High Court Ruling Reinforces Importance of Psychosocial Safety during Disciplinary Processes
A recent High Court ruling to restore $1.44 million in damages for a psychological injury caused by a botched disciplinary process has sent shockwaves through the business community. This decision highlights the critical need for employers to prioritize psychosocial safety when managing disciplinary actions, terminations, and organizational change.
Employers now face heightened expectations to eliminate or minimize psychosocial risks, not just during day-to-day operations but also in their handling of sensitive workplace events. Mishandling these processes can lead to significant financial, legal, and reputational consequences, alongside the human toll of psychological harm.
What the Ruling Means for Employers
The case involved an employer who failed to follow proper disciplinary procedures, culminating in the unlawful dismissal of an employee. The employee suffered a serious psychological injury, which the court found was directly caused by the employer’s actions. While this ruling doesn’t explicitly extend employers’ duty of care to terminations, it reinforces the importance of adhering to fair and compassionate processes to avoid such harm.
This decision serves as a stark reminder that employers have a positive duty to minimize psychosocial risks in the workplace. While termination itself is not explicitly listed as a psychosocial hazard under current guidelines, factors like poor support and ineffective change management during such events are clear risks that employers must address.
The Cost of Neglecting Psychosocial Safety
The financial implications of failing to manage psychosocial risks are glaring. The damages awarded in this case highlight the potential high cost of psychological harm claims which, when accompanying fines/penalties and the awarding of legal costs are factored in, make the argument for psychosocially safe practice even more compelling, Beyond these monetary damages, businesses risk workers’ increased workplace tension, decreased employee morale, and damage to their reputation.
Taking proactive steps to ensure employees feel supported during terminations or organizational changes is not just ethical—it’s good business practice. Investing in strategies to manage psychosocial risks costs far less than the consequences of neglecting them.
Best Practice for Managing Psychosocial Safety Risks during Disciplinary Proceedings
Employers can take practical steps to minimize harm during sensitive workplace processes like terminations, disciplinary actions, and organizational restructuring. Here are some proven approaches:
- Prepare Leaders to Deliver News with Care. Business Owners, managers and their HR team members must be able to communicate difficult decisions with respect and empathy, ensuring they follow established procedures and maintain professionalism.
- Provide Structured Employee Support
Offer immediate support, such as access to internal or external resources, for employees affected by workplace decisions. Support should be available as part of the process with encouragement of engagement. - Consider Ongoing Follow-Up
Psychological harm often develops in the days and weeks after a termination or disciplinary event. Following up with an affected employee helps address lingering concerns and fosters a sense of dignity and respect. - Embed Psychosocial Safety into Organizational Processes
Review and refine your HR Governance Framework to ensure psychosocial safety is a core consideration of your workplace practices, particularly performance management, disciplinary, termination, and change management frameworks.
Why Psychosocial Safety Matters
Safeguarding employees’ mental health during stressful workplace events isn’t just about compliance; it’s about creating a workplace culture of care, respect and safety.
Employees who feel supported during challenging transitions are more likely to view their employer positively, even when facing tough decisions. This helps maintain trust, reduce turnover, and enhance overall workplace morale.
Partnering with Professionals to Elevate Psychosocial Safety in Your Workplace
Meeting your positive duty to ensure psychosocial safety is more than a compliance exercise—it’s an opportunity to create a workplace where employees feel valued, supported, and safe. But achieving this standard requires expertise, structured processes, and a commitment to care-led leadership. That’s where engaging Active HR can make all the difference.
With a mission of helping shape great workplaces, Active HR brings the specialized knowledge, experience and tools needed to help you embed psychosocial safety into your workplace practices, from designing effective governance frameworks, guiding leaders on how to manage sensitive processes with empathy and care, and giving you access to professional follow through employee support coaching and care. By partnering with our experts, you ensure your business stays ahead of legal obligations while fostering a culture of trust and resilience. This isn’t just about avoiding costly legal claims or compliance issues. It’s about doing what’s right for your people— building a stronger, healthier, and more sustainable organisation, where both your employees and your business thrive.