Recent Fair Work Commission FWC decisions demonstrate how psychosocial obligations are increasingly influencing employment outcomes. Credit: iStock
23 Oct 2026, 2:51 am
Psychosocial safety is no longer a niche work health and safety (WHS) issue in Australia. It now sits at the centre of employment law, safety regulation and workforce management, exposing organisations to legal, financial and reputational risk.
Recent Fair Work Commission (FWC) decisions demonstrate how psychosocial obligations are increasingly influencing employment outcomes. In one case, an employer was required to act against a manager whose behaviour was harming employee wellbeing. In another, an organisation successfully relied on psychosocial safety concerns to justify refusing an employee's request to extend parental leave.
Taken together, the decisions highlight the broader trend of psychosocial risk management becoming a core governance issue, rather than a standalone compliance exercise.
Australian WHS regimes define psychosocial hazards broadly. While wording differs across states, the common theme is that psychosocial hazards arise from the way work is designed, managed and performed, as well as from workplace interactions and behaviours.
The concept extends well beyond traditional notions of bullying or harassment. High workloads, poor supervision, workplace conflict, inadequate support, role ambiguity and aggressive behaviours can all constitute psychosocial hazards if they create a risk of psychological harm.
For employers, the practical consequence is that a wide range of operational decisions may attract WHS scrutiny. Regulators are increasingly examining not only individual incidents but also the systems, management practices and workplace cultures that contribute to psychosocial risk.
The legal exposure is equally broad. Poor management of psychosocial hazards can give rise to unfair dismissal, discrimination, general protections, bullying and sexual harassment proceedings, as well as workers' compensation claims. Organisations may also face regulatory investigations, improvement notices and prosecutions under WHS legislation.
Recent court decisions have further elevated the stakes. Employers are increasingly being judged not only on the outcomes of workplace processes but also on whether investigations, disciplinary procedures and other management actions themselves create foreseeable psychological harm.
Against this backdrop, employers are increasingly finding that psychosocial safety obligations can require intervention.
The FWC’s decision in Filamor v Port Stephens Veterans and Citizens Aged Care Ltd illustrates how psychosocial safety concerns can underpin disciplinary action.
The case involved a lifestyle and engagement manager at an aged care facility who had been in the role for less than a year when complaints began to emerge regarding her treatment of staff.
Concerns included her implementation of an unauthorised "points system" that could result in suspension of employees, criticism of staff she described as "lazy", and a management style that generated significant distress among team members. Two employees resigned citing her conduct, while others reported intending to do the same.
The employer ultimately concluded that the manager had created an unsafe psychosocial work environment and terminated her employment.
In upholding the dismissal, the FWC accepted evidence that staff members had been yelled at, spoken to rudely and regularly reduced to tears at work. The evidence also demonstrated tangible impacts on employee wellbeing, including increased medication for anxiety and depression and the need for medical treatment.
Importantly, the FWC viewed the employer's response through the lens of its WHS obligations. The decision recognised that the organisation was required to take action to protect the health and safety of its workforce.
The FWC also attached weight to the quality of the employer's process. The investigation was conducted over several weeks, evidence was gathered from multiple sources, and the manager was given opportunities to respond before a decision was made.
The decision demonstrates that employers cannot ignore behaviour that creates psychosocial risks, even where that behaviour is framed as robust performance management or strong leadership. Where employee wellbeing is being affected, intervention may be necessary to satisfy WHS obligations.
For organisations, the case also reinforces the value of a structured investigation process. A well-documented and procedurally fair process remains one of the strongest protections against subsequent employment claims.
The FWC decision in Donnelly v Whitehaven Coal Mining Limited is significant for different reasons.
The case concerned an employee in a highly specialised data analytics role who sought a six-month extension of her parental leave. Whitehaven refused the request and relied in part on its WHS obligations to justify that decision.
The organisation argued that the employee's continued absence would exacerbate significant workload pressures within a small specialist team. Work demands had increased substantially during the leave period, efforts to redistribute responsibilities had stretched existing staff, and managers and employees were already working extended hours to maintain operations.
Whitehaven's evidence painted a picture of a team operating under sustained pressure. Managers were working late into the evening, workloads had increased dramatically and concerns about employee fatigue and burnout were growing.
Crucially, the organisation framed these pressures as a psychosocial safety issue rather than merely a resourcing problem.
Whitehaven argued that, as a person conducting a business or undertaking (PCBU), it had a legal obligation to eliminate or minimise psychosocial risks so far as was reasonably practicable. Extending the leave period would prolong conditions that were already exposing team members to high work demands and psychological risk.
The FWC accepted that reasoning. It found there were reasonable business grounds for refusing the request and accepted evidence that team members were working longer hours, work was being delayed or missed, and employees were experiencing heightened psychological pressures.
The decision is notable because it appears to be the first case in which psychosocial safety concerns affecting colleagues have successfully formed part of the justification for refusing a parental leave extension under the Fair Work Act.
The ruling highlights the increasing interaction between employment rights and WHS obligations. Employers faced with workforce planning challenges may now be more inclined to assess whether psychosocial risks arising from staff shortages, workload or extended absences create legitimate business grounds for particular decisions.
However, the case also demonstrates the importance of taking proactive steps to manage those risks. Whitehaven did not simply point to workload concerns after the fact. The evidence showed it had attempted to mitigate the pressure by redistributing work, recruiting additional staff and monitoring employee wellbeing. Those efforts strengthened its argument that the concerns were genuine safety issues rather than a pretext for refusing the leave request.
Employers seeking to rely on psychosocial safety considerations in employment decisions will likely need similarly robust evidence.
The significance of the Filamor and Donnelly cases extends beyond the individual outcomes. Both decisions form part of a broader regulatory shift in which psychosocial hazards are receiving greater attention from regulators, unions and courts.
Across Australia, safety regulators are increasingly using their enforcement powers in relation to psychosocial risks. Improvement notices, requests for information, investigations and prosecutions are becoming more common, particularly where organisations are unable to demonstrate structured approaches to identifying and controlling psychosocial hazards.
At the same time, workplace culture, workload management and employee wellbeing have become key areas of union activity and regulatory scrutiny.
The policy landscape is also continuing to evolve at the Commonwealth level. Proposed reforms to Commonwealth WHS laws, including the expansion of incident notification duties to capture serious psychological harm, signal that psychosocial risk regulation is likely to become more prescriptive in coming years. Continued efforts to harmonise WHS laws across jurisdictions may further accelerate that trend. On 19 October 2026, Safe Work Australia released its report setting out the recommendations and actions arising from the “best practice review” of the model WHS laws, which are directed at maintaining and strengthening harmonisation across jurisdictions.
Another developing area is the conduct of workplace investigations. Regulators are increasingly examining whether investigations themselves create psychosocial risks. Poorly managed processes, prolonged timeframes, unclear communication and inadequate support arrangements can all contribute to psychological harm. In some circumstances, the management of a complaint may become as significant as the complaint itself.
For organisations, this means psychosocial safety considerations should be embedded throughout workplace processes rather than addressed only when incidents arise.
The commercial implications of these developments are significant. Workplace conflict, unmanaged workloads and poor people management are no longer solely HR concerns and increasingly carry regulatory risk, litigation exposure and potential business disruption.
The decisions in the Filamor and Donnelly cases suggest several practical questions for employers to consider.
First, are psychosocial hazards being actively identified and assessed across the organisation? Regulators are unlikely to accept reactive approaches where warning signs were visible but ignored.
Second, do management systems address common psychosocial risks such as excessive workloads, interpersonal conflict, bullying and poor supervision? Policies alone are unlikely to be sufficient without evidence of implementation.
Third, are managers equipped to recognise and respond to psychosocial hazards? Front-line leaders often play a critical role in identifying emerging risks before they escalate.
Fourth, is consultation with workers meaningful and ongoing? WHS laws generally require consultation as part of risk management processes, and organisations should be able to demonstrate how employee feedback informs control measures.
Finally, can workplace investigations be defended from both an employment law and psychosocial safety perspective? Timeliness, procedural fairness and appropriate support mechanisms are becoming increasingly important.
The key message from both decisions is that psychosocial safety has evolved from a compliance issue into a business-critical risk area and organisations that fail to identify and manage psychosocial hazards face growing legal exposure, while those that can demonstrate genuine and proactive risk management are likely to be in a much stronger position when employment disputes arise.
Co-written by Camille Wright-Gray of Pinsent Masons.
Written by
