Workplace psychosocial hazards are no longer an emerging concern—they are a legislative priority. With mental health claims doubling every four years, psychosocial risks now represent a major compliance obligation and a significant cost driver for organisations across Australia.
In 2025, every Australian organisation—regardless of size or industry—is expected to manage psychosocial hazards as rigorously as physical risks. If you’re still treating mental wellbeing as a “nice to have”, this article will show you why that mindset could cost you in legal liability, insurance premiums, and staff retention.
Let’s unpack what psychosocial risk is, why it matters more than ever in 2025, and how your organisation can remain WHS compliant under current Australian legislation.
What is Psychosocial Risk?
Psychosocial risks are hazards that arise from the way work is organised, the social environment of work, and broader organisational factors that can cause psychological or physical harm.
These risks include:
- High job demands and workload
- Poor support or supervision
- Lack of role clarity
- Bullying, harassment or conflict
- Remote or isolated work
- Traumatic events
Why the Focus on Psychosocial Risk in 2025?
1. Legislative Reform
The Marie Boland Review (2019) led to major WHS legislative updates across all states and territories, making psychosocial risk management mandatory.
2. Claim Costs Are Skyrocketing
Psychological injury claims now cost up to 6x more than physical injury claims.
3. Mental Health Is an ESG Metric
ESG investors now assess organisations based on how they manage mental health and psychosocial risk. This impacts brand equity, funding and recruitment.
WHS Psychosocial Compliance: What the Law Requires by State
A quick overview of what’s required in each state:
- NSW – Mandatory code, consult workers, assess risk
- VIC – Psychological health included in OH&S Act
- QLD – Code of Practice requires documented controls
- WA – WHS Act 2020 mandates psychosocial protections
- TAS – Uses national model code
- NT – New 2023 legislation enforces management of psychosocial hazards
- ACT – New regulations from 2023 define controls and obligations
What Does Psychosocial Compliance Actually Look Like in 2025?
Compliance with psychosocial WHS regulations is not just about ticking a few boxes, it requires a systematic, documented and proactive approach to identifying, assessing and controlling mental health hazards in the workplace.
To meet the standard set by codes of practice such as the NSW Managing Psychosocial Hazards at Work (2021) and other state-based equivalents, your organisation must show clear evidence of the following:
1. Psychosocial Risk Identification
Employers must first recognise and document the psychosocial hazards in their workplace. These may include:
- Work overload or high job demands
- Poor communication from leadership
- Remote or isolated work
- Inconsistent role clarity or job insecurity
- Workplace conflict, bullying or harassment
How to comply:
- Conduct anonymous surveys, focus groups or individual interviews
- Include psychosocial questions in employee engagement audits
- Screen candidates at the pre-employment stage using validated tools (like FitWorker360’s GFI assessments)
“Identify psychosocial hazards by considering how work is designed, managed and carried out and by consulting with your workers.” — SafeWork NSW
2. Formal Psychosocial Risk Assessment
Once hazards are identified, you need to assess the likelihood and potential harm they pose. This means prioritising risks, not all of which carry equal weight.
Use these criteria:
- How frequently does this hazard occur?
- How severe are the consequences if left unaddressed?
- Who is most at risk (e.g. new hires, casual workers, frontline roles)?
3. Implement Controls That Match the Risk
According to SafeWork NSW, organisations are legally obligated to eliminate psychosocial hazards if reasonably practicable or minimise them with appropriate controls.
Types of controls include:
- Job redesign to balance workload
- Clarifying KPIs and reporting structures
- Leadership training to improve manager-employee relationships
- Providing access to EAP or on-site mental health support
- Embedding mental health screening into recruitment and onboarding
“A PCBU must ensure, so far as is reasonably practicable, the health and safety of workers… This includes managing psychosocial risks.” — WHS Act s19(1)
4. Worker Consultation and Participation
You must consult workers and health and safety reps when:
- Identifying hazards
- Making decisions on how to control risks
- Reviewing control measures
The goal is to create shared responsibility for psychosocial safety and empower teams to speak up.
Best practices:
- Include psychosocial risk topics in toolbox talks or team meetings
- Rotate mental health champions within departments
- Build feedback loops into your WHS system
5. Documentation and Continuous Review
Compliance isn’t a once-off task. Regulators expect:
- Written records of hazard identification and risk assessments
- Documentation of the controls you’ve implemented
- Evidence of review cycles (e.g. quarterly)
- A complaints and incident register for psychosocial events
The Business Case for Compliance
Aside from legal risk, failing to manage psychosocial hazards is incredibly costly.
Poor mental health costs Australian workplaces:
- $17 billion per year in lost productivity
- $3.6 billion in compensation claims annually
- An average of 27 weeks off work for psychological injury claims (vs 6–8 for physical)
By contrast, Safe Work NSW reports that implementing low-cost controls such as leadership coaching or flexible rostering pays for itself within months.
FitWorker360’s Role in Ensuring Compliance
FitWorker360 helps organisations stay compliant by offering:
- Forensic-level pre-employment screening that includes psychosocial risk profiling
- Data reporting that aligns with WHS legislative requirements
- Audit trails showing how decisions were made and risks were managed
- Consultation templates to assist with worker involvement and documentation
Common Mistakes Organisations Still Make
- Confusing mental health programs with risk controls
- Ignoring role clarity and poor management as hazards
- Using generalised wellbeing surveys instead of risk-based screening
3 Steps to Achieve Psychosocial Compliance in 2025
1. Audit Your Current Psychosocial Hazards
Start with a workplace audit. Use frameworks from SafeWork or work with FitWorker360 to triage and evaluate current exposure.
2. Implement Screening at the Candidate Level
Identify risks before they’re hired. Our psychosocial tools let you screen role-specific behavioural and emotional risks upfront.
3. Train Managers and Create a Reporting Culture
Psychosocial risk is not just HR’s job. Leadership teams must be trained to recognise and respond to psychosocial hazards.
From Compliance to Culture
Yes, WHS psychosocial compliance is mandatory in 2025—but it’s also an opportunity.
Creating a culture that values psychological safety leads to:
- Stronger teams
- Better retention
- Lower injury costs
- A brand that top talent wants to work for
Ready to Futureproof Your WHS Strategy?
📞 Book a 15-minute strategy call with the FitWorker360 team
📧 guy.terkelsen@fitworker360.com.au
🌐 www.fitworker360.com.au
