Mental health meets compliance: inside Victoria's new Psychosocial Regulations

Since 2021, the Victorian Government has been working to amend the Occupational Health and Safety (Psychological Health) Regulations to better address psychological wellbeing in the workplace. Now, effective from 1 December 2025, the updated Occupational Health and Safety Regulations 2025 (2025 OHS Regulations) will legally require employers to identify, assess, and control psychosocial hazards.

Overview of the 2025 OHS Regulations

A psychosocial hazard, under the Occupational Health and Safety Act 2004 (Vic) (OHS Act), is defined as any factor arising from work design, systems of work, work management, performance of work, or personal and work-related interactions that may occur in the working environment which cause an employee to experience one or more negative psychological responses, such as stress or anxiety. Examples of psychosocial hazards include bullying, sexual harassment, and exposure to traumatic events.

At its core, the 2025 OHS Regulations shift the focus from proving psychological harm to managing psychosocial hazards that may cause negative psychological responses, such as stress. This broader framing promotes a more inclusive understanding of workplace risks. Some key obligations arising from the 2025 OHS Regulations include:

• Requiring an employer to, so far as is reasonably practicable, eliminate any risk associated with a psychosocial hazard.
• Where unreasonable to eliminate the risk, employers must reduce the risk of by either:
  • altering the work design, system, workplace environment or management
  • providing information, instruction, or training, or
  • using a combination of both.
• Employers must continually review and, if necessary, revise any control measures to address risks associated with psychological hazards where (including but not limited to):
  • new information about psychosocial hazards is provided
  • directed by a health & safety representative, or
  • where they receive a report of a psychosocial injury and/or hazard.

Additionally, the new regulations will be supported by a new Compliance Code titled Psychological Health (Edition 1, September 2025) (the Compliance Code 2025) which provides practical guidance on identifying, assessing, and controlling psychosocial hazards. While not legally binding, compliance with the Code is considered sufficient to meet relevant duties under the OHS Act and the 2025 Regulations. WorkSafe Victoria expects employers to be familiar with the Code when determining what is reasonably practicable.

Evidential drivers behind the 2025 OHS Regulations

The introduction of the 2025 OHS Regulations is timely. Over the past decade, claims for mental health conditions have steadily increased, forming a growing proportion of overall compensation claims for work-related injuries and illnesses in Australia. According to a report prepared by Safe Work Australia, between 2021–2022: mental health conditions accounted for 9% of all serious claims and 7% of all work-related injuries (this represents a 36.9% increase in total claims since 2017–2018). Anxiety and stress disorders made up 45.8% of mental health-related claims and the Healthcare and Social Assistance sector recorded the highest number of claims, while the Public Administration and Safety sector saw the greatest increase over the five-year period.

Notably, in Kozarov v Victoria [2022] HCA 12, the High Court affirmed that employers have a common law duty to take reasonable steps to manage risks inherent in a worker’s role. In a separate case in 2023, Court Services Victoria was fined $379,157 for failing to maintain a safe workplace, following findings of a toxic culture at the Coroners Court that contributed to a worker’s suicide and widespread sick leave.

Key takeaways

For employers/host employers and employees

As per the 2025 OHS Regulations, employers must take all reasonably practicable steps to manage psychosocial hazards. Importantly, the Regulations impose an ongoing obligation on employers to consistently review and revise the control measures. Training alone cannot be the primary control measure unless other modifications are not reasonably practicable. Employers must also review and revise their existing frameworks and systems including their organisational structures, management practices, systems of work, risk assessments, incident reports, and employee feedback processes.

Interestingly, host employers share similar occupational health and safety duties and obligations as employers, within the 2025 OHS Regulations.  Under the OHS Act, host employers are deemed to be ‘an employer’ of the labour hire employee and owes the same obligations as an ordinary employer. Moreover, labour hire companies and host employers are required to, so far as reasonably practicable, communicate and cooperate with each other with respect to the duties they share (s 35A OHS Act). Therefore, for the purposes of the 2025 OHS Regulations, labour hire companies and host employers alike would be subject to the same duties and obligations with respect to psychosocial hazards.  This no doubt invites a clear positive for employees which is the reduction of psychosocial risks that arise through high job demands, low job control, and lack of recognition or reward.

For insurers

The rise in mental health claims has been described by life insurers as an affordability and sustainability crisis. In 2024, mental health claims totalled $2.2 billion, up from $1.9 billion in 2019, nearly 44% of all life insurance payouts were for mental health conditions and the median compensation for mental health claims was $58,615, compared to $15,743 for other injuries. 

Broadly speaking, an increase in psychological claims will naturally lead to a substantive rise in legal costs. From our experience, claims which consist of, or have associated psychological injuries tend to attract additional costs due to its intricate nature and the difficulty in assessing and quantifying its impacts on a claimant.

Insurers must therefore consider how the increasing prevalence of psychosocial hazards will affect policy design, coverage scope, and premium structures, especially in high-risk sectors like Healthcare and Public Administration. Based on current market trends, businesses have already experienced, and will continue to face increased premiums in response to this hike in claims.

Final reflections and recommendations

• The statistical evidence reveals an upward trajectory with respect to number of mental health compensation claims arising out of workplaces. Therefore, employers and insurers alike can expect, and should appreciate the role psychosocial hazards have in future claims.
• Employers and host employers should view the 2025 OHS Regulations with a proactive mindset in mitigating the impact of psychosocial hazards on employee’s mental health in the workplace. As highlighted above, employers hold a proactive obligation to identify, assess, and control psychosocial hazards in the workplace.
• Employers and host employers should review and make note of any trends being observed with respect to psychosocial hazards within their workplace and use that as a starting basis to implement revised control measures.
• Additionally, we recommend employers and host employers document all the steps taken to identify, assess, and control psychosocial hazards when implementing the 2025 OHS Regulations. Doing so naturally creates a succinct chronology of documentary evidence highlighting that employers have taken all the reasonable steps required to discharge their duties & obligations owed to employees.