Employer Responsibilities: Is Your Business Protected?
A serious mental health claim in Australia now involves a median of almost 35 weeks off work and $68,600 in compensation. (Safe Work Australia, Key WHS Statistics 2026)
If a regulator decides you didn’t manage the risk, a fine can come on top of that. In Victoria, New South Wales, Western Australia, Queensland and the ACT, you’re not allowed to insure against it. It comes straight out of the business. (Insurance Business)
And if an employee says you treated them badly because they raised a complaint, the law can presume they’re right until you prove otherwise.
Your employer responsibilities have never been heavier, and they’ve never changed this fast. The question isn’t whether you mean well. It’s whether you could prove it if you had to.
What are your employer responsibilities in Australia?
In short, Australian employers have two big sets of obligations running side by side.
Fair Work: paying people correctly, having proper contracts and policies, following a fair process when things go wrong, and not treating people badly because they’ve exercised a workplace right, like making a complaint.
Work health and safety: providing a safe workplace and safe systems of work, including managing psychosocial risk as deliberately as physical risk.
Underneath both sits the same thing: records. Policy, process and proof. If it isn’t written down, it can be very hard to show it happened.
Why it’s harder to keep up than ever
Even well-run businesses are struggling to keep pace. In the last couple of years alone:
Wage underpayment became a crime on 1 January 2025. Knowingly underpaying can now mean millions in fines for a company and up to 10 years’ jail for individuals. (NSW Small Business Commissioner)
The right to disconnect reached small businesses on 26 August 2025.
Victoria’s psychological health regulations commenced on 1 December 2025.
In NSW, from 1 July 2026, employers must comply with the psychosocial hazards code of practice, or show an alternative approach that meets an equal or higher standard. SafeWork NSW added 51 inspectors this year, 20 of them focused on psychosocial safety.
The first conviction of a Commonwealth employer for failing to manage psychosocial risk came in December 2025, with a $188,000 fine.
NSW workers compensation rules for psychological injury changed again from 1 July 2026.
And it won’t stop there. Most business owners didn’t start a business to become employment lawyers, and they shouldn’t have to. Having qualified specialists who stay on top of the changes, give advice when you need it and keep your documentation current takes a huge load off.
When something goes wrong, the burden is on you
This is the part that catches people out.
Complaints and the reverse onus
Under the Fair Work Act, if an employee raises a complaint and something bad then happens to them, like being disciplined, moved or dismissed, they can make a general protections claim. The law presumes the complaint was a reason for what happened. It’s then up to you to prove it wasn’t, and it only has to be part of the reason. (CBP Lawyers)
So picture it. Someone raises a concern about their workload. A month later, you start managing their performance, for completely genuine reasons. Without clear records showing the two were separate, you could be the one proving your innocence.
Stress claims and workers compensation
When someone goes on leave with a psychological injury, the workers compensation insurer investigates. Each state has its own rules, and they don’t line up neatly.
In NSW, the rules changed on 1 July 2026. A psychological injury is now generally only compensable if it comes from a “relevant event”, such as bullying, harassment, excessive work demands or a traumatic incident, and employment has to be the main contributing factor. Compensation isn’t payable where reasonable management action, like a performance appraisal, discipline, a misconduct investigation or a redundancy, was a significant cause of the injury, and the action was reasonable in the circumstances. NSW also updated and clarified that definition. Employers also need to notify the insurer within 48 hours and record the relevant event. (SIRA)
Victoria and Queensland have their own reasonable management action exclusions, with their own wording and tests. (WorkCover Queensland)
Whatever state you’re in, it tends to come back to one thing: can you show what you did, why you did it, and that it was done fairly? A process recorded at the time is what makes the difference.
Is your business protected? A quick self-check
Be honest with yourself on these:
If you had to let someone go tomorrow, do you have a clear, documented process you’d follow?
Are your employment contracts and policies up to date with the last two years of changes?
If an employee raised a complaint and you then managed their performance, could you prove the two weren’t connected?
If someone went on stress leave tomorrow, could you show the insurer your management actions were reasonable, and documented at the time?
Do you know how you’re tracking against the psychosocial hazards code in your state?
If an inspector walked in today, could you show what you’ve done to manage psychosocial risk?
If a claim landed tomorrow, do you know who’d handle it, and roughly what it could cost you in time and money?
If one of your people needed support at 9pm on a Sunday, could they get it?
When something goes wrong at work, who do you call? Do you have someone in your corner 24/7?
If you hesitated on more than a couple, you’re not alone. You may have some gaps worth addressing.
Why protection needs to be in place before something goes wrong
Most of what protects you in a dispute has to exist before the dispute starts. You can’t go back and write the policy, or record the conversation, after a claim lands.
For most businesses, that means:
Up-to-date, legally sound contracts, policies and handbooks, kept up to date as the law changes.
Record-keeping systems that capture what happened and why, as it happens.
Employment law advice and WHS support on call, ideally 24/7, so you can check before you act on a difficult call.
Access to legal representation if a claim does land.
An employee assistance program (EAP), so your people can get confidential support, ideally before small problems become big ones. It’s worth having. It doesn’t replace your responsibility to identify and control psychosocial hazards, though. Your people benefit most from both: individual support, and a better working environment.
For small and medium businesses, this matters most. A large company has an HR department and in-house lawyers. A 30-person business usually has the owner and a spreadsheet, and one bad claim can do real damage.
You don’t have to build all of that yourself. I work with trusted HR, WHS and employment law specialists, and I can introduce you to the right people for your business.
Solid foundations first, then performance
Here’s why this matters to me, as someone who works on culture and performance.
A business owner worrying about employment disputes, claims or compliance can do all the breathwork and resilience workshops they like. Those tools can genuinely help them manage the stress. Having proper HR and legal support in place deals with where a lot of that stress is coming from.
That’s the difference between helping someone cope with a problem and fixing the conditions causing it. Both have their place. When the underlying systems aren’t there, the foundations matter more than another wellbeing initiative.
I think of it as four layers:
Solid foundations: HR, WHS, legal support, policies, procedures and reliable systems.
Workplace culture: leadership, communication, feedback, trust and working conditions.
Performance: productivity, engagement, customer experience and how well teams work together.
Business outcomes: profitability, growth and success that lasts.
You can work on all four at once, and the foundations hold up everything above them. When an owner isn’t making every decision defensively, they can open up and start looking at how their people actually work, and set the conditions up for their people and the business to succeed.
If your foundations are in place and you want to see where your culture stands, our Team Culture Diagnostic is a good next step.
Build solid foundations. Create a healthier workplace culture. Improve performance. Better business results follow.
This article is general information, not legal advice. For advice about your specific situation, speak to an employment lawyer or a qualified HR and WHS adviser.
Frequently asked questions
What are employer responsibilities in Australia?
Australian employers must meet Fair Work obligations, such as paying people correctly, having proper contracts and following fair processes, and work health and safety obligations, including managing psychosocial risk. Keeping accurate records of policies, processes and decisions underpins both.
What is the reverse onus in a general protections claim?
If an employee shows they exercised a workplace right, such as making a complaint, and then suffered adverse action like dismissal, the law presumes the complaint was a reason. The employer must then prove it was not part of the reason.
Can you insure against WHS fines?
Not in most of Australia. Victoria, New South Wales, Western Australia, Queensland and the ACT prohibit insuring against WHS fines. Defence costs can still be insured through statutory liability or directors and officers cover.
Does a small business need HR and WHS support?
Small and medium businesses often carry the most risk, because they rarely have in-house HR or legal teams. Up-to-date contracts and policies, good records and access to advice when something goes wrong can make a significant difference if a complaint or claim arises.
Not sure if your business is covered?
Let’s have a chat.
I’ll help you work out where you might be exposed, and introduce you to trusted specialists who can help.
Call me on 0431 342 691, email info@basestate.au, or get in touch here.
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