From December 1, 2025, Victorian employers must treat psychological health like any other safety risk. The new Occupational Health and Safety (Psychological Health) Regulations 2025 and Psychological Health Compliance Code require employers to identify psychosocial hazards, control the risks and keep those controls working, so far as reasonably practicable.
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For employers in New South Wales, Queensland, Western Australia, and other jurisdictions that have already introduced psychosocial hazard duties and codes of practice, this is less a new idea and more a reminder that the real work now is about everyday human behaviour, not just a legal checkbox.
Workload blow-outs. Managers who avoid hard conversations. Poorly handled conflict. Unclear roles. These are now managed under the same legal category as guarding a machine or managing asbestos – and for a very good reason.
The business case is strong. Mental health conditions now account for a significant share of serious workers’ compensation claims in Australia, and the time lost for these claims is far longer than for other injuries. For an SME, that is not just a compliance risk. It is a strategic risk.
At ASPL Group, we deliver trauma-informed neuroscience-backed training programs and see the same pattern across many of the businesses we work with. Most leaders do not wake up planning to harm anyone. The gap is not intent or a missing policy.
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The gap is emotional intelligence and conversational intelligence in the places where work actually happens. Pressure often flows from the top, where one stressed, time-poor manager passes that pressure down the line.
AI now sits in the mix as well. Used well, it helps leaders spot patterns in workload, rosters and feedback before harm occurs. Used poorly, it becomes digital surveillance that erodes trust and psychological safety. The technology is not the solution. It is a decision support tool for more human leadership.
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Victoria’s new rules create a useful nudge, but law alone does not change behaviour. Leaders do.
What actually changes in December
Under the existing OHS Act (Occupational Safety and Health Act 2004), employers already have a duty to provide and maintain a working environment that is safe and without risks to health, including psychological health. The new Psychological Health Regulations and Compliance Code sharpen that duty into clearer steps. Employers must identify psychosocial hazards, assess and control the risks, consult workers and health and safety representatives, and monitor and review control measures.
Information, instruction or training cannot be your only or main control unless more effective measures are not reasonably practicable. You cannot “toolbox talk” your way out of chronic overwork and poor behaviour.
The missing piece: Behaviour and emotional intelligence
Most commentary on the legislative changes has focused on the legal details. In our work with leaders, three behavioural realities matter more.
Conversational intelligence
First, psychosocial hazards are often created in conversation. A rushed “can you just take this on” chat becomes chronic overload. An offhand remark undermines someone in front of their peers. A clumsy performance discussion feels like humiliation rather than support.
Emotional intelligence
Second, controls live or die with emotional intelligence. You can have a beautiful, flexible work policy, but if a manager reacts defensively when someone mentions burnout, the control has already failed at the point of contact.
Psychologically safe climate
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Third, psychological safety climate drives outcomes. When people feel safe to speak up about workload and conflict, organisations see lower burnout, fewer mental health claims and higher engagement.
Neuroscience gives a simple explanation. The brain treats chronic overload and social threat as danger. When people sit in fight or flight, the prefrontal cortex, which handles planning, impulse control and empathy, works less well. Leaders who can regulate their own nervous systems and stay curious under pressure are, in effect, risk controls.
That is why programmes that lead with emotional and conversational intelligence often create the behaviours workplaces need to prevent psychosocial hazards from starting.
You need to look at how leaders listen, how they give feedback, how they make decisions under pressure, and how they handle conflict, not just what is written in the policy manual.
Core behavioural controls for SMEs and scale-ups
Whatever your size, four control areas matter most: workload and job design, flexibility, performance conversations, and conflict and conduct. Across all four, the real levers are leaders’ nervous systems, emotional intelligence and conversational skills. AI and trauma-informed support sit around that core, not above it.
1. Workload and job design
The brain treats chronic overload as a threat, not a badge of honour.
Behavioural controls that help:
Watch for “ghost growth” roles: These are roles that quietly expand as others’ leave or restructures drag on. Name the increase, decide whether it is temporary or permanent, and adjust pay, hours, or priorities so people feel valued, not exploited.
Update the job, not just the to-do list: When responsibilities shift, invite staff to help rewrite their role and update performance expectations. Clarity and fairness reduce the brain’s threat response and make it easier to speak up early.
Plan restructures with the nervous system in mind: The way you handle redundancies has a bigger impact on mental health than the announcement itself. Design communication and consultation with change specialists and trauma-informed practitioners so people have information, voice and support, not just a legal letter.
2. Flexibility as a control, not a perk
From a neuroscience perspective, control and predictability are powerful buffers against stress.
Behavioural controls that help:
Frame flexibility as risk control: Talk about flexibility as a way to do high-quality work sustainably, not a perk saved for favourites. The language you use signals whether asking for flexibility is safe or career-limiting, especially for people managing health, disability or caring responsibilities.
Make the decision logic transparent: Replace “it depends” with “here is what this role needs, here is what you need, and here is where we can flex and where we cannot”. Use simple scenarios by role type so staff can see realistic options rather than guessing.
Notice who is not asking, and model it yourself: Emotionally intelligent leaders pay attention to high performers who never request flexibility despite clear strain, and check in early. Leaders who log off at a reasonable time and speak positively about hybrid work show that flexibility is safe, not suspect.
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3. Performance, feedback and difficult conversations
The brain treats social threat, such as criticism, exclusion and loss of status, similarly to physical pain. Poorly handled performance conversations sit at the heart of many psychosocial claims.
Behavioural controls that help:
Regulate before you relate: Leaders who can notice their own heart rate, breathing, and urge to “win” a discussion are less likely to lash out. A simple pause and slow breath keep the prefrontal cortex online so you can choose your next sentence rather than reacting.
Separate data from story: Describe observable behaviour and impact, then ask open questions. “I noticed X happened three times this month and it affected Y. What was going on for you?” invites dialogue instead of defensiveness.
Use AI as a rehearsal partner: Draft emails or conversation outlines with AI to strip out loaded language and clarify key points, then personalise for warmth and accountability. The goal is firm, factual and non-shaming communication, not hiding behind a script.
4. Conflict, conduct and specialist support
Unresolved conflict and repeated microaggressions keep people’s nervous systems in a constant state of alert.
Behavioural controls that help:
Define behaviours, not just labels: Instead of relying on abstract words like “bullying”, give practical examples of tone, jokes and patterns of exclusion that cross the line. This resets expectations for your organisation and reduces arguments about intent.
Teach simple regulation skills and explain the brain: When stress is high, people default to fight, flight or freeze. Leaders who know basic techniques like extended-exhale breathing, grounding and pausing before responding can de-escalate many situations. A short explanation of how the brain reacts in conflict helps people feel less ashamed and more able to self-correct.
Bring in trauma-informed specialists: Psychologists, coaches or mediators who understand trauma and the nervous system can support complainants, respondents and leaders so investigations do not retraumatise people.
Over the next 30, 60, and 90 days, you can turn these obligations into action.
Next 30 days: get clear. Read the Psychological Health Compliance Code, map your main psychosocial hazards, and brief your leaders on the behavioural risks, not just the legal ones.
60 days: listen and respond. Run a simple pulse on workload, flexibility, performance conversations, and conflict, then choose one or two leadership behaviours to shift and support them with training and coaching.
90 days: embed and review. Build what you have learned into your WHS and people reporting, sense check whether staff feel any safer speaking up, and set a date to review progress so psychological safety becomes an ongoing practice, not a one-off project.
Psych safety is now the new safety in Victorian law, but it is not a Victorian-only issue.
For leaders in other states where psychosocial duties already exist, this is a reminder that ticking the box is not enough.
The real risk controls live in how people lead, speak and make decisions under pressure. Organisations that lift emotional and conversational intelligence, and use AI thoughtfully to see risks earlier, do more than comply. They build teams that stay, perform, and grow.
Oh, and you’re more likely to make money and reduce the health burden on the economy at the same time.
