With Victoria and New South Wales releasing updates to their regulations governing psychosocial safety (mental health) in the workplace during 2025, and other states enhancing measures, it is timely for businesses Australia wide to review their workplace health and safety risk management action plans to support employees.
All Australia's psychosocial workplace legislation primarily falls under the Work Health and Safety (WHS) Act, except Victoria, where the Occupational Health and Safety (OHS) Act applies. Each state's legislation includes specific regulations requiring employers to proactively manage psychosocial risks to workers' health.
Regulatory changes in NSW
In NSW in November 2025 the Workers Compensation Legislation Amendment Act 2025 introduced changes that include tighter eligibility for ongoing payments on claims for mental health injury in the workplace.
Key changes include:
- higher whole person impairment1 eligibility thresholds
- a threshold for access to long-term payments
- clearer definition of what constitutes a psychological injury
- new bullying and harassment jurisdiction in the Industrial Relations Commission.
The reforms also include processes for quicker claim assessments and a new employer excess for claims.
Regulatory changes in Victoria
In Victoria the new Occupational Health and Safety (Psychological Health) Regulations came into effect on 1 December 2025. Under the Occupational Health and Safety Act 2004 (OHS Act)2, employers must provide and maintain a safe working environment for their employees, including contractors, without risks to their health, as far as reasonably practicable. Health is defined as including psychological health.
The WorkSafe website includes a guidance code3 which explains:
- how to identify, assess and control psychosocial hazards and associated risks
- when to review and revise risk controls for psychosocial hazards
- how to manage reports of psychosocial hazards and incidents.
Along with legal compliance a psychologically safe workplace provides business benefits such as enhancing employee wellbeing, engagement and productivity. Proactively managing risks can also reduce absenteeism, staff turnover and compensation claims.
What are workplace psychosocial hazards?
Psychosocial hazards that may cause psychological and physical harm are those that arise from or in relation to:
- the design or management of work such as lack of role clarity, poor organisational change management, poor organisational justice, job demands, poor support, low job control, job insecurity, inadequate reward and recognition
- the working environment such as remote or isolated work
- plant (equipment, machinery etc) at a workplace such as fatigue, lack of adequate training
- workplace interactions or behaviours such as traumatic events or material, violence and aggression, harassment and sexual harassment, bullying, conflict or poor workplace relationships or interactions.
Psychosocial hazards contribute to work-related stress. People experience workplace stress when their job requirements exceed their ability to cope.
Ensuring businesses can manage psychosocial risk
Addressing psychosocial hazards risks requires an effective risk management process with mechanisms for:
- consulting with the workforce
- identifying the hazards
- assessing the associated risks
- implementing control measures to eliminate or minimise risks
- scheduling regular reviews to gauge effectiveness.
This calls for scrutiny of current processes, management structures and reporting mechanisms to understand where gaps or deficiencies may be occurring, or if behavioural issues such as bullying or harassment, or even just personality clashes and communication failures are involved. All evaluations should be conducted in consultation with workers.
Developing effective workplace psychosocial risk management tools
To comply with regulatory requirements businesses need to implement clear processes for addressing psychosocial risks. These include:
- identifying psychosocial risk factors
- conducting an assessment of the psychosocial risk factors and the determination of suitable risk factor controls
- developing psychosocial guidance to support operationally meaningful psychosocial risk management
- developing training to educate on the process.
These should include protocols for reporting and responding to issues like harassment, bullying, sexual harassment and work-related stress.
Essential framework:
- communication channels
- mechanisms for confidential reporting and support
- providing additional resources and support
- creating records of measures taken and outcomes.
How Gallagher can help
Our Workplace Health & Safety consultancy works with client organisations to assess and implement systems to manage risks, delivers mentoring and training, assists with structuring psychosocial programs, and hazard and risk profiling.
Find out more by talking to one of the experts on the Gallagher Workplace Risk team.
