Mitigating and Managing Psychosocial Risks: Small Business Employer Obligations

In the evolving landscape of workplace health and safety, small business employers face unique challenges and responsibilities, especially regarding psychosocial hazards. These hazards, which can significantly impact employees’ mental health and well-being, include factors such as workplace stress, change consultation, bullying, harassment, and poor work-life balance. Recognizing and managing these risks not only complies with legal obligations but also fosters a positive work environment, enhances productivity, and protects the business from potential legal consequences.

Understanding Psychosocial Hazards

Psychosocial hazards arise from the way work is organized, social factors at work, and aspects of the work environment, content, and tasks that have the potential to cause psychological or physical harm. Examples include excessive workloads, tight deadlines, lack of control over work tasks, and unclear job expectations. The impact of these hazards can range from stress and burnout to more severe mental health issues, such as anxiety and depression.

Legal Framework and Employer Responsibilities

Recent legal cases and legislative changes in Australia underscore the importance of managing psychosocial hazards. The High Court’s decision in Kozarov v State of Victoria [2022] HCA 12 highlighted an employer’s duty to manage mental health risks inherent to an employee’s job.

The Kozarov v State of Victoria case is a landmark decision in Australian law regarding employer liability for psychosocial hazards that cause psychological injury to employees. The case centred on Ms. Maria Kozarov, a solicitor working for the Victorian Office of Public Prosecutions (OPP) in the Specialist Sexual Offences Unit (SSOU), who sought damages for psychiatric injuries she suffered as a result of her work.

Background of the Case

Ms. Kozarov’s role involved dealing with victims of sexual crimes, which exposed her to vicarious trauma—a psychosocial hazard. She claimed that the cumulative exposure to traumatic content in her work led to significant psychiatric injuries, including depression and post-traumatic stress disorder (PTSD).

Legal Proceedings and Findings

The case ultimately reached the High Court of Australia, where the central issue was whether the OPP had a duty of care to take reasonable steps to prevent Ms. Kozarov from suffering psychiatric injuries as a result of her work.

The High Court found in favour of Ms. Kozarov, establishing several critical legal principles:

1. Employer’s Duty of Care: The Court confirmed that employers have a common law duty to take reasonable steps to manage mental health risks inherent in an employee’s job. This duty exists irrespective of whether the employee has shown warning signs of mental illness.

2. Inherent Risk: The Court recognized that certain jobs carry inherent risks to psychiatric health, and employers must be proactive in managing these risks. The Court noted that the OPP was aware of the mental health risks associated with work in the SSOU, as evidenced by its Vicarious Trauma Policy.

3. Active Steps for Care: The High Court stated that the content of the duty of care owed by an employer includes taking active steps for the care of the psychiatric health of the employee and their colleagues. It was found that the OPP failed to provide Ms Kozarov with a safe system of work, which exacerbated her psychiatric injuries.

4. Reasonable Measures: The Court determined that a reasonable employer would have observed indicative signs that Ms. Kozarov was not coping with her workload and the effects of vicarious trauma and that her mental health was at risk. The Court also found it likely that Ms. Kozarov would have accepted medical advice to rotate out of the SSOU, which the OPP failed to offer as an option.


The Kozarov v State of Victoria case has significant implications for workplace health and safety law in Australia, particularly concerning psychosocial hazards. It confirms that employers must take a proactive approach to controlling known risks to the psychological health and safety of workers, including those arising from the nature of the work being undertaken. Employers are encouraged to review and develop policies that enable workers to raise concerns and report unreasonable behaviour, ensuring they follow these policies to effectively manage psychosocial risks in the workplace.

Similarly, amendments to the Work Health and Safety Model Laws have confirmed that psychosocial hazards are a work health and safety issue, mandating employers take active steps to mitigate risks to mental health.

Small Business Employers must be aware of their legal obligations under the Work Health and Safety Act, which requires them to ensure, so far as is reasonably practicable, the health and safety of their workers. This includes identifying potential psychosocial hazards, assessing the risks, and implementing appropriate control measures.

Practical Steps for Managing Psychosocial Hazards

1. Identify Hazards: Regularly consult with employees to identify potential sources of stress or harm in the workplace. Surveys, interviews, and suggestion boxes can be effective tools for gathering employee feedback.

2. Assess Risks: Evaluate the likelihood and severity of harm from identified hazards. Consider factors such as workload, work patterns, and the work environment.

3. Implement Control Measures: Develop and implement strategies to manage identified risks. This may include job redesign, flexible work arrangements, clear communication of job roles and expectations, and fostering a supportive workplace culture.

4. Monitor and Review: Regularly review the effectiveness of control measures and make necessary adjustments. Continuous monitoring helps identify new hazards and prevents existing ones from escalating.

5. Support and Training: Provide management teams access to training on managing psychosocial hazards, the legal risks and obligations and frameworks for difficult conversations

6. Policy Development: Develop clear policies on workplace behaviour, including anti-bullying and harassment policies, and ensure these are communicated to all employees.

The Importance of a Supportive Culture

Creating a supportive workplace culture is vital in managing psychosocial hazards. This involves promoting open communication, encouraging work-life balance, recognizing and rewarding contributions, and providing opportunities for employee development. A positive workplace culture not only mitigates risks but also enhances employee engagement and loyalty.


For small business employers, understanding and managing psychosocial hazards is crucial for legal compliance and creating a healthy, productive work environment. By taking proactive steps to identify, assess, and control these hazards, employers can safeguard their employees’ mental health and well-being, contributing to the overall success of their business

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Written By   

Jonathan Mamaril   


NB Employment Law   

[email protected]   

+61 (07) 3876 5111