Legislative Alert: When the board is the hazard: What recent interventions mean for boards.

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What the RACP suspension means for charity governance in Australia

For the first time, a major Australian charity regulator has suspended an incoming Chair on psychosocial safety grounds — using a SafeWork NSW Prohibition Notice as the evidentiary basis. The regulatory architecture for board accountability has materially changed.

What Happened?

Ten days before she was due to assume the presidency of one of Australia’s oldest professional colleges, Dr Sharmila Chandran was suspended from her seat on the Royal Australasian College of Physicians board.

The suspension was not issued by the college. It was issued by the Australian Charities and Not-for-profits Commission (ACNC). Acting on advice from SafeWork NSW. Citing alleged non-compliance with a Prohibition Notice. Framed against Governance Standard 5 of the ACNC Governance Standards.

This is the first widely reported case of an Australian charity regulator removing a director from a board on psychosocial safety grounds. The reasoning is short, the consequences are long, and the implications for every charity, member association, professional college and not-for-profit board in this country are material.

The architecture of the suspension

Three regulatory layers came together to produce the suspension.

  1. The first layer is the Work Health and Safety Act 2011 (NSW). Section 19 has always placed a primary duty of care on a person conducting a business or undertaking, to ensure (so far as is reasonably practicable) the health and safety of workers. “Health” is defined in section 4 to include psychological health. Boards have always, in principle, been within scope where their conduct affects worker health and safety.

2.   The second layer is the SafeWork NSW enforcement machinery. On 5 May 2026, SafeWork NSW issued a Prohibition Notice to the RACP. The notice directed all Responsible Persons of the RACP (or their delegates) to refrain from communicating with RACP staff, except for the CEO (or Acting CEO), for the purpose of instructing them to undertake activities. SafeWork NSW had earlier found, in March 2026, that the RACP had contravened workplace health and safety laws.

3.  The third layer is the ACNC Governance Standards. There are six of them. The two engaged in the RACP matter are Governance Standard 3 (charities must not act in a way that, under Commonwealth, state or territory law, could be dealt with as an indictable offence or a breach with a civil penalty of 60 penalty units or more) and Governance Standard 5 (charities must take reasonable steps to make sure their Responsible Persons are subject to, and comply with, a set of legal duties, which include duties of care, diligence and good faith).

The ACNC’s reasoning, in the suspension notice, was that Dr Chandran had been advised by both regulators of her obligations and had nonetheless persisted in writing to RACP staff in breach of the Prohibition Notice. That conduct exposed the RACP to non-compliance with Governance Standard 5. The ACNC suspended her until 11:59pm on 20 September 2026. Susan Pascoe AM — herself a former ACNC Commissioner — was appointed as an Acting Responsible Person and interim Board Chair.

What does this mean for all charities?

It proves once and for all that all organisations whether you are a not for profit, a registered charity, run by volunteers – you must still abide by WHS – Managing psychosocial hazards regulations. That all of the other acts such as the Charities Act or the Aged Care Act refer to an organisations duties under WHS and yes this could impact your licence to operate. This applies to financial institutions, banking institutions, education, NDIS, Aged Care.

This is not a story about one professional college. It is a story about how two regulatory frameworks — WHS and charity governance — have begun to share an evidentiary surface.

Until very recently, charity regulators and WHS regulators operated in different worlds. The ACNC investigated charitable purpose, financial reporting, and Responsible Person suitability. SafeWork investigated workplace incidents, injury rates, and hazardous conditions. The two regulators had different remits, different language, and different evidentiary thresholds.

The RACP matter changes that. SafeWork’s Prohibition Notice was the trigger. The ACNC’s suspension was the consequence. The same conduct produced two regulatory responses, but the second one used the first one’s evidence as a foundation.

For every charity board in Australia, the practical implication is this. A WHS finding against the board, or against an individual director, is no longer a WHS-only problem. It is potentially a Governance Standard 5 problem. And Governance Standard 5 is enforceable.

The vulnerable boards

Some boards are more exposed than others.

Member-elected boards.

Professional colleges, peak bodies, industry associations. Their directors are often clinicians, academics, or industry leaders who maintain direct working relationships with the very staff they now govern. Boundaries that work in a commercial board do not work the same way here.

Charitable companies in factional dispute.

When a board splits, communications proliferate. Emails, side-channels, member updates, social media. Each one is potentially a piece of evidence. Each one is potentially a contravention of a Prohibition Notice.

Boards transitioning between presidents.

Succession periods are when board behaviour is most observed and least disciplined. The regulator sees all of it.

Smaller boards with limited governance support.

Larger boards have company secretaries, legal counsel, and risk committees that can advise on regulator-engaged communication. Smaller boards do not. The gap matters.

What do all leaders (including managers) need to do?

Leaders must ensure their organisations:

  1. Abide by legislative requirements. You are not exempt because you are a charity, a volunteer director. 
  2. Read your ACNC Governance Standards if you are a registered charity. However, if you are a private institution, you will also have industry standards read them and understand just how far reaching psychosocial hazards are. 
  3. Standards 3, 4 and 5 in particular. Many directors have not read them since induction. They are now an active enforcement tool.

2.  Proactively Identify Psychosocial Hazards:

    • Conduct regular psychosocial risk assessments.

    • Use validated tools and surveys to capture anonymous employee feedback.

    • Include psychosocial factors in routine risk assessments.

    • Identify your vulnerable cohorts and map where they sit – casuals, apprentices, visa holders, contractors, sole shift workers, new starters. 
    • Brief your directors and managers on their duties and obligations – Fair Work, WHS, Discrimination Act. 

3. Be Proactive (it’s your duty):

    • Don’t wait for a complaint. Ensure your communications, messaging and cultural norms reflect a zero tolerance for sexual harassment.

    • Review your incident reports where single reports of issues have appeared – have the appropriate responses/actions been taken.?

    • Ensure you have a strong complaints process that is trusted. 

3.Strengthen Leadership and Support Structures:

  • Assess the psychosocial hazards within the board and the executive leadership team. They are not exempt and have large influence. 
  • Train leaders in mental health first aid, psychosocial risk management, and compassionate leadership.
  • Establish clear reporting lines and local accountability.
  • Create peer support networks and accessible EEO officers.

4. Promote a Just Culture:

    • Ensure procedural fairness and transparent decision-making.

    • Implement robust reward and recognition systems.

    • Foster open communication and psychological safety.

5.Audit and Review Continuously:

    • Regularly audit psychosocial risk controls.

    • Involve workers in safety committees and consultations.

    • Use leading indicators (e.g., survey results, hours worked) to predict and prevent harm.

“A person conducting a business or undertaking must ensure, so far as is reasonably practicable, the health and safety of workers engaged, or caused to be engaged by the person, while the workers are at work in the business or undertaking.”

— Work Health and Safety Act 2011 (NSW), Section 19(1) Tweet

Example scenarios

Too often, board members and executives in the not for profit or charities sector have believed that they have immunity from any prosecution in relation to their behaviour and conduct. Sometime because they are volunteers, sometimes because they believe their constitution protects them and others because they believe that they have got away with poor behaviour and our regulators have failed to find out.  Managing psychosocial hazards and abiding by governance standards is mandatory.  With multiple avenues for complaints and whistle-blowing boards need to get on the front foot. 

Scenario A — The member-elected board in conflict.

A professional college board splits along factional lines. Staff begin reporting fatigue, sleep loss, and absenteeism. Two staff complaints reach SafeWork. The regulator issues a Prohibition Notice. Within six weeks, a director is suspended by the ACNC. The membership is told. The staff complaints remain confidential. The reputational fallout is significant.

Scenario B — The well-intentioned director.

A director, concerned about a staff member’s wellbeing, contacts them directly to offer support — in breach of a Prohibition Notice. The intent was good. The act was a breach. The regulator’s reasoning attaches to the act, not the intent.

Scenario C — The CEO as sole channel.

A board is ordered to communicate with staff only via the CEO. The CEO, now the single conduit, becomes both decision-maker and information bottleneck. Their psychological load rises. The board’s risk has been transferred, not resolved.

Scenario D — The disrupted EGM.

A factional dispute spills into an Extraordinary General Meeting. The meeting is closed, police are called, governance descends into a public dispute. Regulators take notice. The ACNC opens an investigation. Member confidence collapses. The cost is not the dispute itself. It is what the dispute reveals to the regulator.

Must-Do for Leaders: Manage Your Exposure to Personal and Organisational Risk

1. Treat Psychosocial Risks as Critical Operational Hazards

  • Integrate psychosocial risk management into your core safety systems.

  • Use data-driven tools to identify and monitor risks continuously.

2. Educate and Empower Your Leaders

  • Train directors, executives, and line managers in psychosocial risk management.

  • Equip them with skills to lead with empathy, clarity, and accountability.

3. Implement Verifiable Controls

  • Use technology to enforce working hour limits and fatigue policies.

  • Ensure remote and matrix-managed workers are not excluded from protections.

4. Build a Psychologically Safe Culture

  • Encourage reporting without fear of reprisal.

  • Respond to concerns with visible and meaningful action.

5. Engage Experts Early

  • Partner with specialists in organisational psychology, WHS law, and human factors.

  • Conduct independent audits and gap analyses.

6. Prepare for Scrutiny

  • Regulators are increasingly focused on psychosocial safety.

  • Document everything: risk assessments, controls, training, and responses.

Working with People Plus Science

When SafeWork and the ACNC begin sharing evidence, the question for every board becomes whether the way it operates would survive external scrutiny. The PPS Board Health Index is built for exactly this — six bands, independent assessment, the honest version of where your board sits.

 

→ The Board Health Index is how we measure where your board actually sits — not the optimistic version, the honest one. Book a confidential conversation at peopleplusscience.com.

Downloadable references

“Neuroscience is the foundation for the approach we bring to every engagement. Partnering with our leaders to provide the insights that allow for improved decision making resulting in organisational resilience.  Carolyn Grant

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