February 2026
In 2024, a director in the Australian Defence Force was convicted and fined $188,000 for failing to exercise due diligence during a major organizational restructure. The prosecution didn't allege that the director committed harassment, enacted unfair dismissals, or violated employment law. The charge was simpler and more devastating: the director failed to manage psychosocial hazards created by the performance management and restructure process itself.
This landmark conviction sent shockwaves through boardrooms across Australia—including South Australia, where SafeWork SA has made clear that the same enforcement approach applies to businesses operating under SA's pioneering December 2023 psychosocial hazard regulations.
The case established an uncomfortable truth: performance management itself is a psychosocial hazard. Not just poorly executed performance management, or unfair performance management, but the routine business practice of evaluating, ranking, restructuring, and managing employee performance.
For South Australian businesses, this has profound implications. Performance reviews, restructures, redundancy processes, promotion decisions, and capability management are no longer purely HR matters—they are work health and safety risks subject to the same rigorous identification, assessment, control, and documentation requirements as physical hazards. Directors and senior officers who fail to ensure appropriate systems are in place face personal criminal liability.
This article examines why performance management creates psychosocial risk, what the Defence conviction means for South Australian businesses, which specific hazards performance processes trigger, and how organizations can implement safeguards that protect both workers and directors from catastrophic liability.
The Defence Conviction: What Actually Happened
The 2024 Defence conviction provides the clearest precedent for how Australian regulators—including SafeWork SA—will prosecute psychosocial hazard failures related to performance management and organizational change.
The Facts
Between 2020 and 2022, the Australian Defence Force undertook a significant organizational restructure affecting multiple departments and hundreds of employees. The restructure involved:
Role redesign and job evaluation across affected departments
Competitive merit-based selection processes for new positions
Redundancy of employees who were unsuccessful in securing new roles
Increased performance expectations and workload for retained staff
Compressed timelines driven by budget cycle requirements
During the restructure, multiple employees reported experiencing:
Severe anxiety and stress about job security
Excessive workload as they competed for limited positions while maintaining current duties
Lack of clarity about roles, expectations, and assessment criteria
Inadequate support and communication from management
Perception of unfair treatment and poor organizational justice in selection processes
HR documented these concerns through employee surveys, exit interviews with departing staff, and formal grievances. Several employees sought medical treatment for stress-related conditions. Two employees lodged workers' compensation claims for psychological injury directly attributed to the restructure process.
The director overseeing the restructure was aware of this distress. HR provided regular reports to executive leadership documenting employee concerns, declining engagement scores, and increasing absenteeism. The director attended meetings where these issues were discussed.
The Prosecution Case
The prosecution did not allege that the restructure itself was unlawful, that performance management decisions were unfair under employment law, or that any individual manager engaged in bullying or harassment.
Instead, the prosecution argued—successfully—that the director failed to exercise due diligence under Section 27 of the Work Health and Safety Act by:
1. Failing to identify psychosocial hazards created by the restructure process
The director did not formally identify that the restructure created multiple psychosocial hazards including:
Job demands: Excessive workload as employees maintained current roles while competing for new positions
Poor organisational change management: Inadequate consultation, compressed timelines, unclear communication
Lack of role clarity: Ambiguous expectations during transition, uncertainty about future roles
Poor organisational justice: Perception of unfair selection processes, inconsistent communication
Inadequate reward and recognition: Loss of career progression, job insecurity
Poor support: Inadequate managerial support, limited access to counseling or assistance programs
While HR documented employee distress, there was no systematic identification of these factors as psychosocial hazards requiring formal risk management under WHS obligations.
2. Failing to assess the severity and likelihood of harm
No formal psychosocial risk assessment was conducted before or during the restructure. The director did not evaluate the likelihood or severity of psychological harm, despite clear warning indicators including documented employee distress, declining engagement, and workers' compensation claims.
3. Failing to implement control measures to eliminate or minimize risks
While the organization had general employee assistance programs and HR support available, no specific controls were implemented to manage the psychosocial hazards created by the restructure. The prosecution demonstrated that reasonable and practicable controls could have included:
Extended timelines to reduce workload pressure during the competitive process
Temporary backfill or workload relief for employees participating in selection processes
Structured communication protocols ensuring consistent, transparent information
Formalized support mechanisms including access to counseling, career transition support, and manager check-ins
Clear, documented selection criteria and feedback processes to address organizational justice concerns
Regular monitoring of employee wellbeing through pulse surveys or manager observations
None of these controls were systematically implemented.
4. Failing to verify implementation and effectiveness of any controls
The director could not demonstrate that any control measures—even the general employee assistance programs that existed—were monitored for effectiveness in managing restructure-related psychosocial risks. There was no system for tracking employee wellbeing, monitoring control implementation, or adjusting approaches based on feedback.
The Defence Argument and Why It Failed
The defence argued that:
The restructure was a legitimate business decision executed in accordance with employment law
HR was responsible for managing employee wellbeing, not the director
Employee assistance programs were available to all staff
The director reasonably relied on HR and legal advice that the process complied with all requirements
Some level of stress during organizational change is normal and unavoidable
The court rejected every argument:
Lawfulness under employment law does not satisfy WHS obligations. A restructure can be entirely compliant with Fair Work Act requirements while simultaneously creating psychosocial hazards requiring WHS risk management. These are separate, parallel legal frameworks with distinct obligations.
Directors cannot delegate due diligence to HR. Section 27 imposes personal obligations on officers to ensure the organization has appropriate systems in place. While HR may implement these systems, directors must verify their existence and effectiveness.
Generic support programs do not constitute specific control measures. Having an employee assistance program available is not equivalent to implementing targeted controls addressing identified psychosocial hazards. Controls must be specific to the risks created.
Reliance on HR/legal advice does not discharge due diligence duties. Officers must independently verify that WHS obligations are being met, not simply accept assurances from advisors focused on employment law compliance.
"Normal" stress does not exempt organizations from WHS duties. The fact that organizational change typically creates stress does not make that stress acceptable or unmanageable. If the process creates psychosocial hazards, those hazards must be controlled.
The director was convicted and fined $188,000. The conviction stands as precedent that performance management and organizational change processes are psychosocial hazards requiring active risk management, and directors who fail to ensure this management face personal criminal liability.
What This Means for South Australian Businesses
The Defence conviction has direct implications for South Australian businesses operating under SafeWork SA's December 2023 psychosocial hazard regulations. South Australia's regulatory framework mirrors the federal requirements that underpinned the Defence prosecution—and SafeWork SA has been the most aggressive enforcer of psychosocial obligations in Australia.
Performance Management Is Explicitly a Psychosocial Hazard
Performance management processes trigger at least seven of the fourteen recognized psychosocial hazards:
1. Poor organisational change management
Restructures, role changes, promotion processes, and performance improvement plans all constitute organizational change. Inadequate consultation, poor communication, compressed timelines, and lack of support during these processes create psychosocial risk.
2. Poor organisational justice
Performance ratings, promotion decisions, redundancy selections, and discipline processes must be—and must be perceived to be—fair, consistent, and transparent. Where employees perceive unfair treatment, inconsistent application of standards, or lack of procedural fairness, psychosocial hazards arise.
3. Inadequate reward and recognition
Performance management directly impacts reward and recognition. Unfair performance ratings, lack of acknowledgment, denial of promotion opportunities, and inadequate compensation relative to effort all create psychosocial risk.
4. Job demands
Restructures and performance processes often increase workload. Employees may be required to apply for their own positions, compete with colleagues, maintain current duties while participating in selection processes, or manage increased performance expectations without additional resources.
5. Lack of role clarity
During restructures, role expectations become ambiguous. Performance criteria may be unclear. Reporting lines shift. Uncertainty about future roles creates significant psychosocial risk.
6. Poor support
Employees undergoing performance management or restructure processes require support—managerial guidance, access to counseling, career transition assistance, clear feedback. Where this support is inadequate, psychosocial hazards intensify.
7. Low job control
Performance management processes often reduce employee autonomy. Decisions are made about employees rather than with them. This loss of control—particularly during restructures or performance improvement plans—creates psychosocial risk.
For South Australian businesses, this means that every performance review cycle, every restructure, every redundancy process must be treated as a WHS issue requiring formal risk identification, assessment, control, and review.
SafeWork SA Will Prosecute Performance Management Failures
SafeWork SA has made clear that the same enforcement approach that led to the Defence conviction applies in South Australia. The regulator's 2024-25 enforcement statistics demonstrate this:
7,715 workplace visits (51% increase year-on-year)
$2.37 million in fines, with substantial proportion relating to psychosocial failures
Multiple improvement notices issued to businesses across all sectors
Specific targeting of professional services firms where poor organisational change management is prevalent
SafeWork SA's published guidance on psychosocial hazards explicitly identifies organizational change and performance management as high-risk areas. The regulator has conducted focused campaigns targeting Adelaide CBD professional services firms—precisely the organizations most likely to conduct regular restructures and performance-based redundancies.
South Australian directors who oversee restructures, major performance management exercises, or redundancy programs without implementing formal psychosocial risk controls face:
Personal fines up to $600,000
Imprisonment up to five years for due diligence failures
Imprisonment up to 20 years under industrial manslaughter provisions if death results from psychosocial hazards (including suicide linked to workplace stress)
Corporate fines up to $18 million
The Defence conviction demonstrates that regulators will prosecute for performance management failures. The question for South Australian businesses is not whether SafeWork SA will enforce these obligations, but when.
Common Performance Management Scenarios That Create Psychosocial Hazards
South Australian businesses engage in performance management activities constantly. Understanding which specific scenarios create psychosocial risk is critical for compliance:
Scenario 1: Annual Performance Reviews and Forced Rankings
A mid-sized Adelaide professional services firm conducts annual performance reviews using a forced ranking system—managers must rate 10% of staff as "exceeds expectations," 80% as "meets expectations," and 10% as "needs improvement." Poor performers receive performance improvement plans; continued poor performance results in termination.
Psychosocial hazards created:
Poor organisational justice: Forced ranking systems require rating some employees poorly regardless of absolute performance, creating perceptions of unfairness
Conflict or poor workplace relationships: Forced rankings create competitive rather than collaborative cultures
Inadequate reward and recognition: High performers may receive "meets expectations" ratings due to quota constraints
Job demands: Employees experience pressure to outperform colleagues rather than collaborate
Required controls:
Document the business rationale for forced ranking and assess whether it creates psychosocial risks outweighing benefits
Implement clear, transparent criteria for performance ratings
Provide training for managers on delivering performance feedback constructively
Establish appeal mechanisms for employees who believe ratings are unfair
Monitor employee wellbeing during and after review cycles through pulse surveys
Provide access to support services for employees on performance improvement plans
Review ReturnToWorkSA claims and turnover data to verify controls are effective
Failure to implement these controls exposes South Australian directors to due diligence liability.
Scenario 2: Major Restructure with Redundancies
A South Australian manufacturing company closes a regional facility and consolidates operations to Adelaide. Sixty employees are affected—some offered relocation, some made redundant, some required to reapply for redesigned roles. The process unfolds over six months.
Psychosocial hazards created:
Poor organisational change management: Six-month timeline creates prolonged uncertainty; inadequate consultation with affected workers
Job demands: Employees maintain current productivity while managing relocation decisions, job applications, and financial planning
Lack of role clarity: Uncertainty about future roles, reporting lines, and expectations
Poor support: Regional employees may lack access to career transition services, counseling, or managerial support
Poor organisational justice: Concerns about fairness in redundancy selection, relocation offers, or redeployment decisions
Inadequate reward and recognition: Loss of career progression, community ties, and job security
Required controls:
Conduct formal psychosocial risk assessment before announcing restructure
Consult with affected workers and health and safety representatives on process design
Shorten timeline where possible to reduce prolonged uncertainty
Provide temporary workload relief for employees participating in competitive selection processes
Implement structured communication protocols with regular updates, transparent criteria, and accessible leadership
Provide career transition support, financial counseling, and access to employee assistance programs
Document selection criteria and ensure consistent application
Monitor employee wellbeing through manager check-ins, pulse surveys, and review of absence/turnover data
Track ReturnToWorkSA psychological injury claims and investigate any restructure-related claims immediately
Document all risk assessment, control implementation, and monitoring activities for SafeWork SA compliance
This level of control implementation is not optional—it is legally required under South Australia's psychosocial hazard regulations. The Defence conviction demonstrates that generic employee assistance programs are insufficient. Controls must be targeted to the specific hazards created by the restructure.
Scenario 3: Performance Improvement Plans and Capability Management
An Adelaide-based healthcare organization places an employee on a formal performance improvement plan (PIP) due to concerns about clinical errors and communication failures. The PIP sets specific performance targets over a 90-day period, with termination the consequence of failure to improve.
Psychosocial hazards created:
Job demands: Increased scrutiny, pressure to demonstrate improvement while managing existing clinical workload
Poor organisational justice: PIPs may be perceived as unfair if criteria are unclear, feedback inconsistent, or process not transparent
Poor support: Employee may lack adequate managerial coaching, training, or resources to meet PIP targets
Conflict or poor workplace relationships: Tension with supervisor, stigma among colleagues, isolation
Inadequate reward and recognition: Loss of confidence, career setback, reputational damage
Required controls:
Ensure PIP criteria are objective, clear, and achievable within the timeframe
Provide adequate support including coaching, training, and resources needed to meet targets
Implement regular check-ins with constructive feedback, not just monitoring for failure
Consider workload adjustments to allow employee to focus on improvement
Provide access to employee assistance program and clarify this will not be used against employee
Monitor employee wellbeing and adjust process if psychological harm is evident
Document the rationale for the PIP, support provided, and assessment of employee wellbeing
PIPs are particularly high-risk from a psychosocial perspective because they combine job insecurity, increased scrutiny, and potential stigma. South Australian employers must recognize that the PIP process itself is a psychosocial hazard requiring active management, regardless of whether the underlying performance concerns are legitimate.
What South Australian Directors Must Do Now
The Defence conviction and SafeWork SA's aggressive enforcement posture create immediate obligations for South Australian directors and senior officers. Treating performance management as "just an HR issue" is no longer defensible.
1. Integrate Psychosocial Risk Management into Performance Processes
Before any major performance management activity—restructures, redundancies, performance review cycles, PIPs—South Australian businesses must:
Identify the psychosocial hazards the process will create
Assess the severity and likelihood of psychological harm
Design and implement specific controls targeting those hazards
Monitor implementation and effectiveness throughout the process
Review outcomes and adjust controls based on employee feedback and wellbeing data
This cannot be an afterthought. The Defence prosecution succeeded because psychosocial risk management was not integrated into the restructure planning—it was treated as separate from the "real work" of organizational change.
2. Implement Systems That Provide Visibility Into Performance-Related Psychosocial Risks
South Australian directors cannot exercise due diligence without visibility into psychosocial risks across the organization. Traditional HR systems capture fragments of the risk profile—grievances here, exit interview feedback there, ReturnToWorkSA claims in a separate system—but do not provide integrated visibility.
Directors need systems that:
Aggregate data from HRIS, performance management systems, employee surveys, ReturnToWorkSA claims, and incident reports into a unified analytical engine
Reveal correlations between performance management activities and psychosocial harm indicators (declining engagement, increased absenteeism, psychological injury claims)
Provide anonymous reporting channels so employees can raise concerns about performance processes without fear of identification
Track implementation of control measures and verify effectiveness
Generate audit-ready documentation demonstrating due diligence for SafeWork SA inspections
Without these systems, directors are operating blind—unable to identify emerging risks, verify control effectiveness, or demonstrate due diligence if SafeWork SA or a court comes calling.
3. Train Managers on Psychosocial Risk Management in Performance Processes
Line managers deliver performance reviews, manage PIPs, communicate restructure decisions, and oversee redundancies. Yet most have no training in psychosocial risk management.
South Australian businesses must provide managers with training on:
Identifying psychosocial hazards in performance management activities
Delivering difficult feedback constructively while minimizing psychological harm
Recognizing signs of psychological distress in employees
Implementing control measures such as workload adjustments, support access, and transparent communication
Escalating concerns to HR or WHS teams when psychosocial risks become apparent
This training must be ongoing, not a one-off session. Managers require regular updates as psychosocial hazard regulations evolve and refresher training to maintain competency.
4. Document Everything for SafeWork SA Compliance
The Defence conviction hinged on the director's inability to demonstrate that psychosocial risks were identified, assessed, or controlled. Even if some informal controls existed, the lack of documentation proved fatal.
South Australian businesses must document:
Psychosocial risk assessments conducted before performance management activities
Hazards identified and severity/likelihood assessments
Control measures designed and implemented
Worker consultation processes and feedback received
Monitoring activities and wellbeing data reviewed
Effectiveness reviews and adjustments made based on outcomes
Board-level reporting on psychosocial risks and director oversight activities
This documentation must be contemporaneous, detailed, and audit-ready. Manual documentation processes are both burdensome and unreliable—intelligent platforms that automatically capture this evidence provide defensible proof of compliance while eliminating administrative overhead.
How Salus Addresses Performance Management Psychosocial Risks
Salus is Australia's first predictive intelligence platform purpose-built for psychosocial health management—including the complex risks created by performance management processes. Where traditional HR and OHS systems operate in silos, Salus provides the integrated visibility and automated controls South Australian businesses require to manage performance-related psychosocial hazards.
Unified Visibility Across Performance Management Systems
Salus integrates with performance management platforms, HRIS, ReturnToWorkSA management systems, employee surveys, and incident reporting to provide directors with comprehensive visibility into performance-related psychosocial risks.
This means seeing that a department undergoing restructure is experiencing:
Declining engagement scores (employee survey data)
Increasing absenteeism (HRIS data)
Rising grievance rates (HR system)
Anonymous reports of excessive workload (Salus confidential reporting)
Elevated ReturnToWorkSA psychological injury claims (workers' compensation data)
Traditional approaches require manual collation of data from 5-10 disconnected platforms. By the time these correlations become visible, the harm is typically entrenched. Salus aggregates this data in real-time, enabling early intervention before psychosocial hazards escalate into costly claims or SafeWork SA enforcement actions.
Anonymous Reporting for Performance Management Concerns
Employees rarely report concerns about performance processes through formal channels. Fear of reprisal, concern about career implications, and belief that nothing will change suppress disclosure. Research shows that only 36% of psychosocial harm is formally reported through traditional channels.
Salus provides genuinely confidential reporting channels where South Australian workers can raise concerns about:
Unfair performance ratings or perceived bias in review processes
Excessive workload during restructures or competitive selection processes
Lack of support from managers during PIPs or organizational change
Inadequate communication or transparency in redundancy decisions
Concerns about organizational justice in promotion or selection processes
Anonymous reporting increases disclosure rates to 62%—providing early warning of psychosocial risks while they're still manageable, not after employees have lodged formal ReturnToWorkSA claims or resigned.
Automated Triage and Control Implementation
When performance-related psychosocial risks are identified through anonymous reports, system integrations, or survey data, Salus automatically triages concerns to appropriate stakeholders—routing excessive workload reports to operations managers, organizational justice concerns to HR, and serious risks to WHS teams and directors.
This automation ensures rapid response without the manual coordination that currently wastes 6.5 weeks per year of manager time on report routing and data duplication.
Audit-Ready Evidence for Director Due Diligence
For South Australian directors, Salus provides comprehensive, timestamped documentation of:
Psychosocial risk assessments conducted before performance management activities
Hazards identified and severity assessments
Control measures implemented and verification of implementation
Worker consultation activities and feedback received
Monitoring outcomes and effectiveness reviews
Board-level reporting demonstrating director oversight
This evidence management is automated—no manual documentation burden—and produces reports suitable for board review, SafeWork SA submission, or legal defense. When SafeWork SA conducts an inspection or a prosecution is threatened, South Australian directors can demonstrate exactly what systems were in place, what controls were implemented, and how effectiveness was verified.
The Defence director could not do this—and paid $188,000 for the failure.
Predictive Intelligence for Early Intervention
Salus doesn't just record performance management incidents after harm occurs. The platform uses intelligent analytics and cross-platform data integration to identify emerging psychosocial risks before they escalate.
By detecting early warning signals—gradual declines in engagement during restructure planning, patterns of overtime indicating excessive workload, subtle increases in grievances following performance review cycles—Salus enables proactive intervention rather than reactive crisis management.
This is precisely what SafeWork SA expects to see: genuine risk identification and control before incidents occur, not after employees have suffered psychological injury.
Conclusion: Performance Management Is a Psychosocial Hazard—Manage It Like One
The 2024 Defence conviction fundamentally changed how Australian businesses—including South Australian organizations—must approach performance management. Restructures, performance reviews, PIPs, and redundancies are no longer purely HR matters. They are psychosocial hazards requiring systematic identification, assessment, control, and documentation under work health and safety law.
For South Australian directors and senior officers, the implications are severe:
Personal fines up to $600,000 and five years imprisonment for due diligence failures
Up to 20 years imprisonment under industrial manslaughter provisions
Corporate fines up to $18 million
SafeWork SA enforcement action including improvement notices, prohibition notices, and prosecution
The Defence conviction demonstrated that regulators will prosecute for performance management psychosocial failures. Generic employee assistance programs do not constitute adequate controls. Reliance on HR advice does not discharge director due diligence obligations. The fact that organizational change creates "normal" stress does not exempt businesses from WHS duties.
South Australian businesses must integrate psychosocial risk management into every performance management activity. This requires systems that provide unified visibility across disconnected platforms, anonymous reporting channels that increase disclosure from 36% to 62%, automated evidence management demonstrating due diligence, and predictive intelligence that identifies risks before they escalate.
Traditional HR and OHS systems cannot deliver this capability. They were designed for different purposes—managing employee records and documenting physical safety incidents, not identifying and controlling psychosocial hazards created by performance processes.
The $188,000 Defence fine is a warning to every South Australian director: performance management creates psychosocial risk, that risk must be actively managed, and failure to ensure appropriate systems are in place carries personal criminal liability.
The question for South Australian businesses is not whether to implement these systems, but whether to act before or after SafeWork SA comes calling.
Protect Your Directors and Your People
Book a free system audit and see Salus in action. Discover how Salus can unify your existing platforms, provide visibility into performance-related psychosocial risks, and help you demonstrate due diligence before SafeWork SA enforcement actions threaten your directors with $188,000+ fines—or worse.
Visit safeworktech.com to learn more and schedule your demonstration.