What the new duty to act on psychosocial risks means for NSW employers

From 1 October, psychosocial risks must be managed like physical risks 5 min read

The recent passage of the Work Health and Safety Amendment Regulation (the NSW Regulation) means that employers will soon have a more explicit duty to eliminate or minimise workplace psychosocial risks.

In this Insight, we look at the genesis of the changes, as well as the NSW Regulation, and its interrelation with sexual harassment and bullying.

Key takeaways

• From 1 October 2022, the NSW Regulation detailing employer duties to respond to, manage and prevent psychosocial risks will come into effect.
• It reflects a broader shift in the minimum standards expected of employers in managing psychological risks in the workplace.
• These changes, and those occurring nationwide, present challenges not only in terms of determining how and when to respond to risks. There's also the question of how these regulations will interact with other workplace issues that are likely to impact psychological health – notably, sexual harassment and bullying.
• The implementation of the NSW Regulation on psychosocial risks is a warning for NSW employers, and employers nationally, to undergo a risk assessment and review their control measures in relation to psychosocial hazards.

Background

While the concept of psychological health isn't new, it hasn't been comprehensively addressed in workplace injury legislation until now. This is despite the fact that, over the past decade, there has been an increase in psychological health issues, and a decrease in the rate of physical injuries, in the workplace.

The growing spotlight on psychological health in the workplace is most likely the result of high-profile reports like the Respect@Work Report, the Productivity Commission's Mental Health Inquiry and Marie Boland's Review of the model Work Health and Safety laws (the Boland Review).

While all these reports give valuable context to exactly what behaviours are increasing the risk of psychological injury in Australian workplaces, it was the Boland Review that specifically looked at the Model WHS Laws, and its recommendations resulted in the changes that are now reflected in the NSW Regulation.

Psychological injury before the NSW Regulation

Psychological health is currently addressed in the Work Health and Safety Act 2011 (NSW) (the WHS Act) by way of inclusion in the definition of 'health' in section 4. This means that employers are already under an obligation to ensure, so far as reasonably practicable, the psychological health of their workers while they are at work.

However, the model WHS regulations and the model Codes of Practice provided no further assistance to employers, and other duty holders, on how to meet their obligations regarding psychological health, and so this wasn't further dealt with by the WHS Regulations in NSW.  

The Boland Review

The Boland Review identified that there was a gap in how the model WHS regulatory framework dealt with psychological health. In total, it made 34 recommendations, two of which related to psychological health.

Recommendation 2: amend the model WHS regulations so that they appropriately address psychological health, risks and appropriate control measures.¹

Recommendation 20: review the incident notification provisions in the model WHS Act, to ensure, among other things, that they provide for a notification trigger for psychological injuries.²

Only Recommendation 2 was included by Safe Work Australia in the model WHS amendments. (You can read more about which of the Boland Review recommendations were taken on by Safe Work Australia in our Insight.)

Model WHS instruments

The model WHS regulations were amended by Safe Work Australia in June 2022, to deal with, among other things, the lack of regulation around psychosocial risks in the workplace. Those amendments clarified employers' obligations to identify and control psychosocial hazards.³ Importantly, changes to the model WHS regulations don't take effect in a jurisdiction until it has implemented them.

In July 2022, Safe Work Australia also published a Model Code of Practice: Managing Psychosocial Hazards at Work (the Model Code). The Model Code provides additional guidance on managing psychosocial hazards at work. Since May 2021, NSW has had its own independent Code of Practice: Managing Psychosocial Hazards at Work (the NSW Code), which gives guidance on eliminating and minimising psychosocial hazards in the workplace. The NSW Code largely reflects guidance from Safe Work Australia from before the publication of the Model Code. The Regulation has more legal force than the Code.

Overview of the NSW Regulation

From 1 October 2022, the NSW Regulation detailing employer duties to respond to, manage and prevent psychosocial risks will come into effect.

The NSW Regulation makes it explicit that a person conducting a business or undertaking (PCBU) must manage psychosocial risks in the same way that other risks to health and safety (ie physical risks) are dealt with under the NSW Regulation.

It defines psychosocial risk as a risk to the health or safety of a worker, or other person, arising from a psychosocial hazard. A psychosocial hazard is a hazard that arises from, or relates to:

• the design or management of work;
• a work environment;
• plant at a workplace; or
• workplace interactions or behaviours; and
• that may cause psychological harm.

A hazard may be a psychosocial hazard whether or not it may also cause physical harm.

Examples of psychosocial hazards identified by Safe Work Australia are:

The NSW Regulation makes clear that a PCBU must:

• identify reasonably foreseeable psychosocial hazards that could give rise to health and safety risks; and
• introduce, maintain and review control measures to eliminate (or minimise) psychosocial risks to health and safety so far as is reasonably practicable.

In determining what control measures to implement, a person must have regard to all relevant matters, including:

• the level of exposure of workers and others to the psychosocial hazards;
• how the psychosocial hazards may interact or combine;
• the design and systems of work, including job demands and management of work;
• the design and layout, and environmental conditions, of the workplace;
• workplace interactions or behaviours; and
• the information, training, instruction and supervision provided to workers.

How does the NSW Regulation interact with inappropriate workplace behaviours?

The duty of PCBUs under the WHS Act has always meant that employers have an obligation to eliminate risks to psychological health. For example, the High Court decision of Kozarov made clear that psychosocial risks can arise from the nature of a job itself, in which case employers are expected to be on notice and actively taking steps to address that risk.

However, the NSW Regulation now makes employers' obligations as to psychosocial risks more explicit. It is now clearer that the risk of psychological injury can also arise from behaviour in the workplace. The obvious and most common examples of inappropriate workplace behaviour that would cause such risk are sexual harassment and bullying. These are two significant behavioural issues that are common across workplaces, have a high risk of psychological injury for victims and can result in employee-initiated legal claims.

Sexual harassment and the NSW Regulation

Sexual harassment in the workplace is a universal issue for employers.

While workplace risks to psychological health are already covered by the primary duty of care of PCBUs under the WHS Act, in NSW there has been a tendency for incidents of sexual harassment to only be dealt with under the Anti-Discrimination Act 1977 (NSW), with no parallel WHS proceedings being commenced.

We anticipate that the amendments to the NSW Regulation may see a greater focus by victims and SafeWork NSW on utilising the WHS Act to address sexual harassment in the workplace. This will be particularly so if the WHS Act is amended, as recommended by the Boland Review, to provide a notification trigger for psychological injuries. However, in the absence of this amendment, there is nothing preventing victims from notifying SafeWork NSW of incidents of sexual harassment. Additionally, the changes to the NSW Regulation coincide with the establishment, by SafeWork NSW, of the Respect at Work Taskforce. That Taskforce will, among other objectives, undertake regulatory action targeting high-risk industries, and workplaces where gender-based violence and harassment are prevalent. We expect to see an increase in action by SafeWork NSW on sexual harassment.

Bullying and the NSW Regulation

Bullying is another type of universal workplace behaviour that effects employers across Australia. It's also a type of behaviour that is likely to result in some level of psychological injury.

As with sexual harassment, employers more commonly see bullying dealt with only under the Fair Work Act 2009 (Cth) rather than in tandem with WHS proceedings. From 1 October, employers need to be aware that allegations of bullying may result in Fair Work proceedings and a Safe Work investigation. This emphasises the importance of employers responding to all allegations of bullying, as well as having up-to-date workplace behaviour policies, investigation procedures and document retention plans.

What does this mean for employers and officers?

The implementation of the NSW Regulation regarding psychosocial risks is a warning bell for NSW employers, and employers nationally, to undergo a risk assessment and review their control measures in relation to psychosocial hazards.

Safe Work Australia has released an infographic to assist employers with this process. It recommends managing psychosocial hazards by following the same four-step risk management process that is used to manage physical hazards. This involves undertaking the following steps in consultation with workers:

• Identify any psychosocial risks;
• Assess the impact of all identified risks;
• Control risks by eliminating and minimising them as much as possible; and
• Review any control measures implemented, to ensure they are effective.

Further, officers and managers should be particularly mindful of how this change impacts on their due diligence obligations under the WHS Act. Officers should ensure that they have taken all reasonably practicable steps to gain an understanding of the psychosocial risks faced by the PCBU; and to ensure that the PCBU has, and implements, processes for complying with the duty to eliminate or minimise psychosocial risks to workers.