Navigating Australia’s New WHS Landscape: The Importance of Minimising Psychosocial Hazards

Recent Cases: A Clear Warning for Employers

The growing weight placed on psychological risk in Australian WHS law is now evident in recent regulatory actions and legal decisions:

1. SafeWork NSW Intervenes in Redundancy Process (September 2025): In an unprecedented move, SafeWork NSW issued a prohibition notice halting job cuts at a university due to a "serious and imminent risk of psychological harm". This marks the first time SafeWork intervened in a redundancy process on mental health grounds. The regulator acted following staff complaints about inadequate consultation, short-notice meetings and "finalistic" language that created heightened anxiety and a "culture of fear". While the prohibition notice was later lifted, this case serves as a stark warning that the expectations of the 2023 psychosocial hazards Code of Practice are being tested and enforced.
2. Unreasonable Redundancy Causes Psychological Injury (August 2025): In Ahmadi v New Evolution Ventures Australia Pty Ltd, the NSW Personal Injury Commission upheld a long-serving manager's workers' compensation claim for depression and anxiety, finding his "shocking" redundancy caused psychological injury. Despite receiving HR advice, the employer gave the manager no prior notice of the redundancy meeting, no opportunity for a support person, no chance to seek legal advice and no option to work out a notice period. He was also only given a single day to clear out 14 years of personal belongings. The Senior Member found the employer's actions "fell far short of establishing that its action with respect to the [manager's] retrenchment was reasonable".

Why Minimising Risks is Crucial: Avoiding WHS Claims and Fines

These cases powerfully underscore the critical importance for employers to proactively minimise psychosocial hazards. The consequences of inaction can be severe, leading to significant workplace health and safety claims and potential regulatory fines.

• Legal Risks and Fines: Regulators like SafeWork NSW are increasing their focus on psychosocial hazards, particularly in large businesses. Inspectors conducting WHS visits in businesses with 200 or more workers will also complete a psychosocial check and a lack of appropriate action can lead to regulatory action and prosecution. Employers are being held to a high bar, requiring risks to be mitigated or eliminated as far as reasonably practicable, which demands proactive steps.
• WHS Claims: As seen in the Ahmadi case, employees who suffer psychological harm due to unreasonable workplace actions can successfully claim workers' compensation, incurring significant costs for businesses. This highlights the direct financial impact of failing to manage psychosocial risks effectively.

Beyond mere compliance, creating environments where people thrive not only improves health outcomes but also drives performance; it becomes good for business, not just the right thing to do.

Proactive Steps Your Organisation Can Take

Addressing psychosocial hazards often requires deepseated cultural or structural changes. Here's how to get ready:

1. Identify Hazards Systematically: Utilise resources like Safe Work Australia’s Managing psychosocial hazards at work: Code of Practice and ISO 45003. Anonymous surveys can effectively pinpoint hazards, with questions focusing on work design rather than individual feelings. Other valuable data sources include check-ins, exit interviews, incident reports and listening sessions.

2. Consult and Collaborate with Staff: It is vital to involve employees in identifying and addressing hazards. Solutions should ideally be developed in collaboration with those doing the job, as their frontline experience often differs from management's perception.

3. Build Trust: Trust is paramount; employees must feel it is safe to report hazards without fear of repercussions, otherwise, problems will remain hidden and unaddressed.

4. Adopt Robust Frameworks:

• • The Prevent, Promote and Support Model: This integrated approach focuses on:
    • Preventing harm: Setting realistic workloads, making it safe to say no and improving work systems.
    • Promoting wellbeing: Giving employees a voice, opportunities to craft roles and fostering connection.
    • Responding to mental health problems: Creating a safe environment for employees to speak up and providing pathways to support.
  • The SMART Work Design Model: Encourages workers to think about changes to job design, workflows, systems, or structures to make work more tolerable, meaningful and stimulating.

5. Manage Restructures with Care: When contemplating redundancies, employers must go beyond traditional consultation. A robust risk mitigation plan should include:

• • Assessing risks: Consulting experts, conducting anonymous surveys and structured psychosocial risk assessments.
  • Mitigating risks: Scheduling consultation meetings with adequate notice, using empathy and transparency in communications, offering external support and training managers in supportive conversations.
  • Testing effectiveness: Gathering employee feedback and monitoring wellbeing metrics. Crucially, consultation must be early and meaningful, clearly communicating the reasons for restructure and potential impacts before decisions are made and genuinely considering employee suggestions. Thoughtful and empathetic communication, along with psychological support, is essential when communicating final decisions.

6. Maintain Thorough Records: Employers should keep meticulous records of how they assess, address and monitor psychosocial risks, both to protect employees and to demonstrate compliance.

The landscape of Australian workplace safety has fundamentally changed. Organisations must embrace this broader definition of safety, not just to meet legal obligations and avoid significant WHS claims and potential fines, but to cultivate a workplace where everyone can thrive. Investing in psychosocial safety is an investment in your people and your business's long-term success.