5 Ways to Fix a Toxic Workplace

Updated October 2026: We have corrected the definition of workplace bullying under the Fair Work Act and refocused the five steps on what employers can do.

Identifying and fixing a toxic workplace

For small and medium-sized businesses in Australia, cultivating a positive and productive work environment is essential for attracting and retaining talent, boosting morale, and driving company success. Unfortunately, challenging workplace dynamics are a reality in many businesses, and employers have legal duties to deal with them.

Defining a toxic work environment

Difficult work environments can manifest through various behaviours and systemic issues, including:

• Actions that create discomfort or intimidation, or leave employees feeling unsafe.
• Repeated conduct that has the potential to cause physical or psychological harm.
• Unfair treatment based on legally protected attributes.
• A lack of constructive processes for addressing and resolving workplace disputes.
• Excessive work demands that contribute to undue stress and a negative overall work environment.

Identifying a toxic work environment

There is no single test to identify toxic workplaces. However, some red flags can indicate a hostile work environment, including:

• Employees leaving or feeling disengaged‍
• Unfair treatment based on personal characteristics
• Repeated offensive behaviour or actions that create a hostile environment.
• Disrespectful communication and a feeling of being undervalued.
• Problems unresolved or handled inappropriately.
• Being constantly overloaded with work and having little control over schedules

The impact of negative workplace dynamics

The presence of a toxic workplace can have a significant negative impact on your business. Here is how:

• Increased stress, anxiety, and potential impacts on mental health.
• Lower productivity, diminished morale, and difficulties in retaining talent.
• Exposure to potential legal claims related to harassment, discrimination, or unfair dismissal.

5 steps to improve a toxic workplace

Australian law takes a strong stance against toxic work environments. Under the Fair Work Act, a worker is bullied at work if a person or group repeatedly behaves unreasonably towards them (or towards a group of workers they belong to) and that behaviour creates a risk to health and safety. Reasonable management action carried out in a reasonable manner is not bullying. A worker who reasonably believes they have been bullied can apply to the Fair Work Commission for an order to stop it. Work health and safety laws also require employers to manage psychosocial risks such as bullying and harassment, and employers have a positive duty to take reasonable and proportionate measures to eliminate sexual harassment. Both federal and state laws also prohibit discrimination, giving employees grounds to seek redress if they experience unfair treatment. Our guide to bullying in the workplace explains more. Here are 5 key strategies that Australian businesses can implement to cultivate a better workplace:

• Act on complaints promptly. Record what was reported, what you did and the outcome, and follow a fair workplace investigation process for serious allegations.
• Set clear expectations. Make sure managers and staff understand your HR policies and procedures, including your code of conduct and anti-bullying policy, and provide training to promote a positive and respectful work environment.
• Cultivate an environment where employees feel comfortable expressing concerns and providing feedback without fear of negative repercussions.
• Make sure that all workplace procedures, including performance management, promotions, and disciplinary actions, are fair, transparent, and consistently applied.
• Manage the risks to mental and physical health. Look at workloads, role clarity and how conflict is handled, as you would any other work health and safety risk.

Get help fixing a toxic workplace

If you are dealing with a toxic culture, conflict between staff or a bullying complaint, our employee relations support can help you respond fairly and lawfully, and our workplace investigations service can look into complaints. For advice today, call our 24/7 HR advice line on 1300 144 002.