A look at Australia’s approach to psychosocial risk management in the workplace

In particular, the movement took off in the wake of the global coronavirus pandemic, an event that finally pushed employers to recognize workplaces can do so much more for their employees, says Wendy Poirier, global well-being leader at WTW.

Read: Mental health firmly in the spotlight due to impacts of coronavirus, says report

“That was the first time in my career I’ve heard the [human resources] department talking about burnout and wanting to get the C suite involved, understanding how they designed work . . . and how their workplace practices had such a big influence. They were allowed to take ownership of that in a way that said, ‘If we want to be a high-performing company, we need to acknowledge that we have a big part to play in keeping employees’ minds healthy, just like their bodies.”

In 2018, the International Organization for Standardization published ISO 45001, a standard for occupational health and safety management systems that provides a framework for employers to prevent work-related injuries and illnesses, improve safety performance and create safe workplaces. In 2021, the organization published another guideline — ISO 45003 — for managing psychosocial risks and promoting employee well-being within an OH&S system.

“To have that equivalent focus on mental health or psychosocial aspects of work was a great way to validate these are real things,” says Poirier. “It was broader than psychological safety; it wasn’t just bullying and harassment. It was all about employers having a big part to play in how they design jobs, how they support employees and how they can create a good environment with the appropriate decision-making, latitude in jobs and rewards that are commensurate with the level of effort.”

The view from Australia

In February 2024, Safe Work Australia published a report that found mental-health conditions accounted for nine per cent of all serious workers’ compensation claims in 2021/22, a 37 per cent increase since 2017/18. As well, it found the median time lost was more than four-times greater than that of all physical injuries and illnesses and the median compensation paid for mental-health conditions was more than three-times greater than that of all physical injuries or illnesses.

Read: 2024 Mental Health Summit: What does effective integration of psychological health and safety look like?

“Safe Work Australia data shows work-related psychological injuries typically have longer recovery times, higher costs and require more time away from work compared to physical injuries,” says Marie Boland, the organization’s chief executive officer. “Workers’ compensation claims for psychological injury and illness are increasing. Managing psychosocial risks is a legal obligation that not only protects workers but also reduces absences from work and staff turnover and can improve organizational performance and productivity.”

While Australia’s Work Health and Safety Act has recognized both physical and psychological health since it first came into effect in most jurisdictions in 2012, a 2018 review recommended the introduction of specific regulations to help duty holders (including employers) identify psychosocial risks and implement appropriate control measures.

In June 2022, the act was amended to include regulations on psychosocial hazards. In July, the national code of practice for managing psychosocial hazards at work was published with the aim of providng practical guidance on how to manage psychosocial health and safety risks at work.

The same year, Safe Work Australia published a code of practice that provides practical steps for managing workplace risks to psychological health. “These changes strengthen protections against psychological injury to workers and provide clear guidance for employers on how to ensure their workplaces are safe and healthy,” says Boland.

Read: Are workplace mental-health programs evolving beyond the National Standard for Psychological Health and Safety in the Workplace?

The regulations define psychosocial hazard and risk and require employers to apply a risk management process, including identifying reasonably foreseeable hazards; eliminating or minimizing the risk so far as is reasonably practicable; and monitoring and reviewing control measures to ensure they remain effective.

The regulations also outline matters employers must consider when determining control measures, such as the design of work, including job demands and tasks and systems of work, including how work is managed, organized and supported. “These requirements prompt employers to consider the sources of risk and provide practical measures to control the risk,” says Boland.

Carrot or stick

Australia’s WHS regulators have a range of tools available if employers don’t comply with their duties, ranging from support and education to assist with compliance through to prosecutions where possible penalties include fines and jail time.

These penalties are an important part of Australia’s approach and should make employers stand up and take notice, says Poirier. According to the Safe Work Australia website, the maximum penalty for an employer that fails to comply with its health and safety duty is nearly AUS$12 million (around $11 million).

“It’s a carrot and stick approach, but the stick seems to work when it comes to regulatory stuff,” says Poirier. “Everything you see in the psychosocial hazards are things we should just be doing as companies, so to have that big stick with a penalty and fines and jail time, . . . organizations will actually take it seriously.”

Read: Head to head: In workplace wellness programs, is it better to use the carrot or the stick?

The Australian approach is about assessing risk and having an action plan to identify and address hazards, she adds. Another important part is the integration of psychosocial hazards into the existing WHS framework rather than creating a separate system, so employers have to apply the same risk management principles they already use for physical hazards to psychosocial risks.

“This approach leverages employers’ existing WHS processes and knowledge to manage psychosocial hazards, reinforcing that workers’ psychological health is equally important as physical health,” says Boland.

It forces HR and OH&S to talk to each other and work together, notes Poirier, something she calls long overdue. “The collaboration [and] learning together is what’s going to be powerful.”

From a C-suite perspective, she says, mental health has always been a bit warm and fuzzy, but the OH&S people take a structured view, identifying hazards and establishing a risk profile. “It’s a really interesting approach to a topic that we’ve tried very hard to make more scientific. . . . The collaboration is where there’s going to be a lot of strength that we can adopt more of the psychosocial risk approach at organizations.”

Jennifer Paterson is the editor of Benefits Canada and the Canadian Investment Review.