One of the most under-the-radar compliance issues facing Australian businesses has suddenly hit the headlines thanks to a court showdown involving two shock jocks
At the centre of the dispute is a concept many business leaders are only just starting to get their heads around: psychosocial hazards in the workplace.
The legal action stems from the spectacular breakdown of the long-running breakfast show hosted by Kyle Sandilands and Jackie 'O' Henderson.
Henderson has alleged she was subjected to bullying and unsafe workplace conditions, raising questions about whether her employer ARN Media properly managed psychosocial risks.
These risks include bullying, harassment, aggression, poor workplace interactions and unclear roles -- all factors that can harm a person’s mental health.
They might sound like soft issues, but regulators certainly don’t see them that way.
Psychosocial hazard regulations have already resulted in hefty fines, with even government departments on the receiving end – a clear signal regulators mean business.
For many employers, however, the concept remains unfamiliar.
That is why the radio dispute now unfolding could prove significant.
For more than two decades, Sandilands and Henderson hosted one of Australia’s most successful breakfast shows, built on a dynamic where one played the deliberately outrageous provocateur while the other acted as the moderating voice.
Barristers for Sandilands have described their client as performing the role of the “dominant and abrasive personality who was deliberately outrageous and often offensive”, while Henderson was portrayed as the “warmer and more emotionally attuned character”.
Although they are atypical employees, with salaries that would go close to supporting a small country, the case could become one of the first major tests of how psychosocial hazard regulations apply in practice. (Assuming it ever reaches a courtroom. Many observers suspect it will settle long before then).
The regulations require businesses to identify psychosocial hazards, assess the risks they create and take steps to manage them.
Employees must also have input into that process, which must be reviewed regularly.
The framework identifies 14 psychosocial hazards, including aggression, bullying, harassment, poor role clarity and poor workplace relationships, while recognising that other risks may emerge depending on the nature of the workplace.
One can imagine lawyers having a field day exploring how those hazards intersect with the carefully crafted on-air roles that underpinned the radio show.
But what does all this mean for the average business?
Quite a lot.
In the 2022–23 financial year there were 11,700 workers’ compensation claims in Australia for mental health conditions – about one in every 11 serious claims.
The median time off work was 34.2 weeks and the median compensation payment $58,615.
Those figures were roughly four times higher than the medians across all workplace injury claims.
In the following financial year, as awareness of psychosocial hazards grew, the numbers worsened.
Claims jumped 50% to 17,600. Median compensation rose to $67,400 and the median time off work increased to 35.7 weeks.
The total cost to the Australian economy has been estimated at $10.9 billion, with about six million working days lost each year to previously untreated depression alone.
That surge raises two obvious questions.
To what extent were psychosocial hazards already present in workplaces before they were formally defined and regulated?
And to what extent, if any, might the new framework be contributing to the increase in claims?
Employers often argue it is difficult to determine whether mental ill health stems from workplace conditions or personal circumstances, but the economic evidence suggests the debate misses the point.
Investing in workplace mental health pays.
In the United Kingdom, studies report a return on investment of between £3.30 and £7.70 for every £1 spent addressing workplace mental health, with about £5 commonly cited.
In the United States the range is $1.62 to $4, while Australian estimates sit at around $2.30.
In other words, investing in managing psychosocial risks simply makes good business sense.
Reducing the long periods employees spend away from work due to mental health conditions delivers tangible productivity gains and financial returns.
Yet many executives still believe the problem does not apply to them.
Research by the Australian Human Rights Commission found that nearly half of senior managers believe none of their employees will experience a mental health problem at work.
That assumption may be one of the biggest psychosocial hazards of all.
Professor Alan Patching holds a PhD focused on workplace stress. He is a co-author of Bond University's Leadership in Psychosocial Risk Management microcredential.
