Psychosocial Risks in the Workplace

In recent years, psychosocial hazards factors in the design and management of work that increase the risk of psychological harm, have emerged as a critical issue for employers across Australia.

Regulators now expect businesses to treat psychological health with the same importance as physical safety, and failure to do so can result in enforcement action, legal costs, poor morale and reputational damage.

What Are Psychosocial Hazards?

Psychosocial hazards are elements of work that can cause stress and, over time, lead to psychological or physical harm. These hazards often arise from:

• Work design and management (high workloads, low job control);
• Workplace environment (poor conditions, remote work); and
• Interactions and behaviours (bullying, harassment including sexual harassment, poor support).

Common examples include:

• Role overload or underload;
• Low role clarity;
• Poor organisational change management;
• Inadequate recognition and reward;
• Workplace violence or aggression;
• Exposure to traumatic events; and
• Poor workplace relationships.

Importantly, psychosocial hazards often combine and amplify risk. For instance, high job demands coupled with poor managerial support can significantly increase stress levels. While stress itself is not an injury, prolonged exposure can lead to psychological harm, triggering workers’ compensation claims and regulatory intervention.

Legal Obligations

Under the Work Health and Safety Act 2011, a Person Conducting a Business or Undertaking (PCBU) must eliminate or minimise risks to both physical and psychological health so far as is reasonably practicable. Codes of Practice, including SafeWork NSW’s Managing Psychosocial Hazards at Work, provide guidance on identifying hazards, assessing risks, and implementing controls.

Employers should:

• Conduct psychosocial risk assessments;
• Consult workers on hazards and controls;
• Implement measures to minimise risks (this could include workload adjustments, support programs);
• Monitor and review controls regularly.

Case study: UTS redundancy process

In September 2025, SafeWork NSW issued a prohibition notice to the University of Technology Sydney (UTS), halting a planned redundancy consultation. SafeWork NSW believed the consultation process posed a “serious and imminent risk of psychological harm” to staff.

UTS had scheduled meetings to discuss the potential loss of 150 academic positions, notifying approximately 800 employees just one day before the meetings. SafeWork NSW intervened, requiring UTS to:

• Delay the meetings and release of the change proposal;
• Explain the reasons for redundancies clearly;
• Consult staff in accordance with legislative requirements; and
• Implement measures to manage psychosocial risks.

UTS complied by extending timelines and revising communications, leading to the prohibition notice being lifted.

This marked the first known instance of a prohibition notice being used to pause a planned redundancy process which is generally considered as a managerial prerogative in order to meet operation needs, signalling a new era of regulatory oversight.

The UTS case underscores that psychological safety is now a compliance issue. Employers must anticipate psychosocial risks in organisational change and take proactive steps to mitigate them.

Organisational restructures and redundancies are inherently stressful. To minimise risk, Clubs should plan ahead, communicate clearly, allow reasonable timelines, follow the award / legislative provisions especially relating to consultation, and provide adequate emotional support.

Psychosocial risk is no longer a peripheral concern, and the UTS case demonstrates that regulators are taking an active effort to intervene where processes create psychological risk. As a result, Clubs should consider these matters as central to workplace safety compliance.

Employers must embed psychosocial risk management into all aspects of work design, consultation, and organisational change. A proactive approach not only ensures compliance but also fosters a healthier, more resilient workforce.

For further information or assistance with any employment issues or queries, member clubs can contact the Workplace Relations Team at ClubsNSW via ClubASSIST on 1300 730 001.