Insight

Get ready for sweeping changes in managing mental health risks at work

Published

14 May 2025

Read time

5 minutes

Around the world, workplaces are facing a reckoning: mental health is no longer a peripheral concern - it’s a core workplace risk.

In response to rising rates of stress, burnout and work-related mental illness, governments and regulators are stepping in and organisations are being held to account over how their workplaces affect psychological well-being.

For instance, in Australia, SafeWork’s new Code of Practice on Managing Psychosocial Hazards at Work is now in effect. This new code doesn’t just offer guidelines, it creates legal obligations. For HR leaders and risk professionals, it offers both a warning and a roadmap: the way we manage mental health risks at work is changing - and expectations are rising, fast.

What’s in the Australian code – and why it matters globally


The biggest change is that psychosocial hazards are now formally recognised in the Work Health and Safety (WHS) framework.

The framework makes it mandatory for organisations to identify, assess and manage psychosocial hazards, such as:

  • High job demands
  • Low job control
  • Inadequate support
  • Bullying, harassment or conflict
  • Exposure to trauma or emotionally distressing work

That means organisations now have a legal duty to eliminate or minimise risks to psychological health, just as they do with physical risks.

The code provides practical steps for meeting these duties, from engaging with workers and conducting risk assessments, to designing safer jobs and supporting psychological recovery. Crucially, it’s backed by WHS laws, meaning organisations can face enforcement action if they fail to act.

The global picture


This trend is reflected globally, and jurisdictions around the world are also emphasising the importance of psychosocial safety.

For instance, the World Health Organization (WHO) now includes organisational factors in its mental health at work recommendations, the European Union Agency for Safety and Health at Work (EU-OSHA) identifies psychosocial risks as among the most urgent challenges in modern workplaces, and In the United States, NIOSH has called for systemic change to better manage mental health risks in work environments.

For multinational organisations or those working across borders, this is a clear signal that psychosocial risk management is fast becoming a compliance and governance issue, not just a wellbeing initiative.

Why mental health matters

Research from UK charity Mind shows that 1 in 4 people in England will experience a mental health condition in any given year. Globally, the stats are similar. NIMH reports that in 2022 ,23.1% of all US adults had some form of mental illness.

And the data from NSW shows that psychological injury claims are growing faster than physical injury claims. Moreover, these claims cost more and often result in longer absences.

From a business perspective, unmanaged psychosocial risks can:

  • Undermine engagement and productivity
  • Increase absenteeism, turnover, and workers’ compensation costs
  • Damage culture and employer brand

Essentially, the very nature of work itself - if poorly designed or managed - can cause harm. Businesses need to find ways to prevent that, by building safer, healthier workplaces.

What HR and risk professionals should be doing now

Risk assessment

  • Review and update your risk registers to explicitly include psychosocial hazards.
  • Conduct a gap analysis against the new code – especially for high-risk roles or teams.
  • Use data (surveys, exit interviews, complaints) to spot patterns of psychological strain or distress.

Policy and procedures

  • Update or create mental health and wellbeing policies in line with international standards and local laws.
  • Integrate psychosocial risk controls into performance management, change management, and work design processes.

Training

  • Train leaders and managers to:
  1. recognise early signs of psychological distress
  2. manage team workloads and expectations
  3. handle conflict and complaints appropriately

Culture:

  • Ensure meaningful worker participation in identifying psychosocial risks.
  • Embed psychological safety into your culture strategies — not just your WHS plans.
  • Report psychosocial risk indicators at board level.
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From compliance to competitive advantage

Globally, employers who take psychosocial risk seriously are seeing returns far beyond compliance. These include:

  • Improved staff retention and engagement
  • Stronger employer branding and ESG credentials
  • Reduced absenteeism, presenteeism, and claims costs

This shift also aligns with investor and stakeholder expectations around social impact and sustainable workforce practices. Whereas those organisations that ignore psychological health may soon find themselves exposed — legally, reputationally and financially.

Australia's Code of Practice may be one of the first to put this into law — but it won’t be the last. Whether you're in HR or risk, you need to protect your people by designing healthier, safer ways of working.

Bringing people leaders up to speed

To support organisations to achieve their obligations to leaders and provide them with the tools and training to develop and implement strategies to meet the new Code of Pratice, Howden together with Bond University have created a specialised course Leadership in Psychosocial Risk Management.

Developed to meet the Code of Practice and released in July 2024, this 10-hour eLearning program is the first step in equipping leaders with the skills leaders need to:

  • Identify psychosocial hazards
  • Identify behaviour change and work-related stress
  • Learn strategies to support effective communication for empowering their team
  • Understand strategies to promote psychosocial risk management and build resilient organisations

This course is also applicable to our global clients who have people leaders managing teams in Australia.