When a change or restructure is managed poorly it not only puts the success of your change at risk, it can also trigger significant stress for your people.
And regulators are now watching.
The University of Technology Sydney (UTS) learned this the hard way. During a major restructure that proposed up to 400 job cuts, suspended enrolments in over 100 courses, and other cost-cutting measures, SafeWork NSW issued a prohibition notice, citing a “serious and imminent risk of psychological harm” to staff. Particular concerns were around consultation processes and staff wellbeing.
UTS was required to pause the process and strengthen its approach to psychosocial risk management and consultation before continuing.
This case made headlines as the first known instance of a safety regulator halting a change process on psychological safety grounds. It sends a strong message: psychosocial hazards must be managed with the same rigour as physical safety risks.
Your legal obligation as a change leader
Under recent work health and safety legislation, organisations must now manage psychosocial hazards. Poor organisational change management is specifically listed as one of these hazards.
This isn’t a HR matter you can delegate and forget about. As the sponsor for your change initiative, you carry direct responsibility for identifying and mitigating psychosocial risks. And regulators will hold you to it.
What are psychosocial hazards?
Psychosocial hazards are aspects of work that can cause a stress response, which in turn can lead to psychological or physical harm.
Common hazards are:
- High or unreasonable job demands
- Low job control
- Poor support from managers or team members
- Bullying, harassment, or conflict
- Remote or isolated work
- Inadequate role clarity
- Poor organisational change management
Poor change management means poorly planned or communicated changes, lack of genuine consultation, no assessment of people impact, or not enough support.
Psychosocial risks must be identified, assessed and controlled – just like physical safety hazards.
Read more at Safe Work Australia or your state WHS regulator (SafeWork NSW has a legally adopted Code of Practice).
What’s actually at stake
Let’s be direct about the consequences if you don’t get this right:
- Regulatory action such as prohibition notices that stop your change process (like UTS), improvement notices that become public record, or prosecution and significant fines.
- Reputational damage both externally and internally through board and governance scrutiny, loss of stakeholder confidence, and increased workers’ compensation claims.
- Organisational impact including failure or delay of your change, reduced productivity, or a culture of distrust.
The trend is clear
Across Australia, mental health-related workers’ compensation claims are rising faster than any other category. Between 2016–17 and 2020–21, serious mental health claims increased by 36.9%, compared with 18.3% for all serious claims.
Figure 1: Indexed number of serious claims for mental health and non-mental health conditions. Source: Safe Work Australia.
Almost half of the 2021–22 mental health claims were for anxiety or stress disorders. The top causes? Workplace bullying or harassment (27.5%), work pressure (25.2%), and exposure to workplace violence (16.4%).
In a 2025 national study, 16% of psychosocial complaints specifically cited poor change management. That’s preventable.
Figure 2: Psychosocial hazards complaints or claims. Source: AHRI & DLPA.
Research from the University of South Australia found that unhealthy work environments cost the Australian economy around $30 billion annually in lost productivity. Some of that cost is probably sitting in your budget right now.
So, while poor change management might once have been seen as an internal HR issue, it’s now a clear compliance and governance risk.
The opportunity
The good news? Many organisations are already taking proactive steps to strengthen psychosocial safety.
The AHRI and DLPA study found the most popular interventions for improving psychosocial safety are flexible-working options, work-life balance initiatives, and regular wellbeing conversations. Organisations that foster open communication and psychological safety see measured improvements in staff confidence and wellbeing.
Figure 3: Interventions or policies used to improve psychosocial safety. Source: AHRI & DLPA.
These actions matter because they help build a culture of care and resilience and provide a protective effect that reduces the likelihood of stress during change.
What you can do as a leader of change
Your role is to ensure the change process itself does not create unnecessary psychosocial risk.
Strengthen your change management foundations
Good change management, with a robust change management framework, proper resourcing and strategic change expertise, naturally reduces many psychosocial risks. The ChangeEffect Model sets out three essential elements that, when done well, support the success of your change and create a safer, more stable environment for your people.
- Vision – Reduces ambiguity and provides a cohesive direction.
- Pressure – Helps people understand the why, lowering uncertainty and distress, and ensures appropriate governance and leadership is in place.
- Plan – Ensures management of impacts, structured consultation, clear communication, and adequate support.
Then, target psychosocial risks
Even with strong change management fundamentals, you need to explicitly identify and manage psychosocial risks. Here’s how to make sure you meet your compliance obligations:
1. Assess psychosocial risks
Conduct a formal psychosocial risk assessment for your change or restructure.
2. Plan your controls
Adjust your change approach to include risk mitigations such as genuine consultation, assessment of people impacts, clear and timely communication, adequate timeframes, and practical support. Provide clarity about roles, timelines, and decision-making processes.
3. Resource it properly
Put in place dedicated change management support (not just HR), access to strategic change management advice, training for managers to identify and respond to signs of distress, and support services.
4. Document everything
Regulators will want evidence. Make sure you have documented evidence of your assessment, the controls, your consultation process, and how you monitored and adjusted your approach.
If SafeWork shows up asking questions (and they are making visits), you need to show your evidence. The good news is the same actions that meet psychosocial risk requirements also lead to stronger change outcomes.
Quick self-assessment
Ask yourself these questions right now:
If you answered “no” or “not sure” to any of these, you have gaps to address.
The bottom line
Psychological health is now firmly a governance issue. The UTS case is your wake-up call. Regulators are watching, and they’re prepared to act when psychosocial risks are ignored.
You have a choice: treat this as a compliance box to tick, or see it as an opportunity to lead change in a way that genuinely takes care of your people while protecting your organisation from legal, reputational and performance risks.
The UTS case won’t be the last. But with strong change management, clear governance, and a focus on psychosocial safety, it doesn’t need to be your story.
Learn more:
- Safe Work Australia: Psychosocial hazards
- Safe Work Australia: Poor organisational change management
- Comcare: A short explainer video (1:37) on psychosocial hazards
- SafeWork NSW Code of Practice
- ChangeEffect: Your guide to successful change
- ChangeEffect: Is change fatigue undermining your transformation?
- FutureBuilders: Organisation development
About the authors
Carly Marriner
Director, ChangeEffect
ChangeEffect has been helping leaders make successful change and build change capability for more than 20 years. If you’d like help to set your change up for success book a discovery call, we’d love to support you.
Lisa Ainsworth
Director & Co-Founder, FutureBuilders
FutureBuilders helps organisations create safe, high-performing workplaces through leadership, culture, and psychosocial risk expertise. If you’d like to discuss managing change in your organisation or how you can support your clients, book some time with Lisa at lisa.ainsworth@futurebuildersgroup.com
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