Mental health is the third-highest risk facing Australian independent schools in 2026 – and it now carries a workers’ compensation price tag that demands board-level attention.
That is a key finding from Aon’s 2026 Independent Schools Risk Report, which surveyed 306 schools between January and March 2026.
Cyber risk held the top position for the second consecutive survey. Talent attraction and retention rose to second. Mental health ranked third – reflecting how financial pressure, workforce strain and new legal obligations are converging inside independent schools.
“Mental health is no longer viewed solely as a wellbeing issue,” said Lachlan Bowden, Practice Group Leader of Education in Australia for Aon. “It is increasingly recognised as a workforce, governance and operational consideration that influences schools’ ability to support both staff and students.”
The cost of a mental health claim
According to SafeWork Australia data cited in the Aon report, serious mental health compensation claims in education result in an average of 35.7 working weeks off work and an average payout of $67,400.
Compare that with all other serious claim types: 7.4 working weeks and $16,300.
For school business managers and board directors, that gap represents a material financial exposure.
The link to talent shortages is direct. With vacancies unfilled, existing staff absorb higher workloads. That pressure is now showing up in injury data.
The consequences of unmanaged staff mental health extend beyond absenteeism. Research cited in the report points to flow-on effects for safeguarding, supervision quality and school culture when teacher burnout goes unaddressed.
New legislation has raised the stakes for mental health risk in independent schools
The regulatory environment shifted in the second half of 2025.
New South Wales updated its Work Health and Safety Regulation in October 2025, introducing new employer control measures. Victoria’s Occupational Health and Safety (Psychological Health) Regulations 2025 followed in December 2025.
Both place an affirmative obligation on schools to identify and actively prevent psychosocial hazards, not simply respond after the fact.
Psychosocial risk inspectors are now active in both states’ education sectors. They are looking for evidence of proactive steps: how data is gathered, how risks are identified, and how the workforce is consulted.
Sixty-one per cent of schools surveyed have established clear lines of accountability for psychosocial risks, with a formal employee assistance program in place. Uptake of wellbeing surveys also rose modestly between 2024 and 2026.
The report notes, however, that structural drivers – rising workloads, constrained pay, a shrinking talent pipeline – remain largely unresolved. The factors contributing to teacher burnout and attrition are longstanding, and compliance measures alone are unlikely to address them.
Student mental health: 94% of schools are concerned
Staff mental health is only one dimension of this risk.
Ninety-four per cent of schools reported concerns about student mental health. The proportion employing a full-time student counsellor rose from 68% in 2024 to 77% in 2026.
The Social Media Minimum Age (SMMA) obligation — which restricted social media access for children under 16 from 10 December 2025 — was noted in the report as a significant policy development. Early data from the eSafety Commissioner’s March 2026 compliance update indicates harmful online experiences have not yet measurably declined.
Research into whether school mental health checks are reaching the students who need them suggests one-off wellbeing surveys capture a single moment. Repeated monitoring produces a more reliable picture over time.
What boards need to do now
The Aon report outlines several practical steps for boards and school leaders:
- Treat workload as a measurable risk. Schools that protect non-contact time and remove low-value administrative tasks are better positioned to retain staff and reduce psychosocial injury claims.
- Map accountability clearly. Boards should confirm that roles, responsibilities and escalation pathways for psychosocial risk are documented and understood by all staff — not just leadership.
- Move beyond awareness programs. As Bowden noted: “Supporting mental health requires more than wellbeing initiatives alone. The strongest outcomes come from workplace systems that support staff, strengthen wellbeing and help schools identify and address risks early.”
Schools that embed these practices into day-to-day operations are better placed to reduce both claims and turnover.
The bigger picture
Mental health does not sit in isolation in the 2026 risk rankings. The report is explicit that talent shortages, funding uncertainty and legislative change each compound the mental health burden on independent schools.
Boards that treat these risks as connected to each other are better placed to manage the cumulative effect on staff, students and finances.
At an average of $67,400 per serious claim and nearly nine months off work, the cost of inaction is quantifiable. Mental health risk in independent schools now warrants the same structured board attention as cyber security and funding policy.
