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  • Mark Shaw

The real cost of not successfully managing potential psychological safety issues.

In a recent case before the Personal Injury Commission of New South Wales (reference), the Member found “… I accept that the applicant’s perception that she was overworked, under-resourced and unsupported by management.”


The case relates to an employee with 25 years of service currently working part time in the Toy Department for the past two years. Her claim for psychological stress was based on her view that the previous job incumbent was full time and she was required to do the equivalent work in 17 hours. She lodged her claim in October 2021 and it was determined in her favour by the Personal Injury Commission in June 2023.


Despite the employee's claims, her supervisor argued that she had never complained about her workload or lack of support. However, after examining the evidence presented by both parties, the NSW Personal Injury Commission found in favour of the employee. The Commission acknowledged that the employee had not explicitly complained about feeling overworked and unsupported by her employer. However, the Commission determined that this was the employee's perception of the workplace events and that it had a significant impact on her psychological well-being.


In her judgement, the Member, noted that the employee's predecessor had worked more hours and that the employee often worked overtime. Additionally, the manager admitted to a lack of direction and communication from the supervisor and did not deny that he had set unrealistic expectations for the employee.


While final cost of this case is still to be determined, anecdotal evidence suggests the cost of this case to the employer will exceed $200,000 and includes:

· 2 years’ WorkCover payments ($30,000)

· Direct legal costs ($60,000)

· Indirect cost of lost management time ($20,000)

· Permanent impairment compensation ($100,000)


Of course, it is impossible to measure the emotional toll on the employee or the hidden cost of having a range of managers, employees and colleagues involved in such a situation for almost two years.


Yet my message is that this outcome could have been easily avoided by introducing a contemporary HR solution.


This case demonstrates how the emphasis has shifted to a mandatory requirement for managers and employers to be proactive in how they manage (potential) psychological risk issues. In today's workplace, the fact the employee 'never complained' is insufficient. The employer needs to have a proactive system to demonstrate they regularly asked the employee how things are going.


While the NSW Code of Practice for Managing psychological hazards at work was released in May 2021, we need a contemporary approach to interpreting and implementing this 39-page document and its associated 40-page code of practice on managing risk into your business so it works without negatively impacting everyone involved.


The traditional HR approach is to develop a compulsory on-line training module consisting of a video and test. As a mandatory process, 100% of employees must complete such training even though anecdotal evidence suggests it is applicable for probably less than 2% of the workforce. While according to the transcript, such training did not occur, I’d argue it would not have made a difference to the outcome because proactive management interventions did not occur.


Instead, consider the approach I have been successfully applying in many workplaces.

Step 1. All employees complete an on-line five question self-assessment on the key areas of the Code of Practice.

Step 2. Where the result indicates an area of concern, the employee completes one of five additional short questionnaires.

Step 3. The manager can now proactively discuss the employee’s specific concerns and take appropriate action before the problem escalates.


Behind the scenes, all admin, management reporting, and record keeping is taken care of. Simple, easy and defendable.


I have been applying such a thinking and associated successful HR process redesign for almost 25 years and you can find a summary of my successful approach here or watch this short video.

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