It is widely recognised that employment is vital in assisting young refugees’ integration into a new society. Drawing on psychosocial safety climate (PSC) theory, this research investigated the effect of organisational climate on young refugee workers’ mental health (psychological distress) through stressful social relational aspects of work (e.g., harassment, discrimination). Drawing on data from 635 young refugees aged between 15 and 26 in South Australia, 116 refugees with paid work were compared with 519 refugee students without work, and a sample of young workers from Australian Workplace Barometer (AWB) data (n = 290). The results indicated that refugees with paid work had significantly lower psychological distress compared with refugees with no paid work, but more distress than other young Australian workers. With respect to workplace harassment and abuse, young refugee workers reported significantly more harassment due to their ongoing interaction and engagement with mainstream Australian workers compared with unemployed refugees. Harassment played a vital role in affecting psychological health in refugees (particularly) and other young workers. While refugee youth experienced harassment at work, overall, their experiences suggest that their younger age upon arrival enabled them to seek and find positive employment outcomes. Although PSC did not differ significantly between the employed groups, we found that it likely negatively influenced psychological distress through the mediating effects of harassment and abuse. Hence, fostering pathways to successful employment and creating safe work based on high PSC and less harassment are strongly recommended to improve refugees’ mental health and adaptation.