NSW Code could set a much higher bar for employers managing psychological health risks

Businesses may face a much higher bar to managing employee psychological health

NSW Code could set a much higher bar for employers managing psychological health risks

by John Makris and Dominic Fleeton, Partners, Kingston Reid

In workplaces today psycho-social hazards are the leading contributor to occupational disease and injury.

Each year about $540 million is paid in compensation to about 7,000 Australians due to work-related mental health conditions. 

This has not gone unnoticed by safety regulators. While in the past, mental health issues have typically manifested themselves as workers compensation or employment-related claims, that is certainly no longer the case.

Different jurisdictions have adopted various measures to prompt employers to look at their statutory safety obligations through the prism of managing psycho-social hazards.

For example, several years ago WorkSafe Victoria established a psycho-social investigation unit that focused on potential non‑compliance, with a particular emphasis on employer responses to situations of alleged bullying.

And while there is a plethora of high-level guidance material published by regulators about managing risks of employees’ mental health, no jurisdiction has taken the step of making a Code of Practice focused on the management of risks to employees’ psychological health.

That may be about to change.

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Earlier this year, the NSW Government made available for public comment a draft Code of Practice for Managing Risks of Psychological Health.

That Code represents a much more focused approach to this issue and, if made, could become the national standard for how employers must address mental health risks in the workplace. Why?

Firstly, the focus of the Code is not on the appropriate handling of employees’ mental health problems. Rather, it reinforces the need for employers to be aware of how mental health risks can arise and what steps need to be taken to proactively address them.

Secondly, the Code contains an extensive and broadly described list of issues that can prompt a mental health risk, including:

  • Fatigue, including mental, emotional and physical exhaustion
  • Lack of positive feedback on tasks and work performance
  • Inadequate skills development and use
  • Inadequate support from supervisors
  • Poorly managed performance feedback
  • Unclear or constantly changing management expectations about the responsibilities of the job
  • Incompatible expectations of demand placed on workers by different workplace stakeholders
  • Inconsistency, bias or lack of transparency in the way procedures are implemented, decisions are made, and workers are treated
  • Occupational violence
  • Poor communication between supervisors, workers and others
  • Work demands

Such issues are difficult for employers to manage from an HR perspective at the best of times.

When you add into the mix the prevalence of employees working from home (something which is likely to remain commonplace, if not the norm, courtesy of the COVID-19 pandemic), and the mental health issues that have resulted from the pandemic’s disruption to many aspects of daily life, the degree of difficulty for employers becomes exponentially greater.

Yet, the Code puts employers on notice that they are also expected to have in place a safety management system that identifies and seeks to mitigate these issues.

Thirdly, in New South Wales, a Code of Practice is admissible and courts are required to give due recognition to it.

Fourthly, the Code has the potential to set the example across all Australian jurisdictions.

No matter the State or Territory in which an employer operates, they are required by law to provide and maintain, so far as reasonably practicable, a safe working environment for their employees and other workers.

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When determining what is reasonably practicable, courts examine what an employer knows, and what it ought to know, about risks to worker safety and the available methods of eliminating or minimising those risks.

This necessarily encompasses alerts, guidance material and Codes of Practice published by safety regulators, including by regulators in other states and territories.

Fifthly, it is indicative of a slow and steady move by governments and regulators towards a more rigorous regime on mental health issues.

What does all of this mean for employers?

They need to closely examine the Code of Practice and consider whether they have appropriate controls to manage those risks in their workplaces.

This will not only reduce the likelihood of regulator investigation and prosecution but will also assist in reducing the number of related workers compensation and employment-related claims.

They need to push back against the tendency to view mental health issues as being disconnected from work or the workplace.

In all likelihood, that is not the way a safety regulator will view those issues.

Put simply, workplaces and individuals who allow behaviour that puts employees ‘at risk’ from a wide range of mental health issues will be liable to prosecution, fines in the tens and hundreds of thousands, criminal conviction and, in the most extreme cases, imprisonment for individuals.

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