In recent years, psychosocial safety has become one of the most actively enforced areas of workplace health and safety (WHS) regulation in Australia.
For employers, psychosocial risk management can no longer be treated as a discretionary or cultural initiative; it is now a core compliance obligation, subject to the same legal tests and standards as physical hazards.
Regulators are applying the same legal principles, inspection methodologies, and enforcement powers to psychosocial hazards as they do to physical hazards, focusing on how work is designed, managed, and governed in practice.
This shift places greater emphasis on how work is designed, managed and governed in practice, with particular implications for organisations experiencing sustained workforce pressures, organisational change or heightened performance demands.
What psychosocial hazards look like in practice
Psychosocial hazards are those arising from the design, management and context of work that have the potential to cause psychological or physical harm.
These hazards are defined within WHS legislation and further supported by approved Codes of Practice across jurisdictions.
Hazards commonly cited by regulators include:
Excessive workload and high job demands
Fatigue
Performance pressure and poorly designed performance management
Bullying, harassment and inappropriate behaviours
Poorly managed organisational change
Low role clarity and limited job control
Remote or isolated work
Psychosocial hazards are not industry‑specific and tend to be most acute when workloads are intense, change is frequent, resourcing is constrained, or people-management capability is variable.
Importantly, regulators assess psychosocial hazards as systemic risks, not behavioural issues, and expect them to be controlled through work design, governance and leadership capability.
Intensifying enforcement and operational consequences
Regulatory scrutiny of psychosocial risk has increased significantly over the past two years.
Across Australia, regulators are increasingly conducting targeted psychosocial inspections, often proactively rather than in response to incidents or complaints.
Where organisations cannot demonstrate effective psychosocial risk management, regulators are exercising formal enforcement powers, including:
Improvement Notices, requiring changes to how work is structured, supervised or resourced.
Prohibition Notices, requiring work or initiatives to cease immediately where a serious and imminent risk to psychological health is identified.
The issuance of these notices is a serious regulatory intervention that can have significant, immediate consequences for how an organisation operates.
These impacts may include constraining how work is performed until regulators are satisfied that risks are adequately controlled, delaying or pausing critical initiatives, and diverting executive attention and resources.
As a result, even in the absence of prosecution, improvement and prohibition notices can have material commercial, operational and reputational consequences, as well as implications for those in governance and responsible roles.
Recent enforcement activity across jurisdictions
Nationally, regulators are applying a relatively consistent approach to psychosocial hazard enforcement.
New South Wales
Over the last two years, SafeWork NSW has significantly increased its focus on psychosocial hazard enforcement.
In mid‑2025, the regulator carried out a three‑day inspection blitz comprising 228 psychosocial inspections.
This enforcement blitz focused on deficiencies in organisational psychosocial risk management systems, rather than individual conduct.
The increase in activity aligns with SafeWork NSW’s Psychological Health & Safety Strategy 2024–2026, which commits to a 25 per cent year‑on‑year increase in planned psychosocial inspections of large organisations.
A further uplift has been signalled through additional inspector resourcing, including dedicated psychosocial specialists.
Commonwealth
Comcare has also recently increased psychosocial enforcement activity by expanding its Psychosocial Inspection Program (opens a new window) following a successful pilot.
Where inspections have identified that psychosocial risks are not being effectively managed or controlled, Comcare has generally issued either improvement notices or corrective action plans, with prosecution generally limited to serious or systemic failures.
Inspection focus areas have included workload management, organisational change processes, supervisor capability, consultation arrangements and performance management frameworks.
The emphasis is on whether psychosocial risks are being effectively controlled in practice, rather than simply the existence of policies alone.
Victoria
WorkSafe Victoria has increased its focus on psychosocial risk, issuing improvement notices more frequently, particularly where psychosocial policies are not integrated into day‑to‑day operations or are not applied in practice.
Worksafe Victoria's enforcement approach has recently been reinforced by the commencement of Victoria’s Psychological Health Regulations in December 2025, which introduced clearer, more prescriptive requirements for managing psychosocial hazards.
Queensland
WorkSafe Queensland continues a prevention‑led approach, actively checking compliance with the Managing the Risk of Psychosocial Hazards Code of Practice 2022 (opens a new window).
Since March 2025, many businesses have been required to maintain written psychosocial prevention plans that include coverage of sexual harassment.
WA, SA, Tasmania, the ACT and NT
Across the other Australian jurisdictions, there is also a continued increase in regulatory focus on psychosocial risk.
Enforcement activity is increasing, often triggered by complaints arising from organisational change or workforce risks, where effective management of psychosocial hazards cannot be demonstrated.
Where Regulators Are Issuing Improvement Notices
Across jurisdictions, regulatory intervention has focused on systemic failures, including:
The absence of psychosocial risk assessments, or assessments that do not address workload, fatigue or job design;
Performance management processes that create risk without clear pause, review, or escalation mechanisms;
Failure to manage workload and fatigue during peak periods;
Policies that exist on paper but are not implemented, reviewed or supported by training;
Insufficient manager and supervisor capability to identify and respond to psychosocial risks; and
Complaints handled procedurally, without addressing underlying work design issues.
Regulators have been explicit that employee assistance programs (EAPs) and awareness training alone are not adequate controls.
Notable cases and regulator interventions
Recent court cases and regulatory actions have demonstrated how inadequate psychosocial risk management has translated to both legal exposure and significant operational disruption.
In December 2025, a large Commonwealth agency (opens a new window) was convicted and fined $188,000, with an adverse publicity order, after failing to manage psychosocial risks linked to a worker’s death.
The court cited repeated performance management issues, inadequate supervision, and the absence of timely escalation mechanisms.
This case was the first Commonwealth conviction of its kind, and it sets an important precedent for large, complex organisations with layered management structures and formal performance processes.
In Victoria, a large state justice and court services organisation (opens a new window) was fined nearly $380,000 after failing to address psychosocial hazards, including toxic workplace culture, excessive workload, and inadequate support, all of which the court treated as WHS failures, not merely “people” or “cultural” issues.
In both of these matters, the court considered the failures to be WHS breaches, rather than cultural issues, bringing work design and culture squarely within safety duties.
Even where matters do not proceed to prosecution, regulatory intervention can cause significant disruptions to operations.
In September 2025, SafeWork NSW issued a prohibition notice to a major tertiary education institution (opens a new window), requiring the immediate pause of a large‑scale workforce restructure and redundancy program.
The regulator identified serious and imminent psychological risk arising from failures in consultation, change management and psychosocial controls.
This action halted briefings and delayed implementation until appropriate controls were established.
Critically, this case illustrates a shift in enforcement approach, in which the regulator's prohibition powers, traditionally associated with physical safety risks, are now applied to white‑collar organisational change where psychosocial risks are deemed inadequately managed.
What This Means for Organisations
Recent regulatory inspection and enforcement activity has highlighted that psychosocial hazards are no longer treated as peripheral people risks.
They are now regarded as enterprise‑level WHS risks directly linked to leadership decisions, work design, and operational governance.
This heightened regulatory focus is occurring at a time when many organisations are also navigating sustained organisational change, cost pressures, and rising productivity expectations, increasing the likelihood that psychosocial risks will crystallise if work is not carefully designed and governed.
For boards and executives, this convergence means psychosocial risk now sits at the intersection of safety, strategy, and execution.
Compliance alone is no longer sufficient.
While legal compliance remains critical, recent regulatory activity demonstrates that having policies, EAPs, and standalone training is not enough.
Regulators are assessing whether psychosocial risks are being actively identified, assessed and controlled in practice, particularly during periods of high workload, organisational change, restructures and sustained performance pressure.
Where organisations cannot demonstrate this, regulatory intervention does not require a serious incident, a formal complaint or a prosecution.
Regulatory action can directly disrupt core business activity.
The examples above demonstrate that enforcement activity can cause immediate and material disruption to business operations, even where matters do not proceed to court.
Improvement notices commonly require:
Redesign of workloads, roles or reporting lines
Changes to performance management or escalation processes
Additional consultation, risk assessments and verification activity
Enhanced supervisor capability and governance oversight
In more serious cases, regulators are issuing prohibition notices to halt major initiatives, including restructuring and redundancy programs, until psychosocial risks are addressed, affecting timelines, costs and workforce planning.
WHS penalties and statutory breaches are not insurable.
One of the most important, and often misunderstood, implications of increased psychosocial enforcement is the fact that WHS penalties and statutory breaches are not insurable (opens a new window).
While organisations may hold statutory workers’ compensation, general liability or management liability (financial lines) insurance, regulatory intervention and penalties under WHS legislation are not insurable.
Improvement and prohibition notices, as well as regulator‑mandated changes to work design or organisational programs, cannot be transferred, insured or offset through risk transfer mechanisms and must be addressed operationally.
Therefore, the cost and disruption of regulatory action due to the enforcement of psychosocial hazards sits squarely with the Organisation, which means that insurance cannot be used to mitigate against the following:
Stop‑work or pause‑work directions that delay restructures, redundancies or transformation programs
Regulator‑imposed constraints on how work is performed while controls are developed and verified
Executive and leadership time diverted to inspections, remediation and regulatory engagement
Reputational and workforce impacts arising from public regulatory action
While psychological injury claims may be covered under workers compensation insurance, the underlying causes of psychosocial hazards, including workload, organisational change, performance management and leadership practices, remain real‑time operational risks requiring direct control.
Once regulators intervene, the consequences are likely to be felt through strategy, cost, delivery and governance, not through claims recovery.
For boards and executives, this means psychosocial risk must be treated as a prevent‑and‑control risk, not a transfer‑and‑recover risk.
Legal exposure can extend beyond the organisation.
Regulatory exposure does not stop with the Organisation.
Where foreseeable psychosocial risks are not addressed, officer exposure under WHS laws increases, particularly where workload pressure, organisational change or behavioural risks are known and not acted upon.
Accordingly, psychosocial risk is increasingly subject to:
Direct board and executive oversight;
Formal reporting and assurance processes; and
Inclusion within enterprise risk frameworks.
Regulators and courts clearly expect WHS duties to extend into decisions about work design, performance management and organisational culture.
Commercial impact regardless of prosecution.
Recent cases and inspection programs make clear that prosecution is not required for enforcement to have a material commercial impact.
Regulatory notices and ongoing oversight alone can disrupt operations, which in turn can slow important initiatives, lead to remediation costs, divert leadership attention, and create reputational pressure.
Psychosocial risk management is now a core business capability.
Taken together, these developments send a clear message from regulators and courts: psychosocial risk management is no longer optional, delegable or reactive.
Integrating psychosocial risk considerations across work design, transformation programs, performance frameworks and leadership accountability is now essential to managing regulatory scrutiny while maintaining operational continuity and workforce performance.
How Lockton Can Support
Our People, Safety and Wellbeing team can help support organisations to build more effective and defensible approaches to psychosocial risk management.
We support clients in identifying and assessing psychosocial hazards, designing and implementing effective controls, and embedding those controls into work design, leadership practices, and governance frameworks.
Our unique approach brings together WHS obligations, organisational strategy, and operational execution to help enable organisations to manage regulatory scrutiny while maintaining continuity, productivity, and workforce sustainability.
If you would like to discuss support options, please don’t hesitate to get in touch.
The contents of this publication are provided for general information only. Lockton is the provider of WHS consultancy services. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.