Psychological safety in the workplace: An employer’s guide

Building a high-performing team in New Zealand means creating an environment where people feel safe to speak up, admit mistakes and share ideas without fear. This is psychological safety and it’s the bedrock of innovation, retention and legal compliance. But how do you build it while meeting your duties as an employer?

This practical guide is designed for New Zealand business leaders, owners and HR managers. It cuts through the complexity to give you actionable strategies for fostering psychological safety, managing psychosocial risks and building a healthier, more productive workplace.

Our guide includes:

• What is psychological safety?
• Psychological safety vs psychosocial hazards
• Your legal obligations
• Effective conversation starters with your team
• A 90-day plan to build psychological safety

Understanding psychological safety in New Zealand workplaces

Psychological safety is a shared belief within a team that it’s safe to take interpersonal risks. It’s a team climate where people feel included, respected and confident enough to be themselves. This environment is crucial for mental wellbeing and allows teams to learn, innovate and perform at their best.

Difference between psychological safety and psychosocial hazards

It’s important to know the distinction between these two terms. Psychosocial hazards are factors at work that can cause psychological harm like bullying, high workloads or role ambiguity. Addressing hazards is a legal duty as part of the Health and Safety at Work Act 2015 (HSWA). 

Psychological safety is the positive outcome you create by managing those hazards effectively. Building safety is a leadership opportunity.

Legal framework under Health and Safety at Work Act 2015

Under New Zealand law, all Persons Conducting a Business or Undertaking (PCBUs) have a duty to ensure the health and safety of their workers so far as is reasonably practicable. This duty includes managing psychosocial risks. You must have processes to identify these risks and engage with your workers to find effective solutions.

Creating a psychologically safe environment for teams

Building a psychologically safe environment comes from deliberate, consistent actions that show your team they are valued and heard. It starts with a commitment to move beyond basic compliance and actively foster a culture of trust.

Building trust and open communication channels

Trust is earned through transparency. Make sure information flows freely and that your team understands the ‘why’ behind decisions. Use regular team meetings and one-on-ones as opportunities for genuine two-way conversation, not just status updates.

Encourage feedback and reduce fear of retribution

Employees will only speak up if they believe it is safe to do so. When someone raises a concern or a difficult question, thank them for their courage. Frame feedback and problems as learning opportunities. This response shows others that their voice is valued.

Leadership behaviours that promote safety

Leaders set the standard. When managers and business owners admit their own mistakes, ask for help and listen actively, they model the behaviours they want to see. Holding yourself and other leaders accountable for fostering safety is the most powerful tool you have.

Identifying and managing psychosocial hazards

As an employer you must proactively identify work factors that could harm mental health. Common psychosocial hazards in New Zealand workplaces include excessive workload pressure, bullying or harassment, workplace isolation, low employee autonomy and unclear roles or expectations.

Why psychological safety matters

Investing in psychological safety is not just a ‘nice to have’. It delivers tangible business results by directly impacting performance, innovation and your ability to keep good people.

Impact on innovation and team performance

When people feel safe they are more willing to experiment and suggest new ideas. This climate of smart risk-taking is essential for problem-solving and staying competitive. High-performing teams are built on a foundation of trust and open dialogue.

Reduced turnover and improved employee retention

A safe and supportive workplace is a key reason for employees to stay. When people feel respected and their wellbeing is prioritised, they’re more engaged and loyal. This reduces the significant costs associated with recruitment and training new staff.

Enhanced productivity and customer service outcomes

Happy, engaged teams are more productive. When employees feel supported they are better equipped to handle challenges and focus on their work. This positive internal culture often translates directly to better service and outcomes for your customers.

Legal obligations and compliance requirements

While psychological safety is important for a successful business, failing to manage any underlying psychosocial risks can expose your business to significant legal and financial consequences. Understanding your obligations is the first step in protecting your business and your people.

Employer duties under HSWA 2015

As a PCBU your primary duty of care extends to mental health. You are required to proactively identify and manage psychosocial risks, consult with your workers on health and safety matters and provide a safe work environment.

WorkSafe New Zealand enforcement and penalties

WorkSafe New Zealand can conduct inspections and investigate complaints related to psychosocial harm. If a business is found to be failing in its duties it can face improvement notices, prohibition notices and significant financial penalties.

Personal injury claims and employment law risks

A failure to provide a safe workplace can lead to personal grievance claims under the Employment Relations Act 2000. These can result in costly legal processes and awards for damages, harming both your finances and your reputation.

Measuring and assessing psychological safety levels

You can’t improve what you don’t measure. Assessing psychological safety helps you understand your starting point and track progress over time.

Employee survey tools and feedback methods

Confidential surveys are a powerful tool for gathering honest feedback. Use simple, direct questions like “I feel safe to voice a different opinion on my team”. Combine this with regular check-ins and exit interviews to get a complete picture.

Psychological safety indicators and warning signs

Look out for red flags that may signal a problem. High staff turnover, increased absenteeism, low engagement in meetings or a lack of new ideas can all be signs that your team does not feel psychologically safe.

Regular review and improvement processes

Assessing your workplace is not a one-off task. Make it a regular part of your business rhythm. Review your survey results, discuss them with your team and commit to continuous improvement based on their feedback.

Strategies for building psychological safety

Creating a safe workplace involves a combination of leadership commitment, clear processes and practical support for your team.

Management training and leadership development

Equip your people leaders with the skills they need to foster psychological safety. Training on active listening, constructive feedback and identifying signs of stress can make a huge difference to team dynamics.

Conflict resolution and communication skills

Provide your team with clear processes for resolving interpersonal conflict fairly and respectfully. Investing in communication skills training helps prevent small misunderstandings from becoming major problems.

Support systems and employee assistance programs

Employee Assistance Programs (EAPs) can provide valuable confidential support for your team. Promote these services actively to show your commitment to wellbeing and to reinforce a culture where it is okay to ask for help.

Supporting remote and hybrid workers

For teams working flexibly it’s crucial to be intentional about connection. Regular video check-ins, clear communication channels and opportunities for social interaction can help combat isolation and build trust when you’re not in the same room.

Invest in your team and build a strong workplace

Building a psychologically safe workplace is one of the most valuable investments you can make. It protects your people, ensures you meet your legal duties and unlocks the collective intelligence of your entire team. By starting with small, deliberate steps, you can create a workplace where everyone can do their best work.

Ready to build a more resilient, innovative and compliant workplace?

The information in this article is current as at 30 October 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.