Duty of care: why financial wellbeing is now an employer obligation

The regulatory landscape for Australian employers has shifted. What was once a "nice to have" in the benefits package is rapidly becoming a compliance obligation. Psychosocial hazard regulations, updated across every Australian jurisdiction, now require employers to identify and manage risks to psychological health in the workplace. Financial stress is one of those risks.

This article explains the legal framework, what it means for your organisation, and how a Financial EAP helps you meet your duty of care obligations while genuinely supporting your people.

The legal framework: WHS and psychosocial hazards

In 2022 and 2023, Australian work health and safety (WHS) regulators introduced specific codes of practice and regulations addressing psychosocial hazards. These regulations sit under the model WHS Act and apply in every state and territory, though each jurisdiction has its own implementation timeline and enforcement approach.

A psychosocial hazard is anything in the design or management of work that increases the risk of work related stress and can cause psychological or physical harm. The regulations require employers to:

• Identify psychosocial hazards in their workplace
• Assess the level of risk
• Implement control measures to eliminate or minimise the risk
• Review the effectiveness of those controls

This is not optional. It carries the same legal weight as your obligations around physical safety. Failure to comply exposes the organisation and its officers to the same penalties as failing to provide a physically safe workplace.

Financial stress as a psychosocial hazard

The codes of practice identify several categories of psychosocial hazard, including high job demands, poor support, low control, poor organisational change management, and inadequate recognition. Financial stress intersects with several of these, particularly when workplace factors contribute to or worsen an employee's financial position.

Consider the following scenarios:

Unpredictable rostering: Employees on casual or variable hour contracts cannot predict their income from week to week. This makes budgeting impossible and creates chronic financial anxiety. The employer's rostering practices are directly contributing to a psychosocial hazard.

Inadequate pay transparency: When employees do not understand their pay structure, entitlements, or how to access benefits, they may be leaving money on the table. The resulting financial pressure is partly a function of employer communication failures.

Lack of financial support resources: An employer who recognises that a significant proportion of their workforce is financially stressed but provides no support or resources may be failing to implement reasonable control measures for a known hazard.

Cost of living adjustments: In periods of significant inflation, employers who make no adjustment to wages or benefits while employee expenses rise materially may be contributing to the financial stress burden.

The critical point is this: once you know financial stress is present in your workforce (and the statistics make it virtually certain for any employer with 20 or more staff), you have an obligation to address it. Knowing about a hazard and doing nothing is precisely the scenario regulators are targeting.

What "reasonable" looks like

WHS legislation does not require employers to eliminate all risk. It requires them to eliminate risks so far as is reasonably practicable, or if elimination is not possible, to minimise the risk so far as is reasonably practicable. The test of reasonableness considers the likelihood of harm, the severity of potential harm, the availability of controls, and the cost of implementing those controls relative to the risk.

For financial stress, a reasonable response might include:

• Providing access to a dedicated financial wellbeing program (a Financial EAP)
• Ensuring pay structures are clear, predictable, and communicated effectively
• Offering flexibility in pay timing (such as earned wage access) where feasible
• Reviewing rostering practices to provide income predictability
• Including financial wellbeing in your broader mental health and wellbeing strategy
• Training managers to recognise signs of financial stress and refer appropriately

What is almost certainly not reasonable is doing nothing when you know the hazard exists. Nor is it reasonable to rely solely on your existing EAP's limited financial component when dedicated solutions are available at modest cost.

The compliance timeline

Psychosocial hazard regulations are not coming. They are here. Key dates across jurisdictions:

• Commonwealth: The model Code of Practice for Managing Psychosocial Hazards at Work was published in 2022.
• New South Wales: Regulations commenced 1 October 2022, with a Code of Practice in force since 2024.
• Victoria: Psychological health regulations commenced 1 December 2023.
• Queensland: Managing the risk of psychosocial hazards Code of Practice commenced April 2023.
• Western Australia: Adopted the model regulations in 2024.
• South Australia, Tasmania, ACT, NT: Various stages of adoption, all following the model framework.

Regulators have indicated that enforcement will initially focus on education and guidance, but that formal enforcement action (including improvement notices, prohibition notices, and prosecution) is available and will be used where employers demonstrate persistent non compliance.

How a Financial EAP addresses duty of care

Implementing a Financial EAP is one of the most direct and cost effective ways to demonstrate you are managing financial stress as a psychosocial hazard. Here is how it maps to the regulatory requirements:

Identification: moneymood's employer dashboard provides aggregated, anonymous data showing the level of financial stress engagement across your workforce. This helps you quantify the hazard without intruding on individual privacy.

Assessment: Utilisation patterns and engagement data help you assess whether the risk is increasing, stable, or decreasing over time.

Control: The platform itself is the control measure. It provides employees with coaching, tools, and connected pathways to improve their financial position. It operates 24/7, has no session limits, and addresses the full spectrum of financial stress from budgeting basics to debt restructuring.

Review: Quarterly reporting shows you whether the control is working. Are employees engaging? Is utilisation increasing? Are connected savings outcomes being achieved?

From a compliance perspective, implementing a Financial EAP demonstrates that you have identified the hazard, assessed its impact, implemented a reasonable control measure, and have a mechanism to review effectiveness. That is precisely what the regulations require.

Beyond compliance: the human case

Compliance is a necessary driver, but it should not be the only one. Behind the regulatory language are real people in your organisation who are struggling with money and whose quality of life is materially worse because of it.

An employee worrying about whether they can cover their mortgage payment next month is not performing at their best. They are not sleeping well. Their relationships may be strained. Their health is likely deteriorating. You can help them, and the cost of doing so is modest relative to the cost of inaction.

The employers who approach financial wellbeing from a genuine duty of care perspective, rather than a box ticking compliance perspective, will see better outcomes. Their employees will trust the program more, engage more deeply, and benefit more meaningfully.

Learn how moneymood helps employers support their people while meeting their regulatory obligations.

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