Psychosocial safety obligations on Australian employers continue to increase

Australian employers who undertake workplace investigations into the conduct of their staff should be aware that they may need to consider their employee’s feelings when assessing psychosocial safety risk, following a recent decision in New South Wales.

In the decision, evidence of employees’ subjective feelings about the investigation was admitted by the court as relevant when considering if the employer had failed to comply with its duty to take all reasonable steps to control risks to the employee’s health or safety at work.

SafeWork NSW argued that the employer breached its duty to take all reasonably practicable steps to ensure the health and safety at work of its employees, and that an investigation into the conduct of two employees was poorly handled because the employer failed to apply its own policies and procedures, which resulted in the employees being exposed to psychosocial hazards.

The employees had made repeated statements about their feelings, including being upset and stressed throughout the investigation process. It was alleged the employer ignored or paid insufficient regard to these statements when pursuing the investigation.

SafeWork also argued the employer failed to apply its own policies during the investigation process, leading to a risk of physical or psychological harm to the employees. In response, the employer argued that evidence about employees’ subjective feelings was not admissible to prove the existence of the breach of duty.

The employer argued that evidence of the employees’ feelings was not admissible because an employer needs to respond to foreseeable risks prospectively, not to focus retrospectively on what occurred in a specific incident, and that admitting the employees’ statements about their subjective feelings invited error in the form of “hindsight reasoning” to prove the risk, and therefore the breach of duty, existed.

The District Court of New South Wales rejected the employer’s arguments and accepted SafeWork’s, finding that the employees’ statements about their subjective feelings was consistent with experiencing stress and accordingly, whether the employer breached its duty.  

The court described workplace investigations and disciplinary processes as psychosocial hazards that can give rise to the risk of harm. The employer in this case developed policies to control the risk and its failure to properly apply the policies created a risk of harm.

The court acknowledged that workplace investigations into alleged wrongdoing and disciplinary procedures inherently tend to invoke feelings in participants which are negative or unfavourable, however, this must be balanced against the employer’s duty to eliminate or minimise psychosocial risks that arise from these processes to a reasonably practicable extent.

As this was an interim decision about whether evidence of employees’ subjective feelings could be admitted or not, the court is yet to hear, weigh or make a conclusion on the evidence.  As the court noted, the prosecution must still prove any stress the employees suffered was of the requisite kind that may give rise to injury

Psychosocial safety obligations

Employers are being held to increasingly higher standards when managing, reviewing and responding to employee workplace behaviour and mitigating adverse impacts on the psychological health of their employees and other workers.

Navigating compliance with these increasingly onerous obligations is becoming more complex for employers. For example, employers need to consider:  

• the positive duty to eliminate sexual harassment and sex discrimination in the workplace under the Sex Discrimination Act 1984 (Cth), which includes an obligation to prevent employees being sexually harassed by third parties;

• changes to work health and safety legislation, including recent amendments to the Work Health and Safety Regulations 2011 (Cth) which places duties on employers to manage hazards and risks to their employees’ psychological health and safety. These duties include taking all reasonably practicable steps to eliminate or minimise workplace bullying and sexual harassment, and also other hazards such as the way in which work is organised, performed and managed, excessive workloads, lack of autonomy and inadequate reward and recognition;

• in Queensland, the obligation to have a harassment and discrimination harassment prevention plan under the Work Health and Safety Regulations 2011 (QLD), which came into effect on 1 March 2025 and applies to all employers with employees working in the state;

• last year’s High Court decision in Elisha v Vision Australia Limited, in which an employer was liable for damages for an employee’s psychiatric injury because the employer breached its contractually binding grievance procedures when dismissing the employee, resulting in the employer being ordered to pay A$1.4 million in damages to the employee; and

• repeated decisions of courts and tribunals that have emphasised the high standards on employers conducting workplace investigations to ensure they are objective, procedurally fair and that factual findings are based on sound evidence balanced to the civil standard.

The financial burden of psychological injury workers’ compensation claims has increased so much that at least one state government has announced the need for significant reform. The NSW government, in its proposed reforms to the workers’ compensation scheme, included the implementation of a new “stop bullying” jurisdiction, through which NSW employees will, assuming the proposal becomes law in its present form, be required to proceed before making workers’ compensation claims about alleged workplace psychological illnesses or injuries.

The proposed reform seeks to have a preventative effect with the aim of lowering the prevalence of psychological injury claims, though it will also likely increase the litigation burden on employers to comply with the new “stop bullying” jurisdiction.  
In this context of ever-increasing regulatory complexity, the recent decision in SafeWork NSW v Western Sydney Local Health District (No 3) is another warning to employers that they must tread extremely carefully when conducting workplace investigations and disciplinary processes.

What this means for employers

Courts are not letting up on the pressure on employers to comply with their obligations to ensure the safety, including psychosocial safety, of their employees and other workers at work, so far as reasonably practicable.

The standard expected by the courts for employers has never been higher. It is not enough to have policies and procedures in place which can safeguard risk if utilised properly.  Employers must follow these policies and procedures to ensure when conducting their operations, they are doing everything they can, so far as reasonably practicable, to eliminate or minimise risks to the psychological safety of their workers.

This safety obligation extends beyond an employers’ core business such as provision of goods and services to customers, into every facet of an its operations including all people-related activities such as hiring, on-boarding, training and education, performance management, investigating allegations of unsatisfactory conduct, restructures, redundancies and other terminations of employment.

To help ensure compliance with this duty, employers should:

• ensure policies about discipline and investigation processes are regularly reviewed and fit for purpose, giving clear but flexible use to a variety of actions including discretion about when a full investigation is required;

• ensure appropriate personnel conduct investigations and that any relevant policies are followed;

• ensure investigation policies and procedures are not incorporated into employment agreements, so they are not contractually binding;  

• educate and train HR and frontline managers to make decisions about when investigations are required and how to conduct them in a procedurally fair way;  

• ensure compliance is being documented to limit the exposure to claims;  

• take a proactive / safety approach to psychosocial safety risks, including by conducting a risk assessment and implementing control measures as part of any formal workplace investigation, and

• consult on and implement a harassment and discrimination prevention plan.

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Co-written by Jeremy Bilski of Pinsent Masons.

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Source:

Psychosocial Safety Obligation on Australian Employers Continue to Increase - Pinsent Masons, 21st May 2025