Psychological Safety Legislation is Coming to Victoria: Are Your Leaders Ready?

In December 2025, Victoria will introduce new psychological safety legislation, aligning with the workplace safety laws already in place across most other Australian states and territories. This means that businesses will have a clear legal duty to prevent psychological harm at work, just as they do physical harm. 

The message is clear—mental health risks such as workplace stress, bullying and job insecurity are no longer just HR concerns. They are workplace health and safety risks that must be proactively managed. Organizations that fail to do so risk not only legal repercussions but also declining employee engagement, trust and performance. To truly embed psychological safety, its essential for leaders develop the character traits and skills needed to foster a culture where employees feel safe, supported and empowered. 

Leadership is the Key to Psychological Safety 

Strong policies alone will not create a mentally healthy workplace. Leadership capability is the single most important factor in shaping whether an organization successfully adapts to these new regulations or faces ongoing challenges in meeting compliance and employee well-being expectations. A leader’s ability to engage in open, respectful conversations about workplace issues, manage conflict with sensitivity and foster a culture of trust and inclusion is critical. 

Emotional intelligence (EQ) is at the heart of effective leadership in psychosocial safety. Leaders who can regulate their own stress, recognize signs of distress in others and approach challenges with empathy are far better equipped to create psychologically safe environments. In workplaces where leaders lack emotional intelligence, employees may hesitate to speak up about concerns, leading to unresolved issues that escalate into more serious problems. 

Psychosocial risks are often complex and sensitive, requiring leaders to navigate difficult conversations with respect and confidence. Whether it’s addressing inappropriate behavior, discussing performance issues or supporting an employee experiencing mental health challenges, leaders need the skills to have these discussions in a way that builds trust rather than fear. Leaders who listen actively and provide clarity around workplace expectations create teams where people feel heard and valued. 

Equally important is coaching and supportive leadership. The best workplaces don’t just manage risks—they create cultures of psychological safety where employees feel genuinely supported in their growth and well-being. Leaders who take a coaching approach encourage work-life balance, professional development and open dialogue. Rather than simply enforcing rules, they help employees navigate workplace challenges and create conditions for high performance without burnout. 

The Time to Act is Now 

With Victoria’s new psychosocial safety laws just around the corner organizations must ensure their leaders have the skills to navigate this change. Leadership development is not just a nice-to-have—it’s a business and legal imperative. 

Leaders who excel in emotional intelligence, effective communication and supportive leadership will not only help their organizations stay compliant but also create high-performing, engaged and mentally healthy teams. Those who ignore the importance of leadership capability will face greater risks—not just under the law but in retaining talent, building trust and maintaining a productive workplace culture. 

If your leadership team isn’t prepared for this shift, now is the time to take action. The right leadership skills don’t just reduce risk; they create workplaces where people thrive. 

To learn more about Corporate Dojo's offering on managing psychosocial risks in the workplace, click here.

Follow Karen Gately on LinkedIn now!