Psychological injuries in the workplace can be just as debilitating as physical injuries. Many employees are left navigating typical work-related stress alongside burnout or bullying, and as they feel more isolated in the workplace, they’re unsure of their rights or what to do.
Under the NSW workers’ compensation system, a psychological injury claim is a legal pathway for affected employees to access medical treatment and financial support after experiencing serious mental health impacts due to their employment. In New South Wales, a psychological injury is recognised under the law in the same way as physical injuries are. If your work environment has created or substantially contributed to a psychological condition, you are legally entitled to seek medical treatment and financial support.
In this article, we break down how the workers’ compensation system in NSW handles psychological injuries, what evidence you need to prove your case, and how to navigate the claims process successfully.
How Workers’ Compensation Classifies Psychological Injury
Wonder what counts as psychological injury workers compensation NSW?
It may be the result of a single traumatic event, or it could be a psychological injury developed gradually due to poor work or a hostile environment. Your employment must be the primary contributing factor to the psychological injury to succeed in your NSW workers’ compensation claim.
Every situation is unique, but several common scenarios in the workplace can lead to a psychological injury, including:
- Bullying or harassment
Unreasonable, repeated behaviour that risks your health and safety.
- Sustained or excessive workload
Being assigned excessive volumes of work, provided inadequate support, or given unrealistic deadlines.
- Traumatic event
You directly witnessed a distressing incident during your work duties or were left dealing with the immediate aftermath of a traumatic event.
- Stress around lack of role clarity
There is a protracted period of confusion around your workplace expectations and role responsibilities.
There’s no need to self-diagnose; it’s about identifying how your workplace experiences have potentially impacted your wellbeing.
The “Reasonable Management Action” Exclusion
Employers often cite “needs of the business” or “reasonable management action” to push certain actions through. That is a nuance within the NSW law. Ultimately, not all psychological stress at work is compensable. An insurer can successfully dispute a claim by claiming the action, decision, or environment is either predominantly or wholly the result of “reasonable management action” by the employer.
| The Test | |
| Compensable | Excluded |
| Aggressive bullying | Performance reviews are fair |
| Unfair targeting | Discipline was handled appropriately |
| Excessive workload | Legitimate business expectations |
| Hostile harassment | Refusal of promotion/pay rise/leave |
| Severe lack of support | Fair redundancy plans |
Reasonable management action includes investigation and disciplinary proceedings, transfers, performance reviews, demotions, promotions, pay rises, leave decisions, and redundancies. If these actions are taken lawfully, fairly, and reasonably, the stress and anxiety they cause are not compensable. However, if you can prove the action was unfair, punitive, or to cover up bullying, you may still have a claim.
The Psychological Injury Claims Process
If you suspect you have a psychological injury claim, it may feel daunting, especially when you’re already feeling so unwell. There is a clear sequence to follow to ensure you protect your rights.
- Doctor’s visit
Start by scheduling an appointment with your doctor to discuss the psychological symptoms you have been experiencing. You will need the WorkCover medical certificate (SIRA Certificate of Capacity) to back your psychological injury claim legally.
- Notify employer
Inform the relevant persons of your injury as soon as practicable. Review your employment contract or employee handbook to ensure you notify the correct person (supervisor, direct line manager, HR department, or otherwise). Now you have an official record of the nature of your issue and the date.
- Lodge claim
Submit the SIRA Certificate of Capacity to the correct person and file a formal claim directly with either your employer’s workers’ compensation insurer or your employer directly.
- Maintain records
Always keep a detailed record. Take note of specific incidents, including the dates and details, as well as copies of emails, notes, or anything else that may have contributed to your psychological injury.
Psychological Injury Claims Challenges
Psychological claims are more complicated than physical injuries and often scrutinised more heavily as a result. The best way to prepare for the psychological injury claims process is to understand the common hurdles other applicants have faced.
- Proving the link
This is often one of the most difficult hurdles, as insurers will argue that your psychological injury is the result of financial issues, personal relationships, or pre-existing conditions or traits as opposed to workplace factors.
- Stigma
Many people worry about how others will view them if they take this step. They think their co-workers will judge them or whisper behind their backs. Others worry about potential career repercussions, whether management tries to retaliate or won’t see you as reliable enough to promote in future. You can overcome these hurdles by understanding that the law gives mental well-being the same weight as physical well-being.
- Insurer disputes
Insurers often reject claims initially or delay the process with the “reasonable management action” clause while they investigate further, including your workplace history.
What Compensation May Cover
If the insurer accepts your psychological injury claim, there are a range of financial benefits created to ease financial strain and aid recovery, including:
- Whether you need to take time off or reduce your hours while you recover, you may receive weekly payments to cover a portion of your lost income.
- You may receive coverage for treatment, from psychiatrists and psychologists to rehabilitation services and medication.
- In the case of severe psychological injury with measurable, permanent impairment, you may receive a lump-sum compensation payment.
Frequently Asked Questions
Can I claim workers’ compensation for stress caused by my manager?
Yes. If the behaviour rises to bullying, harassment, or placing unreasonable demands on you, you can file a psychological injury claim.
What if my employer disputes my psychological injury claim?
You will receive a formal liability dispute notice, which you can challenge through the Personal Injury Commission of NSW. An experienced legal team can help you navigate this.
Can I claim without a formal diagnosis?
No, but you should speak to a qualified medical practitioner about your psychological injury to get a Certificate of Capacity before you lodge a claim.
How AJB Stevens Can Help
When you’re managing a psychological injury, an insurance claim is overwhelming. At AJB Stevens, we provide clear and compassionate guidance and practical support to ease the administrative burden. We will assess your eligibility, help you gather evidence, and manage insurer disputes.
If you are struggling under the weight of a psychological injury, discuss your legal pathways by sitting down for a free consultation with AJB Stevens.
