewer compensation claims (Thrive at Work).

You can’t control what you haven’t found. Identify hazards in consultation with workers, using the channels you already have:

• Worker surveys and pulse checks
• Consultation with workers and health and safety representatives
• Workers’ compensation and incident data
• Absenteeism, turnover and exit interview patterns
• Observation of how work is actually done

Then assess the risk: how often workers are exposed, how long for, how severe the potential harm, and how hazards combine. Consultation isn’t optional, it’s a legal requirement and it surfaces hazards managers can’t see from a desk.

The Code of Practice recommends the same four-step process used for physical hazards (Safe Work Australia):

1. Identify the psychosocial hazards.
2. Assess the risks they create, alone and in combination.
3. Control the risks using the hierarchy of controls, starting with the design of work, not awareness training.
4. Review the controls regularly and after any incident.

The order matters. Regulators have made clear that fixing how work is designed, staffed and supervised comes first. Training and employee assistance programs support good work design; they don’t substitute for it.

Poor change management and job insecurity are named psychosocial hazards, which means redundancies and restructures sit squarely inside this duty. How you handle an exit affects the psychological health of the people leaving and the people who stay.

This is where outplacement does real work. Giving exiting employees structured career transition support reduces the stress of job loss and protects the wider team from the survivor stress that follows a poorly handled restructure. A dedicated coach for each participant, rather than a shared queue, is what makes that support land.

Managing psychosocial hazards isn’t a one-off audit. It’s an ongoing system: consult, identify, control, review, repeat. The employers who do it well treat psychological safety as seriously as physical safety, build it into how they design work, and plan for the hard moments like restructures before they arrive.

If you’re managing a restructure and want to protect your people through the change, connect with a career expert today.

This article is general information for employers and isn’t legal advice. Check the WHS requirements that apply in your state or territory.

This is a sensitive topic. If you or someone you work with is struggling, support is available through Lifeline on 13 11 14 and Beyond Blue on 1300 22 4636.