Penalties under the Commonwealth Work Health and Safety Act 2011 are no longer static. The Fair Work Legislation Amendment (Closing Loopholes) Act 2023, which received Royal Assent on 14 December 2023, introduced an indexation mechanism that increases all WHS Act penalty amounts annually based on the Consumer Price Index. The first indexed increase took effect on 1 July 2024. From that date, every 1 July will bring a new, higher set of maximum penalties.

This applies to every category of WHS offence, including failures to manage psychosocial hazards.

How the indexation mechanism works

The Closing Loopholes Act did two things to WHS penalties. First, it increased all existing WHS Act penalties by 39.03 per cent, effective 15 December 2023. This was the first increase since the WHS Act came into effect. Second, it inserted an indexation formula tied to the national CPI, ensuring penalties increase automatically at the start of each financial year without requiring further legislative amendment.

The result is that penalties now compound. They increased by more than 10 per cent in the first indexed adjustment on 1 July 2024.

Current maximum penalties

Following the July 2024 indexation, the maximum penalties for a body corporate under the Commonwealth WHS Act are:

Category 1 (reckless conduct or gross negligence exposing a person to risk of death or serious injury): $16.63 million, up from $15 million on 30 June 2024.

Category 2 (failure to comply with a health and safety duty exposing a person to risk of death or serious injury): $2.32 million, up from $2.09 million.

Category 3 (failure to comply with a health and safety duty): $776,000, up from $700,000.

The Closing Loopholes Act also introduced a new offence of industrial manslaughter under the WHS Act, effective 1 July 2024. The maximum penalty is $18 million for a body corporate and 25 years' imprisonment for an individual.

These figures will increase again on 1 July 2025, and every 1 July after that.

A baseline reference point

In October 2023, Court Services Victoria was convicted and fined $379,157 under the Victorian Occupational Health and Safety Act 2004 for failing to provide a safe workplace. The prosecution related to a toxic workplace culture at the Coroners Court of Victoria that contributed to the death of a worker and widespread psychological harm. The court found the offending was at the highest end of seriousness and imposed the maximum penalty available under Victorian law at the time.

That fine remains a reference point for the severity regulators attach to psychosocial hazard failures. Under the Commonwealth WHS Act with indexed penalties, the maximum available penalties for equivalent conduct are now orders of magnitude larger and will continue to grow.

The trajectory

The practical significance of indexation is straightforward. The cost of psychosocial non-compliance is not a fixed number. It increases every year, automatically, without any further action from parliament. An organisation that delays building its psychosocial compliance capability faces a penalty environment that is more expensive to fail in twelve months from now than it is today.

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. Penalty figures cited are sourced from Comcare and the Federal Register of Legislation as of the date of publication.