Update on psychosocial hazards at work

The recent prosecution of the Department of Defence over psychological hazards linked to performance management processes is a reminder of the increased regulatory focus on adequately addressing risks.

For employers, this underscores the necessity to treat psychosocial risk as a core compliance priority or face serious legal and reputational consequences.

The Department of Defence was convicted and fined for failing to manage psychosocial hazards, following the death of a 34‑year‑old Royal Australian Air Force technician who had been placed on four separate “work plans” within a six-month period.

The prosecution is significant because it demonstrates an increasing readiness for enforcement action in a rapidly growing area.

The New South Wales Local Court imposed a fine of $188,000 after Defence pleaded guilty to a contravention of section 33 of the Work Health and Safety Act 2011 (Cth) - a Category 3 offence (the least serious category of WHS breach but still carrying significant penalties).

Magistrate Brett Thomas found the Department breached its primary duty of care under section 19 and made an adverse publicity order under section 236, requiring Defence to publicise the offence, its consequences and the penalty imposed.

Comcare’s investigation found that, despite the worker displaying signs of distress and ill health during the performance management process, supervisors did not refer him for support, place him on leave, or take other steps to reduce the evident stress and pressure arising during the work-plan process. This occurred despite Defence’s own policies identifying such risks and available mitigations.

The Court identified reasonably practicable controls that Defence should have implemented, including:

• training supervisors to recognise how a “work plan” can constitute a psychosocial hazard;
• identifying associated risks; and
• eliminating or minimising those risks by measures such as medical referrals and pausing performance management where appropriate.

This decision is indicative of the growing regulatory oversight into what has traditionally been the domain of internal management practices. Employers now face significant legal risk if their approach to managing staff is deemed to create psychosocial hazards, even when such action is necessary to maintaining productivity and discipline in the workforce.

This decision makes clear that employers must proactively manage potential psychosocial risks during key HR practices, such as performance management, and ensure supervisors are trained to identify and implement controls to mitigate or remove those risks. Policies alone are insufficient and controls must be applied in practice.

Employers should consider the following steps to strengthen their psychosocial risk management practices:

Embed psychosocial risk assessment and control measures into all key HR processes, including performance management, workplace investigations, restructures and organisational change.

Ensure risk assessment processes are dynamic and continuing throughout HR processes, including during the planning phase, implementation and finalisation.

Train management and supervisors in effective psychosocial risk management, providing them with the tools to recognise early warning signs, activate support pathways, and document reasonably practicable control measures taken in response to emerging risks.

The Defence prosecution signals the importance of proactively considering and managing psychosocial hazards in people‑management processes. Organisations should act now to review their people-management processes and embed psychosocial risk controls in light of increased regulatory oversight.