In this article, we explore the importance of proactive mental health management and the consequences of failing to address psychosocial hazards from a UK and Australian perspective.
For the second year, health and safety has been identified as the top risk for directors and officers globally. According to the WTW 2025 D&O survey report, 43% of respondents cited physical health and safety in the workplace as their primary concern, while 28% highlighted the impact of workplace conditions on mental health and wellbeing. These two risks are converging, with the potential for criminal regulatory action against organizations that fail to demonstrate robust management frameworks for mental health and wellbeing.
In the UK, the Health and Safety Executive (HSE) has committed to a long-term strategy to reduce work-related ill health, with a specific focus on mental health and stress[1]. The HSE will investigate potential breaches of health and safety legislation regarding work-related stress conditions, particularly when multiple employees exhibit symptoms and there are broader organizational failings. The HSE's approach emphasises the importance of being proactive over reactive, focusing on prevention over response.
In December 2024, it was confirmed that the HSE was investigating a UK university due to concerns about work-related stress. A letter from the HSE to the university, later made public by the college union, highlighted a key issue: “almost all your stated control measures are tertiary, or lagging measures, that deal with stress once it has become a problem.”[2]
In other words, the HSE viewed the university’s approach as largely reactive, focusing on support after problems had already developed rather than preventing them in the first place.
In Australia, all states and territories have implemented legislative reform to target ‘psychosocial hazards’ in the workplace, with the state of Victoria planning to further increase its scope. Organizations must proactively identify and control psychosocial hazards that they know about (or ought to reasonably know about) so far as is reasonably practicable. This means doing everything that can reasonably be done to control psychosocial risks.
In both the UK and Australia, court sentences for failing to comply range from punitive corporate fines (up to £10 million[3] and nearly $11m[4] respectively) to custodial sentences for directors and senior managers for the most serious offenses.
There have already been several high-profile prosecutions in Australia related to psychosocial hazards and risks. For instance, a state court services department was fined nearly $380,000 for failing to maintain a safe workplace, contributing to a toxic work culture that led to severe consequences, including the suicide of a worker[5]. In New South Wales, a youth care organization was fined $300,000 for failing to manage the risk of occupational violence and aggression – specifically, inappropriate sexual behavior perpetrated by a young person in care.[6] These prosecutions were not brought due to the impact on workers, but due to inadequate control measures to manage known hazards and risks to employee psychological health and wellbeing. Proactive, preventative action is the requirement, and anything that may give rise to psychosocial risks falls within the scope.
The principle involves identifying potential risks and implementing measures to prevent harm before it occurs. In the context of psychosocial hazards, it means eliminating mental health stressors, or minimizing them so far as is reasonably practicable, as well as providing adequate support and resources to employees. Organizations must integrate psychosocial risk management into their overall health and safety strategy, ensuring that mental health is given the same priority as physical health.
Managing psychosocial hazards is crucial for supporting employee wellbeing and retention. When considering what work factors contribute to mental health stressors, you should consider the design and management of work, the work environment, plant and equipment in the workplace, and workplace interactions and behaviors.
The HSE provides free guidance via its website, which includes detailing the requirement for organizations to consider potential work-related risks to employee mental health and wellbeing through a documented stress risk assessment[7].
In Australia, Codes of Practice have been published in most jurisdictions, which provide minimum standards for compliance. The ‘New South Wales: Managing Psychosocial Hazards at Work’ Code of Practice provides a strong overview of regulatory expectations[8].
Investing in mental health and wellbeing is not only a legal and moral obligation but also makes good business sense. A healthy and engaged workforce is a key factor in improving organizational productivity and performance.
A study by Deloitte[9] has revealed that the cost to employers of poor mental health is £51bn per year, a decrease from £55bn in 2021, but an increase from £45bn in 2019. The analysis showed that the return on investment (ROI) in productivity from successfully implementing appropriate mental health actions was £4.70 for every £1 invested. Early interventions, such as organization-wide culture change and education, can achieve a higher ROI compared to the more intensive support that might be needed later when someone is struggling.
In addition, regulators are actively enforcing compliance in this area, which can lead to additional scrutiny, expenditure to meet compliance and penalties.
Organizations must prioritise mental health and stress management to avoid severe regulatory penalties and ensure a productive and safe working environment. Proactive measures, including risk assessments, employee consultations, and implementing appropriate control measures, are essential to safeguarding employee wellbeing and enhancing overall organizational performance.
Regulators will want to see evidence that organizations are treating mental health and wellbeing with the same importance as the physical safety of employees. The primary goal for businesses should be to establish a structure that not only identifies and addresses the root causes of poor mental health in the workplace but also recognizes and protects against specific instances of poor mental health as they occur. This should be achieved through a risk-based and person-centered approach.
Written documentation that details how organizations monitor and maintain the mental health of their workforce is critical. This includes written policies, stress risk assessments, and records of actions taken to monitor and address any instances of poor mental health, as well as any actions required to manage psychosocial hazards relevant to your specific workplace.
Our risk management specialists are here to advise on potential triggers for health and safety enforcement proceedings and to offer guidance on enhancing your existing systems and procedures to help avoid regulatory action.
