Psychosocial harm in the workplace: what employers need to know

Employers are increasingly familiar with their obligations to manage physical health and safety risks in the workplace. However, psychosocial harm is emerging as one of the most significant workplace health and safety challenges facing organisations today. The way work is designed, organised and managed can also affect a person's psychological wellbeing.

These psychosocial risks can have significant consequences for both employees and organisations. Left unmanaged, these risks may contribute to stress, burnout, anxiety, depression, reduced productivity, absenteeism and, in some cases, serious psychological injury.

Importantly, psychosocial risks are not simply people-management issues. They are workplace health and safety risks that should be identified and managed in the same way as any other workplace hazard.

What is psychosocial harm?

Worksafe New Zealand defines psychosocial hazards as factors at work that may cause psychological or physical harm. These factors can include:

1)   Work design – such as consistently excessive workloads, unrealistic deadlines, long working hours, insufficient staffing, low worker autonomy, or unclear role expectations.

2)   Social factors – including poor leadership, inadequate support, workplace bullying, persistent interpersonal contact, unreasonable management practices, harassment, or poorly managed organisational change.

3)   The work environment – including isolated work, inadequate equipment or exposure to traumatic events.

A hazard is a workplace factor with the potential to cause harm. Psychosocial risk is the likelihood that exposure to that hazard will cause harm, accounting for frequency, duration and intensity of the exposure. Psychosocial harm is the resulting injury or illness. Importantly, psychosocial risks often develop gradually. Unlike a physical injury, warning signs can be subtle and may not become apparent until significant harm has already occurred.

Not every difficult incident, busy period or instance of stress in the workplace means that the employer has breached the law. The focus is on work – related risks and what it was reasonably practicable for the employer to know and do. Workplace risk management is not the same as diagnosing an employee with a mental health condition.

Why should employers care?

Psychosocial risks can have significant consequences for both employees and businesses. Poorly managed risks may contribute to stress, burnout, anxiety, depression, increased absenteeism, higher staff turnover, reduced productivity, complaints, personal grievances, and health and safety concerns.

Taking a proactive approach not only assists with legal compliance but can also improve employee engagement, retention, and overall organisational performance.

What does the law require?

HSWA defines health as both physical and mental health. A person conducting a business or undertaking (“PCBU”) must, so far as is reasonably practicable, ensure workers’ health and safety. This includes providing both a work environment and work systems without health and safety risks, and monitoring worker health and workplace conditions with the intention of preventing work-place injury or illness.

Risks must first be eliminated as far as reasonably practicable, and if elimination is not practicable, then risks must be minimised so far as is reasonably practicable. PCBUs must also engage with workers when identifying risks, deciding on controls and proposing changes that may affect health and safety.

Employers should also be aware that further changes to New Zealand's health and safety framework are expected to come into force on 1 April 2027. While the reforms will place a greater emphasis on the management of critical risks, they do not alter the fundamental expectation that businesses identify and manage risks to both physical and mental health. Organisations that are already taking a proactive approach to psychosocial risk management are likely to be well placed for the forthcoming changes.

Practical steps for employers

Managing psychosocial risks does not require a separate health and safety framework. Like any other workplace hazard, the focus should be on identifying the risk, assessing its potential impact, implementing appropriate controls, and regularly reviewing whether those controls remain effective. The following practical steps provide a useful starting point for employers looking to identify and manage psychosocial risks in their workplace.

1)   Identify the hazards – Speak with workers and their representatives. Review workloads, rosters, overtime, position description, complaints, grievances, incident records and employee survey information. Consider whether different teams or groups work or experience the work in different ways.

2)   Assess the risk – Consider who may be exposed, how often, how long for and at what intensity, coupled with any potential consequences. Assess how hazards interact, for example how would a high workload interact with low control and unclear instructions.

3)   Address the source – Make organisational controls a priority, such as realistic workloads, sufficient staffing, clear responsibilities, effective supervision and appropriate recovery times. Policies, reporting channels and manager training can support such measures, but they are not substitutes for addressing the underlying causes.

4)   Worker engagement – Consultation is not only a legal duty but a practical advantage. Workers understand how work is performed on the ground and what the pressure points are. Provide accessible and, where appropriate, confidential ways to raise concerns.

5)   Respond early – When harm is reported or becomes apparent, listen, assess any immediate risk and when adjustments are reasonable, consider them. Explain any next steps and protect sensitive information. EAP might support an affected worker, but it is not a substitute for correcting an unsafe workload, role, leadership or workplace conditions.

6)   Monitor and review – Set review dates, reassess controls after complaints, incidents, organisational changes, new work activities, significant workload changes or where there is evidence a specific control has not been effective. Keep records of identified hazards, worker feedback, decisions made and any follow up actions.

Psychosocial harm is no longer viewed as merely a wellbeing issue. It is a workplace health and safety risk that employers must actively manage, Psychosocial risk management is not about removing every source of pressure from work. It is about ensuring work is designed and managed in a way that does not expose workers to unnecessary harm. Employers who take a proactive approach are not only more likely to meet their legal obligations, but are also better positioned to create healthy, productive workplaces where people can perform at their best.

If you are unsure whether your organisation's current practices adequately address psychosocial risks, now is a good time to review your health and safety framework. Identifying and addressing risks early can help prevent issues from escalating into workplace complaints, health and safety concerns, or employment disputes.

DTI Lawyers regularly advises employers on psychosocial risk management, workplace investigations, bullying and harassment concerns, performance management processes, and health and safety compliance. If you would like assistance assessing psychosocial risks within your workplace, please get in touch with our Employment Law team by phone on 07 282 0174, or by email [email protected].