NSW Psychosocial Hazards Legislation For Businesses

Psychosocial risks have become one of the fastest-growing challenges in workplaces — but many NSW businesses are unsure what the new laws require from them.

With SafeWork NSW conducting targeted inspections and issuing enforcement notices, a lack of clarity can expose businesses to legal, financial and cultural risks.

This simple guide explains what psychosocial hazards are, what the NSW legislation demands, how to comply and what happens if you don’t.

What Are Psychosocial Hazards?

Psychosocial hazards are work factors that can cause psychological or physical harm.

• High job demands
• Bullying, harassment, verbal aggression
• Violence or aggression
• Poor supervisory support
• Exposure to trauma
• Low role clarity or conflicting priorities
• Remote or isolated work
• Poor organisational change management
• Poor organisational justice
• Insecure work or job uncertainty
• Unsafe physical environment

What Changed in NSW Related to Psychosocial Hazards Safety At Work?

NSW introduced major updates to its Work Health and Safety laws in 2022–2023 to recognise that psychological harm is just as serious as physical harm. 

Until then, psychosocial risks were acknowledged but not explicitly regulated, which meant many workplaces treated them as optional or “soft” safety issues.

These amendments to the WHS Regulation 2017 made psychosocial risk management a legal requirement, creating a clear, enforceable duty for businesses.

Key points:

• Employers must eliminate psychosocial risks where reasonably practicable
• If they can’t eliminate them, they must minimise them using suitable controls
• Psychosocial hazards must be managed using the same risk-management steps as physical hazards
• A new positive duty applies — employers must act proactively, not only after harm occurs

What NSW Businesses Must Do (Your Compliance Checklist)

Identify Hazards

Use:

• Staff surveys
• Incident reports
• Exit interviews
• HR data (turnover, absenteeism)
• Consultation with workers and HSRs

Assess the Risk

Consider:

• Severity and likelihood of harm
• Interactions between multiple hazards (e.g., high workload + poor support)
• Groups at higher risk

Implement & Record Controls

Controls may include:

• Clear role descriptions
• Supportive supervision
• Workload planning and resourcing
• Anti-bullying processes
• Training for leaders
• Debriefing after critical incidents
• Flexible work arrangements
• EAP access

Review Regularly

• Monitor HR indicators
• Review incidents and complaints
• Consult staff on whether controls are working

What Are “Reasonably Practicable” Controls?

NSW employers must take actions that are reasonably practicable given:

• The likelihood of harm
• The degree of harm
• What a reasonable person would do in your position
• Cost vs benefit of controls
• Availability of resources

Importantly:

Cost is not an excuse for inaction if the risk is severe or likely

What Happens If You Don’t Comply? (Consequences)

What legal consequences can businesses face?

Non-compliance can lead to improvement or prohibition notices, WHS fines, criminal penalties, and even prosecution for failing to meet duty of care. Inspectors and unions also have powers to enter workplaces and enforce compliance.

What financial consequences can occur?

Businesses may face workers’ compensation claims, higher insurance premiums, increased absenteeism and turnover, and reduced productivity — all of which directly increase operational costs.

What reputational consequences can arise?

SafeWork NSW may publicly disclose serious breaches, which can result in loss of contracts, damaged employer reputation, and reduced trust from clients, employees and stakeholders.

Penalties Snapshot

WHS Act penalties for corporations can exceed $3 million depending on severity and category of offence.

SafeWork NSW has begun blitzes targeting employers with poor psychosocial controls.

Inspectors can issue on-the-spot notices where risk is obvious (e.g., reports of bullying or excessive workloads).

Supporting psychosocial safety isn’t just a legal requirement — it’s key to keeping your people healthy, engaged and productive.

How To Manage Psychosocial Compliance in NSW

Foremind works with NSW businesses to help meet these new obligations, offering:

• Access to experienced employee counsellors
• On-demand mental health support for employees
• Practical guidance on managing work stress, conflict, burnout and traumatic events
• Reporting and insights to help HR teams meet their WHS duties

If you’re an HR leader or business owner in NSW, Foremind can help you strengthen compliance and support your workforce.

FAQs

Do psychosocial hazards include everyday work stress?

Not minor stress — but ongoing, unmanaged, excessive or harmful stress is a psychosocial hazard.

Do small businesses need to comply?

Yes — the duty applies to all NSW business and employers, regardless of size.

Is documentation necessary?

Absolutely. SafeWork NSW expects to see clear evidence of hazard identification, consultation and implemented controls.

Does an EAP alone meet your duty?

No. A traditiona EAP by itself does not satisfy your psychosocial safety obligations. The law requires businesses to identify hazards, implement controls and prevent harm — not just offer support once issues arise. 

Foremind combines EAP services with psychosocial hazard compliance, helping organisations both meet their duty and put effective preventative controls in place.

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