What do directors need to know about psychosocial hazards?

Psychosocial hazards are now a regulated work health and safety duty in every Australian state, and the due diligence obligation sits with directors and officers personally. If your board papers do not yet include psychosocial risk, that is the gap to close first: not because prosecution is imminent, but because the claims economics and the regulatory trajectory both point the same direction.

What changed, and when

Across Australia, managing psychosocial hazards is an explicit duty under the model WHS Regulation, supported by the Managing the Risk of Psychosocial Hazards at Work Code of Practice. Queensland has required it since April 2023 and New South Wales follows with legally enforceable codes from 1 July 2026, with the remaining states moving on the same path through the model WHS framework.

The practical meaning: psychosocial hazards such as high job demand, low control, poor support, bullying and occupational violence must be identified, assessed and controlled with the same discipline as physical hazards, and the evidence must be documented.

Why the economics matter more than the penalties

The headline penalties get the attention, but the operating numbers are what should drive board interest. Across Australia the average accepted mental injury claim costs around 23,600 dollars, against roughly 13,000 dollars for a physical injury claim, and mental injury claims take substantially longer to resolve. National mental health claim costs crossed one billion dollars in 2024-25, years ahead of projections.

For a board, that reads as a premium trajectory and a workforce availability problem, not just a compliance line item.

What due diligence looks like in practice

The Australian Institute of Company Directors has published guidance on governing psychosocial risk, and its core message matches the WHS Act: officers must take reasonable steps to verify the business has, and uses, appropriate resources and processes. In practice a board should be able to point to:

• A documented psychosocial risk assessment, not just survey results
• A prevention plan that assigns each hazard a control, an owner and a date to review it
• A standing report that tells directors whether the plan is operating

If any of the three is missing, the survey data and the policies do not add up to due diligence.

Where to start

A scoping exercise against the model code is the fastest way to find out where you stand. Averon’s free psychosocial scoping tool is built from the same process used in paid engagements, and the Psychosocial Compliance Package takes the result through to a documented prevention plan.