UTS Restructure Halted: Psychosocial Safety & HR processes under the microscope
Last week, SafeWork NSW issued a prohibition notice to the University of Technology Sydney (UTS), halting its proposed restructure. The notice reportedly blocked a meeting with 800 staff, scheduled with just one day’s notice, to discuss the restructure.
While reports now indicate the notice has been lifted, this development serves as a timely reminder for businesses to assess work health and safety (WHS) obligations as they relate to HR processes like restructuring.
In 2025, safety regulators, tribunals, and courts are increasingly scrutinising psychosocial risks arising through HR processes. This shift demands closer collaboration between HR and WHS functions in relation to how these risks are identified, assessed and managed.
UTS prohibition notice
SafeWork NSW issued a prohibition notice to UTS, pausing its restructure due to “serious and imminent risk of psychological harm.”
The full details of the notice are not known. However, it has been reported that the meeting was called with just one day’s notice, and the UTS Vice-Chancellor Professor Andrew Parfitt has been quoted as saying "On Friday, based on the work we have done over the course of the period with health and safety representatives and in relation to changes mainly to the distribution of information, SafeWork has removed the prohibition notice".
This suggests that the notice period and distribution of information may have contributed to SafeWork NSW’s concerns in relation to psychosocial risks.
Under WHS laws an inspector can issue a prohibition notice which prohibits an activity, which is or may involve a serious risk to health and safety, until the inspector is satisfied that the matters have been remedied.
This may be the first time SafeWork NSW has issued a prohibition notice in relation to a white-collar workforce.
However, the move should not be surprising. In its Psychological Health and Safety Strategy 2024–2026, SafeWork NSW:
estimated the cost of psychologically unsafe workplaces in NSW to be $2.8 billion; and
warned it would increase regulatory action against high-risk and large businesses and government agencies, including having inspectors complete Psychosocial WHS Checks when visiting any businesses or agency with two hundred or more workers.
Businesses also need to be aware of consultation obligations under WHS laws. Under NSW laws, businesses must, so far as is reasonably practicable, consult with workers who are, or are likely to be, directly affected by a matter relating to work health or safety. Consultation includes providing relevant information and giving workers a “reasonable opportunity” to express their views and contribute to the decision-making process.
The Expanding Scope of Psychosocial Risk
WHS legislation has long covered psychological, as well as physical, health. However, psychological health has come into sharper focus in recent years with nearly all states and territories (other than Victoria) introducing regulations and codes of practice addressing psychological health. Victoria intends to implement regulations in December 2025.
Regardless, safety regulators identify poor organisational change management, lack of procedural fairness, and poor workplace relationships as some of the common psychosocial hazards. Examples include:
inadequate consultation during restructures;
unfair or inconsistent handling of performance issues; and
the introduction of new technology. With the ACTU predicting that one in three Australians could lose their job to AI by 2030, the introduction of new technology will likely be a significant psychosocial hazard for businesses to manage.
It is increasingly clear that regulators view HR processes as potential sources of psychological harm meaning businesses should be considering WHS duties in such processes.
Recent case law reinforces this shift, showing how courts and commissions are responding to psychological harm arising from HR processes.
What are recent cases saying about psychosocial risk?
The prohibition notice issued to UTS by SafeWork NSW follows a growing body of case law and other developments recognising the legal consequences of psychological harm in the workplace:
Just last month, August 2025, Safetrac faced scrutiny for using surveillance software which recorded audio on work laptops. In addition to potentially amounting to a criminal offence, the conduct posed psychosocial risks (and harm) with a workers’ compensation claim reportedly being accepted on the basis the surveillance led to anxiety and depression.
In March 2025, the Fair Work Commission found that Vistaprint had not engaged in bullying when it went through a detailed performance management process involving an IT Systems Administrator. Vistaprint’s process involved informal feedback, weekly meetings, a formal performance improvement plan, and a written warning. When the employee reported feeling stressed and victimised, the employer checked on his wellbeing and referred him to support services. The FWC found no bullying, concluding the employer’s actions were reasonable management action conducted in a reasonable manner. Commissioner Yilmaz acknowledged “Clearly a PIP and warning process is uncomfortable but does not give rise to a bullying complaint if conducted in a reasonable manner.” (Mr Faisal Mohammed Hamid [2025] FWC 730).
Also in March 2025, the NSW Personal Injury Commission considered whether an employee’s psychological injury was wholly or predominantly caused by the reasonable actions of the employer with respect to performance appraisal and/ or discipline. Under the Workers Compensation Act 1987 (NSW), no compensation is payable in respect of a psychological injury if it was wholly or predominantly caused by reasonable action of the employer. The Commission found the employer’s conduct was not reasonable – the “process” was ad hoc and the employee was not given notice of the concerns, provided with the opportunity to have a support person or advised of any process that would take place. The employer’s defence therefore failed and the employee was entitled to compensation (Wright v Findex (Aust) Pty Ltd [2025] NSWPIC 113).
SafeWork NSW commenced litigation against Western Sydney Local Health District (WSLHD) for allegedly failing to manage psychosocial risks during the handling of workplace complaints and grievances. SafeWork NSW withdrew the prosecution in March 2025, however it reinforces the growing regulatory interest in testing whether poor processes, including grievance handling, could amount to breaches of WHS laws.
In December 2024, the High Court found that Vision Australia’s breach of contract caused an employee’s psychiatric injury and awarded the employee $1.4 million. Vision Australia breached its disciplinary policy – which was incorporated into the employment contract - by not giving the employee a letter outlining all of the allegations before the disciplinary meeting. In this case, the High Court observed:
“It has been described as a ‘social reality’ that a person’s employment ‘is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self-esteem. An unfair process of termination for alleged misconduct could affect all three of those interests; ie, a person’s livelihood, identity and self-esteem.”
This observation highlights how mishandled employment decisions can cause psychosocial harm (Elisha v Vision Australia Ltd [2024] HCA 50).
Key Considerations for Businesses
In light of the increasing focus on psychosocial risks and HR processes, businesses should reflect on the following practical measures:
WHS risk assessments: Businesses must identify psychosocial hazards, assess and prioritise the risks, implement appropriate controls and regularly monitor and review those controls. Businesses should specifically consider whether any HR processes pose psychosocial hazards – hazards might include poor change management, unreasonable performance processes, grievance processes etc. In particular, in relation to change management, consider timeframes given and how information is distributed.
Technology as a psychosocial hazard: Introduction of new technology, such as surveillance software and AI, could pose a psychosocial hazard. Employers should assess these risks and consider any required steps to appropriately eliminate or manage the risks.
Consultation is also a WHS duty: HR professionals are familiar with consultation requirements under modern awards and enterprise agreements. However, WHS laws also have consultation obligations and these can overlap (for example, in restructures). Under WHS laws, businesses are legally obliged to consult with workers who are, or are likely to be, directly affected by a matter relating to work health or safety.
Ensure performance and disciplinary processes are reasonable: A performance or disciplinary process must be reasonable management action carried out in a reasonable manner, to defend claims like bullying. The FWC (in the Vistaprint case above) and SafeWork NSW both acknowledge that performance and disciplinary processes can be uncomfortable, but this does not mean an employer is breaching its duties if the process is otherwise reasonable management action carried out in a reasonable manner. However ad hoc or procedurally unfair processes could.
Avoid contractual traps: Avoid incorporating disciplinary or performance policies (or any policies) into employment contracts, to avoid breach of contract claims.
As regulatory scrutiny grows, businesses should ensure HR processes are not only legally compliant but psychologically safe. That means HR and WHS functions working together to manage risks in how processes like change management are handled.