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How to Identify & Manage Psychosocial Hazards in the Workplace
If an employee tripped on a frayed extension cord in your office, you would fix it that day. You would log the incident, check for other damaged cords and remind your team to report hazards as soon as possible.
Psychosocial hazards work the same way. They harm a person's mental health instead of causing a physical injury, and under Australian work health and safety laws, they are workplace hazards. Employers have a legal duty to identify them, assess the risk and do something about them.
In 2023-2024, mental health conditions accounted for 17,600 serious workers compensation claims in Australia, representing 12% of all serious workers compensation claims. Over the past 10 years, mental health claims have grown by 161%, the highest growth rate of any workplace injury category tracked in Australia's National Data Set for Compensation-based Statistics.
In this article, we cover what psychosocial hazards are, what employer obligations look like, the risks of ignoring them, and practical steps you can take to reduce the risk.
What are psychosocial hazards?
A psychosocial hazard is anything about the way work is designed, managed, or carried out that can harm a person's mental or physical health. Common examples include too much work, unclear expectations, poor leadership, bullying or dealing with aggressive customers.
Unlike physical hazards, psychosocial hazards are not always immediately visible. They can build gradually over time, and their impact on an employee's overall health and well-being can be just as serious as a physical workplace injury. Left unmanaged, they can affect anyone in the business, regardless of role, seniority or sector.
Psychosocial hazards examples
Below are examples of psychosocial hazards identified by Safe Work Australia:
- High or low job demands - The workload is too high and demanding, or so repetitive and unstimulating that it becomes stressful.
- Low job control - Employees have little say over how, when or in what order they complete their work.
- Poor support - Employees do not receive enough guidance, resources or help from managers or colleagues.
- Lack of role clarity - Employees are unclear about what is expected of them or where their responsibilities begin and end.
- Poor organisational change management - Changes are poorly planned, communicated, supported or managed.
- Inadequate reward and recognition - Employees do not receive appropriate acknowledgement or recognition for their effort and contribution.
- Poor organisational justice - Workplace decisions are seen as unfair, inconsistent or lacking transparency.
- Traumatic events or material - Employees are exposed to distressing incidents, traumatic events or confronting material.
- Remote or isolated work - Employees work alone or away from others with limited access to support.
- Poor physical environment - The work environment has conditions such as noise, heat, poor lighting or overcrowding that may increase stress.
- Violence and aggression - Employees are exposed to threatening, abusive or violent behaviour.
- Bullying - unwanted, intentional, and repeated aggressive behaviour that creates a risk to health and safety.
- Harassment, including sexual and gender-based harassment - Unwelcome or offensive behaviour that humiliates, intimidates or creates a hostile work environment.
- Conflict or poor workplace relationships - Ongoing conflict, tension or poor communication between employees.
The hazards reported most often in Australian workplaces are high workloads, low job control, poor support, bullying and harassment, and poor change management.
What are your obligations as an employer?
Under Australian work health and safety laws, employers have a duty of care to protect both the physical and psychological health of their employees.
This means you must do what is reasonably practicable to eliminate psychosocial hazards. If you cannot eliminate the hazard altogether, you must minimise the risk so far as reasonably practicable.
You also have a legal duty to consult with your employees throughout the risk management process. Consultation has to be genuine. This means talking to the people doing the work to understand what is causing stress and involving them in the solution.
Psychosocial hazard risk assessment process
Safe Work Australia sets out a four-step risk assessment process:
1. Identify the hazards - identify the aspects of work and situations that could potentially harm your employees and why these could be occurring. Review complaints, absenteeism, employee turnover, engagement survey results, workers' compensation claims and employee feedback and document what you find.
2. Assess the risks - Consider how likely harm is, how serious it could be, how long employees are exposed, and how often. Document your psychosocial hazard risk assessment so you can show how you concluded.
3. Control the risks - Start by eliminating the hazard where possible, and if not reasonably practicable, reduce the risk as much as possible. Examples of controls include redistributing workload, reviewing workforce planning, clarifying responsibilities, setting realistic performance expectations, training managers, improving change communication and introducing policies or reporting processes. Record the controls you put in place and why.
4. Review the controls - Check that your controls are working and consult employees about whether anything has changed for them. Controls should be reviewed regularly and updated as needed, for example, after a restructure, a change in leadership, new work arrangements or a formal complaint.
Employers should document each step of the process. If you can’t show what hazards were identified, who was consulted, what actions were taken and whether they worked, it will be difficult to demonstrate compliance if audited or investigated.
If you are a business owner, director or senior manager, you may hold the burden of an "Officer" under the law. Officers have additional duties and must take reasonable steps to make sure the business is meeting its obligations. That means understanding the hazards in the workplace, allocating the resources to manage them, and checking that the controls are actually working in practice.
What are the risks if employers ignore psychosocial hazards?
The key risks fall under five categories:
- Regulator action - Psychosocial hazards are now a clear enforcement priority for work health and safety regulators across Australia. If a regulator identifies unmanaged risks, they can issue improvement notices, prohibition notices that stop work until the risk is addressed and infringement notices. SafeWork NSW carried out state-wide unannounced inspections and issued more than 500 non-compliance notices in July 2025 and over 700 in November 2025. While these notices covered a range of workplace safety issues, managing psychosocial risks was one of SafeWork NSW's stated regulatory priorities for FY25/26.
- Fines - Employers can be prosecuted for failing to manage psychosocial hazards. Penalties under the WHS Act can be significant and, in serious cases, may include criminal liability. As a recent example, the Australian Department of Defence was fined $188,000 after pleading guilty to failing to manage psychosocial risks during a performance management process.
- Workers’ compensation costs - Psychological injury claims are some of the most expensive workplace claims. Reported in Safe Work Australia’s Key Work Health and Safety Statistics Australia 2025, employees with work-related mental health conditions are away from work for a median of 35.7 weeks and receive a median compensation of $67,400 per claim. These claims typically involve longer absences, more complex return-to-work plans and significantly higher costs than most physical injury claims.
- Personal liability for Officers - Officers can be prosecuted personally if they fail to exercise due diligence. Penalties include fines and, for the most serious offences, imprisonment.
- Reputation - WHS prosecutions and prohibition notices are public. Regulators publish outcomes and the media often report on them. This can affect your business reputation with employees, candidates and your customers.
How to identify and manage psychosocial hazards in the workplace?
Most businesses already have the information they need to identify where the risks are.
Use the data you already have
Look at complaints, engagement survey data, turnover, exit interview notes, absenteeism patterns and workers' compensation claims and any themes showing up from performance management and employee relations matters. Patterns usually show up fast. It may be the team with consistently high turnover, the manager who attracts repeated complaints, or the role that no one stays in for more than six months that demonstrates a risk.
Talk to your managers
Line managers play an important role in psychosocial safety. They influence workload, deadlines, feedback, support and how conflict is handled. This makes manager capability one of your most effective controls. If managers don’t understand how their decisions affect psychosocial safety, policies will not reduce the risk. A conversation with each manager about what they are seeing in their teams will help identify hazards and show where capability building is needed.
Use the free resources
Most states provide practical guidance on managing psychosocial hazards. These resources explain what employers need to do and provide step-by-step guidance on how to identify, assess and control psychosocial risks.
Use your existing systems
Add psychosocial hazards to your existing WHS risk register and include them in your policies and HR processes, including performance management, workforce planning, engagement surveys, leadership development and change management.
Start with the biggest risks
Do not try to fix everything at once. Focus on two or three hazards that your HR and WHS data point to most clearly and start there. Document what you do, review whether it works, then move to the next priority.
If you are not sure where your business stands or what to prioritise first, HumanX HR works with Australian business owners on psychosocial safety every day, through HR audits, policy reviews and outsourced HR support. Get in touch if you would like a hand.
Sources:
https://www.safeworkaustralia.gov.au/system/files/documents/1812/officer-duty-interpretive-guide.pdf
