SafeWork NSW has withdrawn its prosecution against Western Sydney Local Health District following three weeks of hearings and the calling of 20 witnesses. The prosecution, commenced in 2022 in the NSW District Court, alleged that WSLHD failed to manage psychosocial risks when responding to and investigating complaints, concerns, and grievances made about and by two nurses.

The case is one of the first safety prosecutions in Australia to test alleged failures to manage psychosocial risks. Its withdrawal does not diminish its significance. If anything, it sharpens the questions that every employer managing workplace complaints and investigations now needs to answer.

What happened

In August 2020, two nurses at WSLHD were involved in an incident where a patient who had absconded from a secure mental health facility was placed in seclusion. Complaints were made about the nurses' conduct, triggering a clinical review investigation. SafeWork alleged that the investigation was not conducted in accordance with WSLHD's own policies and that the nurses were exposed to psychosocial hazards as a result. Both nurses passed away in November 2020.

SafeWork charged WSLHD under sections 19 and 33 of the Work Health and Safety Act 2011 (NSW): primary duty of care and failure to comply with a health and safety duty (Category 3). The prosecution centred on the concept of "poor organisational justice" as a psychosocial hazard that WSLHD was required to manage.

In March 2025, SafeWork withdrew the prosecution after WSLHD successfully objected to an expert's evidence regarding the alleged risk to workers from the Health District's conduct being admitted as part of the prosecution case.

What the court said before the withdrawal

Before SafeWork withdrew, the court made findings that remain instructive even though the matter did not proceed to a determination.

The court rejected WSLHD's argument that evidence about employees' subjective feelings was not admissible to prove a breach of duty. The court found that the nurses' statements about feeling upset and stressed throughout the investigation process were consistent with experiencing stress and therefore relevant to assessing whether a breach had occurred.

The court described workplace investigations and disciplinary processes as psychosocial hazards that can give rise to the risk of harm. It noted that WSLHD had policies in place to manage psychosocial hazards associated with disciplinary processes, but that SafeWork alleged the non-compliance with those policies created the risk.

The court also acknowledged that workplace investigations and disciplinary procedures inherently tend to invoke negative feelings in participants, but that this must be balanced against the employer's duty to eliminate or minimise psychosocial risks arising from these processes so far as is reasonably practicable.

The "real difficulty" and what remains unresolved

Ashurst, which defended WSLHD, described the withdrawal as signifying the "real difficulty" of proving breaches of the WHS Act in the context of managing psychosocial risks.

The court noted that causing stress through complaint and grievance handling processes is not itself a breach of the WHS Act. Because SafeWork withdrew, the court was not required to make any determination about the types of steps an employer should take to avoid stress becoming a risk of psychological injury.

That unresolved question will be tested in future prosecutions. Ashurst noted that the SafeWork NSW Code of Practice on Managing Psychosocial Hazards at Work, which was not published at the time of these proceedings, includes a section on reasonable management action. The Code states that reasonable management action, when carried out lawfully and in a reasonable way, is a legitimate way to manage workplace behaviours, even where it may be perceived as causing stress.

The practical takeaway

The most important fact in this case is one that is easy to miss. WSLHD had policies for managing psychosocial hazards during disciplinary and investigation processes. The prosecution was not alleging an absence of documentation. It was alleging that the policies were not followed.

This is the same lesson as the CSV conviction in Victoria. Having a policy is not the same as having a system. A system operates. A policy sits in a folder. The difference between the two is what regulators are testing when they bring enforcement action.

For every employer that conducts workplace investigations, manages complaints, or runs disciplinary processes, the WSLHD case establishes that these processes are themselves psychosocial hazards requiring active management. The specific controls needed may not yet be settled in law. But the obligation to have controls, to apply them consistently, and to monitor the wellbeing of participants during the process is clear.

Disclaimer: This article provides general information on psychosocial compliance in Australian workplaces. It does not constitute legal advice. Organisations should consult qualified professionals for advice specific to their circumstances. Information cited is sourced from Ashurst, Pinsent Masons, Risk Collective, HWL Ebsworth, and relevant legal analyses as of the date of publication.