A leading electronics and home appliance retailer was recently ordered to pay more than $30,000 after a WorkSafe investigation found workplace stress and burnout were not properly managed.
For HR professionals and senior leaders, cases like this raise serious questions.
- Do we fully understand psychosocial risk in our workplaces?
- Are we confident we’re meeting our legal and ethical obligations?
- What’s at stake if we don’t get this right, not just financially, but culturally?
For many organisations, psychosocial risk management is still treated as an HR initiative, sitting alongside wellbeing programmes and flexible work policies. But increasing legal scrutiny around mental harm at work is making it clear: this is a business-wide responsibility.
Ignoring psychosocial risks isn’t just a leadership blind spot, it’s an operational and financial risk that can lead to compliance failures, legal claims, reputational damage, and declining workplace culture.
What Are Psychosocial Risks and How Do They Show Up?
Psychosocial risks don’t always present as dramatic events. More often, they build up gradually and become entrenched in the way an organisation operates.
- Excessive workloads – Long-term, high job demands double the risk of psychological distress.
- Workplace bullying and harassment – Employees in low-psychological-safety teams are 8.3 times more likely to report bullying (Umbrella Wellbeing Report, 2024).
- Lack of control or autonomy – When employees feel they have no influence over their work, engagement drops and turnover increases.
- Toxic leadership or workplace culture – A workplace where speaking up is seen as risky leads to 5.8 times higher turnover intention.
These risks often go unnoticed until they start impacting engagement, retention, and financial performance.
What’s the Cost of Ignoring Psychosocial Risk?
Without clear data, it’s easy to underestimate the financial and operational impact of workplace stress and burnout.
- $1.79 billion per year – The cost of stress-related absenteeism to New Zealand businesses (WorkSafe NZ).
- 30-50% of annual salary – The cost of replacing a mid-level employee due to burnout-related turnover.
- Increased legal and compliance risks – Workplaces with low psychological safety are more likely to see bullying claims, WorkSafe complaints, and financial settlements (Umbrella Wellbeing Report, 2024).
But beyond the numbers, the loss of trust, collaboration, and productivity can have just as much, if not more, long-term damage.
What Can We Learn from This Recent WorkSafe Case?
The parent company of a leading electronics and home appliance retailer found itself in the spotlight when a former employee received a $30,000+ payout after experiencing prolonged workplace stress.
It’s easy to assume that these situations are one-offs. But the reality is, workload pressure and stress-related burnout don’t appear overnight. They build over time, and without intervention, they can quickly escalate into a serious legal and financial issue.
Where did things go wrong?
- Sustained high stress with no structured intervention.
- Workloads increased, but the support didn’t.
- Concerns were raised but not acted on early enough.
By the time leadership recognised the issue, it wasn’t just an internal challenge – it was a legal and reputational issue too.
What Can Businesses Do to Manage Psychosocial Risk?
Many organisations are already taking proactive steps to manage psychosocial risk and create healthier, high-performing workplaces. Some key areas to focus on:
- Make psychosocial risk a core business strategy – Ensuring that mental safety is seen as a business risk, not just an HR function.
- Align workplace policies with current health and safety legislation – The Health and Safety at Work Act (2015) makes it clear that psychological harm must be managed just as seriously as physical harm. Compliance isn’t just about avoiding fines – it’s about creating workplaces that actively reduce risk.
- Equip leaders with the right training – Managers play a critical role in spotting early signs of burnout, stress, and disengagement. Providing them with practical tools and frameworks can make all the difference.
- Create a culture of psychological safety – If employees don’t feel comfortable raising concerns, issues will go unnoticed until they become much bigger problems. Encouraging open conversations and acting on feedback is key.
Where to From Here?
For HR professionals and senior leaders, the challenge isn’t whether to act on psychosocial risks – it’s about how soon you’re prepared to take action.
- Are you confident you understand the psychosocial risks in your workplace?
- Do your managers have the skills to manage and mitigate these risks?
- Have you embedded psychosocial risk into your business and compliance strategy?
Some organisations will get ahead of this, strengthening their workplace culture and reducing risk before it becomes a problem. Others may wait until burnout, turnover, and compliance issues force them to take action.
What’s your organisation’s approach?
