Psychosocial hazards are no longer peripheral to workplace health and safety, they now sit at its centre. As legislative reforms sweep across Australia, in-house counsel are uniquely positioned not only to guide organisations through this changing landscape but, with national frameworks now in place, to drive a cultural shift where corporate wellbeing moves beyond compliance to truly empowering teams to thrive at work and in life.
Why it matters for legal counsel
Psychosocial hazards are any risks in the workplace that can cause psychological or physical harm. Common examples include:
According to Safe Work Australia mental health conditions accounted for 9% of all serious workers’ compensation claims in 2021-22, a 37% increase since 2017-18. The median time lost to these claims was more than four times greater than for physical injuries with compensation on average more than three times higher.[1]
As internal legal advisers, in-house counsel play a critical role in ensuring organisations meet their legal obligations, integrate psychosocial risk into WHS governance, and implement protective risk mitigation frameworks across the workplace.
Addressing psychosocial hazards proactively not only protects workers, it also reduces disruption associated with staff turnover and absenteeism, while supporting stronger organisational performance and productivity.
Failure to manage psychosocial risk can expose organisations and officers to significant consequences including:
- Workers compensation claims
- Regulatory investigations by Work Health and Safety (WHS) authorities
- Breach of duty allegations against officers
- Reputational risk and erosion of trust
Current Legal Framework
Recent reforms place positive obligations on persons conducting a business or undertaking (PCBUs) to manage risks to employee’s psychological health and safety similar to physical hazards. PCBUs must eliminate or minimise psychosocial risks so far as is reasonably practicable applying the same hierarchy of control as for physical hazards.[2]
When assessing psychosocial risks, PCBUs must consider factors such as the duration, frequency and severity of exposure, how hazards may interact, the design and management of work, workplace interactions and environmental conditions. Importantly, PCBUs must consult with employees when implementing control measures and ensuring risk management is both effective and collaborative.
All jurisdictions in Australia except Victoria have updated their WHS regulations and adopted Codes of Practice aligned with the model framework. Victoria’s new Occupational Health and Safety (Psychological Health) Regulations are expected to take effect on 1 December 2025, introducing more detailed duties around workplace design, exposure to traumatic events, reporting and benchmarking.
Practical Guidance for In-House Counsel
Whilst legislative reforms establish the baseline obligations for employers, in house counsel are well placed to translate these into broader cultural change by embedding psychosocial risk into governance and leadership practices. In practice, in-house counsel may consider focusing on the following measures:
Identifying legal risks and meeting due diligence duties
- Review your business’s WHS framework to ensure psychosocial risks are addressed as part of organisational risk assessments.
- Include psychosocial safety metrics and incident trends in board/ executive reporting.
- Update officer due diligence training to make sure it covers mental health and burnout risks.
- Support managers with training on psychological safety, mental health wellbeing and inclusive leadership
Contracts, policies and processes
- Check that employment contracts, handbooks, and grievance procedures reflect psychosocial obligations.
- Work with HR to update bullying, harassment, remote work, and workload management policies and team training.
- Include psychosocial considerations in workplace investigations and performance management protocols.
Shaping culture
Beyond compliance, in-house counsel can also influence the culture of the workplace by promoting practices that support sustainable wellbeing.
- Advocate for ‘right to disconnect’ practices by giving clear internal guidance on after-hours contact.
- Model healthy behaviours yourself by taking breaks, leaving work on time and using wellbeing resources and strategies
- Normalise conversations about wellbeing by encouraging open dialogue and sharing practical wellbeing practices so that discussions about mental health and resilience become a part of every day culture
- Reframe wellbeing initiatives as an investment in sustainable performance, not just regulatory compliance
For in-house legal teams, the rise of psychosocial hazard regulation is both a wake-up call and a leadership opportunity. By implementing comprehensive strategies at all organisational levels, businesses can proactively mitigate risks, enhance employee well-being, and cultivate a resilient workforce
If your business hasn’t yet reviewed its approach to psychosocial risk, now is the time. And as in-house counsel, your insight and leadership will be pivotal to navigating this shift responsibly.