Psychosocial safety at work not a ‘soft issue’: new laws as SafeWork NSW claims soar

This article was originally published by Cat Woods for LSJ Online (26 May 2026).

In New South Wales, one in five workplace complaints are now psychosocial. SafeWork NSW data revealed that psychosocial hazards account for 19.5 per cent of complaints, as frequent a complaint as falling from heights. In the six months between July and December last year, there were 1,476 requests for service related to psychosocial harms.

The recent case involving radio personalities Kyle and Jackie O raised the fundamental workplace liability that is changing laws across multiple states and territories.

Linda Mackinlay is a Partner at Bartier Perry. She says, “There’s no single reason why we’re seeing more of these claims. I see it as more a combination of factors, from an increased focus on psychosocial risks in law and policy, to greater awareness of employee rights, the complexity of work itself and broader socioeconomic stresses that are increasingly spilling into the workplace.”

As for the Kyle and Jackie O effect, Mackinlay says, “Typically, whenever there is increased media coverage of a matter it heightens awareness and leads to increased enquiries. We have seen this with high profile cases such as the record sexual harassment payout involving the Max Mex employee.”

In August 2025, a Sydney-based Mad Mex employee was awarded $305,000 in compensation and damages after the court found her employer guilty of sexual harassment and victimisation.

Fay Calderone, Partner at Hall & Wilcox, attributes the rise in cases to three key factors.

“First, there is a genuine increase in psychosocial hazards in modern workplaces. Psychosocial hazards arise from how work is designed, managed and experienced, and include excessive job demands, bullying, lack of support and exposure to conflict. Uncertainty and job insecurity arising from the geopolitical climate and AI restructures and redundancies are also causing significant psychological risks which leaders need to manage carefully despite business decisions that need to be made because of these.”

Additionally, she believes workers are more informed about their rights and more confident in identifying behaviour that is not “just part of the job”, but instead a workplace risk that must be eliminated or minimised.

“Thirdly, the legal framework itself has evolved,” says Calderone. “Regulators and policymakers have explicitly recognised psychological health as part of workplace safety duties, which has made reporting and claims more accessible and legitimate. SafeWork has hired, trained and mobilised hundreds of inspectors focused on psycho-social hazards and there has been a noticeable uptick in enforcement activity.”

In NSW, psychosocial risks and physical workplace hazards are treated with equal legal weight. Under the Work Health and Safety Act 2011 and WHS Regulations, employers have a proactive, positive duty to eliminate or minimise psychological risks so far as is reasonably practicable. This is a result of the 1 October 2022 introduction of the Work Health and Safety Amendment Regulation (the NSW Regulation), which required employers to shoulder the explicit duty to eliminate or minimise workplace psychosocial risks.

In July 2022, Safe Work Australia published a Model Code of Practice: Managing Psychosocial Hazards at Work (the Model Code). The Model Code provides additional guidance on managing psychosocial hazards at work. This was in addition to the independent NSW Code of Practice: Managing Psychosocial Hazards at Work (the NSW Code) introduced in May 2021.

Mental health conditions are the most expensive work-related injury/illness claims, in terms of financial compensation paid to employees and the loss of productivity experienced by employers. According to Safe Work Australia, in 2020-21 the median compensation paid for mental health conditions was $58,615 per serious claim compared to $15,743 per serious claim for all injuries and diseases.

Mackinlay says, “Further change is coming with the introduction of new workers compensation laws that are commencing on 1 July 2026.”

The reforms are aimed at tighter thresholds and stricter eligibility for psychological injury claims, along with clearer definitions of workplace conduct such as bullying and excessive workload.

“They also limit the duration of benefits and reinforce the ‘reasonable management action’ defence,” she says. “The shift is designed to lead the system toward more serious, clearly work-related claims while encouraging earlier intervention and return-to-work outcomes.”

Psychosocial risks and hazards an increasing concern for regulators

Under section 274 of the Work Health and Safety Act 2011 (NSW) (WHS Act), SafeWork NSW issued the approved Code of Practice for Managing psychosocial hazards at work (‘the Code’) in May 2021. It is designed to alert management within the workplace to psychosocial hazards and risks to psychological and physical health and safety at work. This was updated, and enhanced, in 2025.

The Work Health and Safety Regulation 2025 strengthened requirements for managing psychosocial risks. While persons conducting a business or undertaking (PCBUs) were already required to follow Part 3.1, where elimination of risk is not practicable, section 55C now explicitly requires the use of the hierarchy of controls (section 36), and consideration of all relevant matters under section 55D when controlling psychosocial risks.

NSW strengthens regulatory measures, leading the country

On 14 March this year, the NSW Government announced an additional 20 psychosocial inspectors as part of 51 additional inspectors overall – SafeWork NSW’s largest ever uplift in inspectors. The move came as part of the assigned $127.7 million over four years to SafeWork NSW to improve work health and safety outcomes, and the $344 million of the NSW Government’s Workplace Mental Health package for, according to a media release, “strengthening mental health support and injury prevention strategies”.

The NSW Government also announced the establishment of the Psychosocial Advisory Service to provide workers and business owners with custom advice on managing psychosocial safety at work.

Minister for Work Health and Safety Sophie Cotsis said, “The new psychosocial inspectors are not just supporting workers, but also businesses, to make sure they understand their obligations, and know how to create a culture of safety in the workplace.”

She added, “This is about prevention. When psychosocial hazards are addressed early, we see fewer injuries, fewer disputes, and better outcomes for workers and employers.”

Public attention to workplace safety has sharpened with greater media coverage

There have been several prominent cases in NSW over the last few years, drawing the attention of legal practitioners, business owners, and the public via media headlines. The repercussions of these cases, whether the employer or the employee ultimately “wins”, are ongoing for all involved in regard to reputation, future prospects, and financial impact. There have also been less prominent cases that have been groundbreaking, no less.

Last year, in a case heard in the NSW Local Court, the Commonwealth Department of Defence was convicted and fined $188,000 following the July 2020 suicide of a 34-year-old worker at RAAF Base Williamtown. The case was the first time a Commonwealth employer was successfully convicted for failing to manage psychosocial risks. According to the findings, supervisors failed to follow existing policies and to mitigate psychological harm caused by high-pressure performance management processes. Defence pleaded guilty to a single charge under section 33 of the Commonwealth Work Health and Safety Act (WHS Act), admitting it did not take reasonably practicable measures to eliminate or minimise the health and safety risks to a Royal Australian Air Force technician. At that time, the maximum penalty available to the court was $500,000 for a Category 3 criminal offence under the WHS Act.

What must be proven in any WorkCover claim

Mackinlay says, “At a high level, it is a no‑fault system, so an employee doesn’t have to prove that the employer did anything wrong. What they do need to show is that they’ve suffered a recognised injury and that their work was a substantial or main contributing factor to it.”

The onus is initially on the employee to prove those elements, particularly the existence of the injury and the connection to their employment. Mackinlay explains that things can shift a bit in psychological injury claims. In that case, if an employer wants to rely on the “reasonable management action” defence, the onus flips, and it’s then up to the employer to show that the injury was mostly caused by reasonable management action taken in a reasonable way.

When it comes to a potential David and Goliath battle between worker and employer, Calderone says, “stigma remains a real issue.”

She explains that many employees, particularly those early or mid-career, fear:

• reputational damage;

• career stagnation; or

• being labelled as “difficult”.

Therefore, Calderone advises that as lawyers, protecting clients involves:

• maintaining strict confidentiality

• advising on timing and communication strategies

• ensuring trauma informed compliant management processes

• ensuring workplaces meet anti-victimisation/general protections obligations to ensure adverse action is not taken against complainants which may result in civil penalties for the organisation and individual involved in the contravention for breach of the Fair Work Act.

Lawyers are key in educating and safeguarding employers

Mackinlay says, “When I am advising an employer on workplace safety and environment, the real control point is having systems in place that identify and manage both physical and psychosocial risks, supported by strong leadership capability, early intervention processes, effective consultation, and ongoing review. Training is important and so are well‑drafted contractual protections but they’re really just part of a much broader framework or ecosystem that needs to be working together in practice.”

A court case may or may not provide satisfaction or closure to the individual

The satisfaction achieved through legal means in psychosocial matters is “a bit of a mixed bag” Mackinlay says. “Often individuals want the opportunity to have their concerns formally heard and, in some cases, feel validated by that process. But, the reality is that litigation can be slow, adversarial, and at times quite impersonal, not to mention costly.”

In her opinion, “the better approach is focusing on earlier intervention and stronger internal processes, so issues are addressed before they escalate to formal litigation in the first place.”

Calderone echoes the same sentiment.

“For many individuals, acknowledgement, change and the ability to move forward is more important than a formal legal outcome,” she says.

Calderone points to the Maya Angelou quote: “People will forget what you say or do, but never how you made them feel”.

How you treat people on the way out will determine how aggrieved they are, she believes.

“Even if employment needs to be terminated for whatever reason – performance, conduct or redundancy – it should be done compassionately and with dignity,” says Calderone. “The nastiest and most protracted legal cases we manage are those from people who have an axe to grind about the way they have been treated by another human – not the organisation but the leader, manager, or the [HR] person who managed the process.”

Ultimately, Calderone says, “The rise in WorkCover claims is not a sign of system failure but evidence of a system catching up to the realities of modern work.”

She adds, “Psychosocial safety is no longer a ‘soft issue’. It is a core legal, organisational and human priority and one that will continue to shape the future of work.”