Serious workers’ compensation claims for mental health conditions have risen 169% over the past decade, according to Safe Work Australia’s Key Work Health and Safety Statistics Australia 2026 report. They made up 12% of the 147,200 serious claims recorded in 2024-25.
Victoria, New South Wales, Western Australia, Queensland and the Australian Capital Territory have prohibited businesses from insuring or indemnifying work health and safety (WHS) fines.
Tighter psychosocial rules and growing enforcement in NSW bring two lines of cover held by commercial and industrial employers into focus, workers’ compensation and management liability.
Read more: Businesses now face tougher penalties for workplace safety breaches
From July 1, 2026, NSW employers must comply with the state’s code of practice on managing psychosocial hazards, or show that an alternative approach provides an equivalent or higher standard, under section 26A of the WHS Act.
Employers can face enforcement action where psychosocial hazards are not adequately managed, even if no worker has suffered a compensable psychological injury.
NSW’s Work Health and Safety Regulation 2025 requires the hierarchy of controls to be applied to psychosocial risks, which points employers to work redesign and staffing rather than policies, training or employee assistance programs alone.
Victoria’s Occupational Health and Safety (Psychological Health) Regulations 2025, in force since December 1, 2025, contain similar requirements.
In March 2026, the NSW Industrial Relations Commission found SafeWork NSW acted reasonably in issuing a notice covering all of the Department of Education’s workplaces, although its investigation concerned one employee. The notice related to a general risk arising from a systemic issue.
SafeWork NSW added 51 inspectors in March 2026, 20 of whom focus on psychosocial safety, in what the state government called the regulator’s largest ever increase in inspectors. The expanded inspectorate will issue on-the-spot fines and respond to psychosocial incidents.
In December 2025, the NSW Local Court fined Defence $188,000, the first conviction of a Commonwealth employer under federal WHS law for failing to manage psychosocial risk. The court found Defence had not trained supervisors to recognise performance management work plans as a psychosocial hazard.
Read next: What $567k in fines reveals about what regulators are actually looking for
The upper limit of WHS penalties in NSW has also risen. The state’s industrial manslaughter offence, which commenced on September 16, 2024, carries maximum penalties of $20 million for a body corporate and 25 years’ imprisonment for an individual.
The cost of defending a WHS prosecution remains insurable, and the relevant classes are directors and officers (D&O) and statutory liability insurance.
Law firm McCullough Robertson describes management liability as another form of D&O cover. It notes that statutory liability claims can be met through a standalone policy or through sub-limits within a D&O policy.
The 2026 report’s 2023-24 data shows a mental health claim involved a median 34.8 weeks off work and $68,600 in compensation, roughly five times the time lost and four times the payout of other serious claims. Harassment or bullying caused 5,400 mental stress claims and work pressure caused 4,500.
An Insurance Council of Australia report found average premium rates in the publicly underwritten schemes of NSW, Victoria, Queensland and South Australia have risen 23.03% since 2021-22, against 0.94% in privately underwritten schemes.
Read next: Workers' compensation schemes crack under psychological claims and widening premium gaps
On February 12, 2026, NSW Parliament passed legislation that requires employers to ensure workers’ health and safety is not put at risk by the use of digital work systems, the first such law in any state or territory.
Minister for Work Health and Safety Sophie Cotsis said the reforms address the “psychosocial risks associated with automated decision‑making and the use of artificial intelligence”.
Safe Work Australia is using the third week of National Safe Work Month, which carries the theme “For the future: The long-term impact”, to ask employers to consider how work-related harm affects workers over time.
It said changes in technology, society and climate can introduce new hazards, create emerging risks or change how existing risks need to be managed.
The report also recorded 222 work-related deaths in 2025, the highest annual toll since 2012.
Safe Work Australia chief executive Marie Boland said: “These deaths and injuries are not simply statistics, and they must never be accepted as an inevitable part of work.”
