Directors' duties for psych risks unpacked in new report

The WHS obligations of company directors include taking reasonable steps to understand the psychological hazards in their workplaces, and this is a "personal" prosecutable duty, a new guide for directors warns.

Directors' obligations include establishing that their organisations and their management "are equipped with appropriate resources and processes to eliminate or minimise these risks to the extent that is reasonably practicable", the guide by the Australian Institute of Company Directors and law firm King & Wood Mallesons says.

Most of any organisation's work to address psychosocial hazards will be "driven by management", given the complexity of the risks and the deep operational knowledge required to guide action, it says.

"The board plays a supporting role in constructively challenging these efforts and maintaining oversight of how effective psychosocial risk management contributes to broader organisational culture and leadership."

Under Australia's national model WHS laws – adopted by all jurisdictions other than Victoria, which has similar legislation – officers have a duty to exercise due diligence to confirm their organisation is meeting its WHS obligations. (See section 27 of NSW's version of the laws, for example.)

This duty is a "personal duty, meaning [officers] can be prosecuted for failing to meet their due diligence obligations", the guide says.

"Prosecution typically requires proof that the officer failed to take reasonable steps to comply with their duty, assessed in the context of the organisation's overall safety and health management system," it says.

These due diligence obligations apply to paid directors, and are "recommended" for volunteer directors, who can be prosecuted in limited circumstances. "While non-executive directors have not been the focus of WHS regulators to date, this can change, and regulatory expectations are rising," the guide notes.

According to the 12-page document, company boards and governance play a crucial role in ensuring psychosocial risks are managed effectively.

Directors must oversee management's efforts at identifying and implementing control measures, set expectations and confirm that the necessary frameworks are in place.

"This includes seeking information, reviewing board reports, assessing organisational culture, and challenging management where needed to strengthen risk controls," the guide says.

Examples of how boards should address the workplace factors that create psychosocial risks include:

• Overseeing how managers monitor the risks associated with work design by drawing on complaints data, employee surveys, and absence and turnover rates, and engaging regularly with management to assess risks and evaluate measures;
• Confirming that management is complying with the positive duty to eliminate workplace sexual harassment, and obtaining regular reports on key behavioural risks involving code of conduct breaches and harassment cases;
• Setting expectations for management to provide workers with practical assistance and timely consultation in the event of organisational change and restructures, which can create significant stress;
• Engaging with management to review how it is addressing remote work risks, and ensuring there they have a clear policy to guide them in determining when remote arrangements are appropriate; and
• Overseeing how HR and performance management processes are managed, and confirming that investigation procedures are fair, workers have access to appropriate support, and outcomes are handled as consistently as possible.

Governing WHS Psychosocial Risks: A primer for directors, by the Australian Institute of Company Directors and King & Wood Mallesons, April 2025

This article has been reproduced with permission from OHS Alert, and the original version appears at www.ohsalert.com.au.