The present paper scrutinises the work environment hypothesis of bullying by examining relationships between psychosocial factors at work and bullying within departments on a group level of analysis, as compared to the many studies executed on an individual level of analysis. Relationships between quantitative demands, job control, role demands, leadership behaviour and social climate, and observed bullying were studied in a convenience sample consisting of 276 departments with a total of 4,064 respondents. Between-group bivariate correlations showed relatively strong relationships (r > .52) between the predictors social climate, leadership behaviour, and role demands, respectively, and observed bullying in the department. A two-factor higher-level model was formulated for the independent variables yielding two latent factors reflecting an interpersonal domain and a task-oriented domain, where the former was strongly associated with observed bullying at a group level of analysis (Beta =−.73), while the last factor yielded an insignificant contribution. The results confirm that a poor social work environment exists within departments in which bullying takes place, hence, yielding further support to the work environment hypothesis. In line with the present results, future studies on workplace bullying should include a group level of analysis.