When most leaders think “workplace injury,” images of slippery floors or heavy machinery come to mind. Yet, the data—and recent high-profile court cases—tell a different story: psychosocial hazards now account for a significant and rapidly growing portion of workers’ compensation claims. These hazards include workplace bullying, sexual harassment, emotional overload, and other risk factors that undermine employees’ mental health.
Martyn Campbell, former CEO of Safe Work South Australia, explained in a recent podcast interview how organisations often unintentionally neglect mental injury dangers which can result in devastating consequences. He also detailed how companies can implement ineffective controls which are more for show than for real world impact. Martyn highlighted this trend of ineffective controls by describing real-life scenarios: from a healthcare provider prosecuted twice over serious sexual assaults on workers, to corporate boards being dismissed because they failed to grasp their legal obligations around psychosocial safety.
Why Psychosocial Hazards Matter More Than Ever
Safe Work Australia’s report shows that mental health conditions represented about 9% of all serious workers’ compensation claims in 2021–22, and the median compensation paid for psychological injuries can be more than four times that of physical injuries.
- Longer Time Off: On average, individuals who suffer psychological injuries can need over four times longer (8 weeks) to return to work than those with a physical injury.
- Higher Claim Costs: Mental health–related claims commonly incur significantly higher compensation amounts than physical ones . Median costs of $58,615 compared to $15,743 respectively.
- Spreading Impact: Psychosocial hazards also lead to higher turnover, absenteeism, and reputational risks for employers—ultimately hitting the bottom line.
Real-World Consequences
Ignoring these hazards is not only bad for culture and morale, it can destroy organisations financially. As Campbell recounted, one major organisation saw its workers’ compensation levy skyrocket by half a million dollars overnight after a psychosocial claim.
But the financial penalty pales next to the human impact. In one instance, a new employee in a care setting was sexually assaulted by someone the facility already knew posed a risk. The entire board was forced out within three months. Regulators—and the public—no longer tolerate inaction on psychosocial harms.
Understanding the Law, Minimizing the Risk
Under the Work Health and Safety Act, employers must ensure not only the physical but also the mental well-being of their workforce. “Officers” (board members, senior executives) face personal liability if they fail to act, which means:
- Identify Hazards: Map out potential psychosocial hazards—bullying, sexual harassment, workload stress, unclear roles, etc.
- Implement Controls: If you can’t eliminate a hazard, reduce it as much as possible through training, policy updates, and workplace design.
- Monitor & Review: Demonstrate that your policies truly work. Regulators won’t accept a “set and forget” approach.
Why Boards and Executives Should Care
Campbell emphasizes that individual executives can face fines or criminal prosecution if psychosocial risks aren’t managed. Director insurance often does not cover criminal or WHS prosecutions.
Taking Action
- Engage Your Workforce: Let employees help identify problems—things like role conflict or bullying.
- Train Leaders: Equip managers to spot early warning signs of harmful behaviour.
- Track and Analyse: Deploy software that flags repeated incidents or emerging hotspots.
- Foster Culture: Encourage trust so staff feel safe reporting issues before they spiral.
If you’ve ever believed mental health risks are intangible or “soft” issues, it’s time to reconsider. As Campbell warns, ignoring psychosocial hazards is both an ethical failure and a strategic business risk. With higher claim costs and stricter legal scrutiny, your board and executive team can’t afford to remain complacent.
Key Takeaway: Address psychosocial hazards with the same diligence as physical hazards—your balance sheet, corporate reputation, and employee well-being depend on it.
Rely is an incident management platform that helps employers prevent, mitigate, respond to and report on workplace issues, and meet your obligations under WHS laws. Book a demo to find out more.
