Peak Physiology | Occupational health and injury prevention for Hunter businesses

Psychosocial risk is the area of work health and safety where the gap between what businesses have in place and what the regulation now requires is widest. It is also the area that has moved fastest.

If your approach to psychological health at work is a policy, an annual training module and an EAP number on the noticeboard, that approach no longer demonstrates compliance in New South Wales.

What psychosocial hazards are

A psychosocial hazard is an aspect of work that can cause a stress response and lead to psychological or physical harm. Under the model WHS framework, they arise from the design or management of work, the working environment, plant at the workplace, and workplace interactions or behaviours.

The SafeWork NSW Code of Practice: Managing Psychosocial Hazards at Work identifies hazards including:

• Job demands — sustained high workload, unrealistic deadlines, or conversely, chronic underload
• Low job control — little say over how or when work is done
• Poor support — inadequate supervisor or peer support, or insufficient resources, information or training
• Lack of role clarity — unclear or conflicting expectations
• Poor organisational change management — change done to people rather than with them
• Inadequate reward and recognition
• Poor organisational justice — inconsistent or unfair application of rules and decisions
• Traumatic events or material
• Remote or isolated work
• Poor physical environment — noise, heat, hazardous conditions
• Violence and aggression, bullying, harassment including sexual harassment
• Conflict or poor workplace relationships

Two things are worth noting. First, most of these are structural features of how work is organised, not individual psychological characteristics. Second, several are physical conditions. Heat, noise and fatigue are psychosocial hazards as well as physical ones, which is why psychological health and physical health cannot sensibly be managed as separate programs.

What changed in the WHS Regulation

The Work Health and Safety Regulation 2025 (NSW) replaced the 2017 Regulation on 22 August 2025 and strengthened the requirements around psychosocial risk.

The key change is that section 55C now explicitly requires PCBUs to apply the hierarchy of control measures to psychosocial risk. Where it is not reasonably practicable to eliminate the risk, it must be minimised using higher-order controls before lower-order ones, having regard to the relevant matters set out in the regulation.

The practical consequence is significant. Policies, training and employee assistance programs are administrative controls and support services. They sit at the bottom of the hierarchy. Relying on them alone, without having genuinely considered whether the work itself could be redesigned, does not meet the requirement.

Higher-order controls for psychosocial risk look like:

• Changing rosters or workload allocation so demands are achievable
• Adjusting staffing levels rather than absorbing shortfalls indefinitely
• Redesigning roles to clarify responsibilities and remove conflicting expectations
• Giving workers genuine input into how their work is scheduled and performed
• Changing supervision structures where support is inadequate
• Removing or reducing exposure to aggression through physical design, procedures and staffing
• Improving consultation processes during organisational change

None of these are HR initiatives. They are work design decisions, and they belong in the same risk management system as your other hazards.

What changed in workers compensation

Separately, the NSW workers compensation scheme has been substantially reformed. The Workers Compensation Legislation Amendment Act 2025 and the Workers Compensation Legislation Amendment (Reform and Modernisation) Act 2026 have changed how primary psychological injury claims are assessed, with changes applying to claims first notified on or after 1 July 2026.

The changes include a stricter eligibility test, requiring the injury to result from a recognised relevant event with a real and direct connection to employment, and employment as the main contributing factor. Whole person impairment thresholds have risen substantially, including the threshold for work injury damages. A separate process applies to claims based on conduct such as bullying and harassment.

Employers should understand what this does and does not mean.

It does not reduce your WHS duty. The duty to eliminate or minimise psychosocial risk so far as is reasonably practicable sits under the WHS Act and Regulation, is enforced by SafeWork NSW, and is entirely unaffected by changes to the compensation scheme. An approved code of practice can be admitted as evidence in proceedings about what was reasonably practicable.

It does not reduce your exposure. Where a claim is harder to bring, the pathway does not disappear — it moves. Employers may see more matters raised through the Industrial Relations Commission, through general protections and discrimination avenues, and through common law. Regulatory enforcement action from SafeWork NSW is independent of any claim.

It does not change the business case. Psychological injury claims have been among the longest-running and most expensive in the scheme. Prevention was always the cheaper option, and the reforms do not alter that arithmetic.

Treating the reform as a reason to relax is, on the evidence, exactly the wrong reading.

Where to start

Identify the hazards using information you already have. You do not need a new survey to begin. Look at absenteeism patterns by team, turnover by supervisor, overtime records, grievance and complaint history, exit interview themes, and where your incident and near-miss reporting is unusually silent. Silence in a high-risk area is data.

Consult your workers. This is a legal requirement and it is also the only reliable way to find out what is actually happening. Workers know which roles are impossible, which teams are struggling and which processes generate conflict. Consultation needs to be structured and confidential enough that people will speak honestly.

Assess the risk properly. Consider the duration, frequency and severity of exposure, and how hazards interact. Psychosocial hazards compound: high demands with low control and poor support is a substantially higher risk than any one of those alone.

Control at the highest practicable level. Start with the work design question — can this exposure be removed or reduced by changing how the work is organised? Only then move to procedures, training and support services.

Record it. Maintain a psychosocial risk register alongside your other risk registers. If you cannot demonstrate what you identified, what you decided and why, you cannot demonstrate that you managed the risk.

Review. After changes, after incidents, and when work changes.

The supervisor’s role

Front-line supervisors sit at the point where most psychosocial risk is either created or controlled. They set workload expectations, allocate tasks, provide or withhold support, and apply rules fairly or unfairly.

They also need support themselves. Supervisors are frequently exposed to high demands, low control and poor role clarity simultaneously, while being expected to shield their teams from all three. A psychosocial risk assessment that does not examine the supervisor layer will miss a large part of the picture.

Support pathways

If you or someone you work with is struggling, support is available:

• Lifeline — 13 11 14 (24 hours)
• Beyond Blue — 1300 22 4636 (24 hours)
• 13YARN — 13 92 76 (24 hour support for Aboriginal and Torres Strait Islander people)
• Your workplace EAP, if your employer provides one
• Your GP, who can arrange a mental health treatment plan

In an emergency, call 000.

For WHS advice: SafeWork NSW — 13 10 50. For workers compensation information: SIRA NSW. For national guidance: Safe Work Australia.

Where Peak Physiology fits

We conduct psychosocial risk assessments for Hunter businesses, working from the same risk management framework you already use for physical hazards — identify, assess, control at the highest practicable level, record and review.

If you would like an independent look at one area of your business, we offer a free workplace assessment for local businesses with 15 or more workers. One task or work area reviewed, one risk concern discussed, and written recommendations you can act on.

Brock McInerney | Accredited Exercise Physiologist | Peak Physiology

This article is general information about work health and safety obligations and is not legal advice. Obligations depend on your circumstances.