As the psychosocial regulatory landscape tightens, organisations that adopt tailored, evidence-based systems stand to realise the greatest returns, not only financially, but in workplace culture, resilience, productivity and employee wellbeing.
Regulatory Landscape
Psychosocial risk regulations mandate the proactive prevention, identification, and management of hazards in the workplace that may cause psychological and/or physical injury. Hazards such as bullying, poor job design, or excessive work demands can have far-reaching impacts on individual wellbeing and organisational performance.
Across Australia, regulatory momentum is continuing:
- Victoria will implement psychosocial regulations in December 2025.
- NSW, the first state to introduce a psychosocial Code of Practice, is now proposing reform to require a 31% Whole Person Impairment (WPI) threshold for psychological injuries to continue receiving benefits beyond 130 weeks.
- In Western Australia, where regulations have been in effect since December 2022, enforcement has commenced with the first case before the courts in November 2025.
These developments signal growing accountability for Persons Conducting a Business or Undertaking (PCBUs). Meanwhile, many PCBUs are still grappling with the complexity of organisational psychosocial risk management within a social context that is seeing a growing prevalence of mental health concerns.
Unique Challenges of Psychosocial Risk
Psychosocial hazards and risk are uniquely challenging for two key reasons:
1. The 'Grey Area' and Individual Variation
The boundaries of workplace psychosocial hazards and associated risk can be unclear.
Some hazards, such as bullying and harassment, are clearly defined and identifiable. These well defined hazards often have a clearly defined tolerability. In the example of bullying and harassment a zero-tolerance approach is warranted. Most PCBU's have prominently covered these types of hazards in training programs.
Others hazards, like workload demands, may be less clearly defined (a hazard in itself) with windows of tolerability that vary between individuals. This creates a grey area that interacts with person factors to heighten risk.
PCBUs often express concerns about intersecting work and non-work stressors making it difficult to delineate causation and responsibility. However, leaning on the contribution of personal factors or non-work stressors is somewhat akin to the ''human error" challenge in general health and safety management, and is unlikely to satisfy regulators in the case of injury.
2. Complexity of Psychosocial Injury
Psychosocial injuries:
- Involve a complex relationship between the nature of the functional impairment and the rehabilitation journey.
- Are associated with almost 3x the cost and over 3x the duration of leave compared with other workers compensation claims (Safe Work Australia).
- Can be particularly costly when involving individuals in leadership or high-responsibility roles. It is relevant to consider whether this group are well-equipped for the responsibility of implementing psychosocial regulations as a potential hazard.
The Business Case for Psychosocial Investment
Evidence outlines a strong return on investment (ROI; 1.5 to 4 times expenditure) for psychosocial risk programs. Financial benefits are realised through reductions in absenteeism, presenteeism, employee turnover and workers' compensation claims. Beyond the financial, benefits also extend to enhanced productivity, strong employee morale and wellbeing.
Stepped Psychosocial RiskTM Management
To address these regulatory and business challenges, Neuro at Work supports organisations with the implementation of an evidence-based, stepped system for managing psychosocial risk and promoting psychosocial wellbeing. This system is informed by organisational data and grounded in an evidence-based understanding of the psychosocial mechanism of injury.
Beyond hazard identification for elimination and reduction, the system enables a data-driven stepped response to psychosocial risk management: Targeting the Step up of controls where they are required to prevent risk from rising, and applying intervention to Step down risk if it becomes heightened. Rather than blanket approaches, the data-informed system is cost effective in investing in psychosocial controls and intervention where they deliver greatest impact.
- The approach is dynamic and scalable to the organisation.
- Interventions are deployed based on assessed need and evaluated for effectiveness.
- Resource stratification ensures optimal resource allocation and cost-efficiency in the provision of progressive intervention.
The Stepped Psychosocial Risk System integrates with existing organisational programs and interventions. Importantly, it seeks to measure and continuously reduce injury rates and costs.
Evidence Base for Stepped Models
Research supports the effectiveness of stepped approaches in psychosocial health and injury management:
- Studies including Salomonsson et al. (2018) and Stiles et al. (2019) affirm their cost-effectiveness.
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Stepped models enable early identification and early intervention, reducing:
- Escalation of risk,
- The cost burden of delayed intervention,
- The likelihood of complex claims.
If you would like an overview of the Stepped Psychosocial Risk Management framework, let's connect. We welcome participating in obligation-free industry based collaboration and knowledge sharing.