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Psychological Injury Claims Under NSW Workers Compensation: A Plain-English Guide (2025)

Psychological injuries from work are among the most complex and least understood area of NSW workers compensation. Workers often do not know they can claim, are unsure what the process looks like, or are worried about the cost of treatment. This guide covers all three.

What is a psychological injury under NSW workers comp?

Under the Workers Compensation Act 1987 (NSW), any injury arising from employment is compensable, including psychological conditions. A psychological injury (sometimes called a psychiatric injury or condition) is a diagnosable mental health condition that was caused, aggravated, or materially contributed to by employment.

This includes:

• Post-traumatic stress disorder (PTSD) arising from a traumatic workplace incident (assault, accident, witnessing harm)
• Adjustment disorder arising from significant workplace changes, excessive workload, or unreasonable demands
• Anxiety disorders caused or worsened by ongoing workplace stress, bullying, or harassment
• Depressive episodes materially caused by working conditions or a specific workplace event
• Secondary psychological injuries — a psychological condition that develops secondary to a physical injury (for example, depression following a long recovery from a physical workplace injury). These are distinct from primary psychological injury claims and are treated differently under the 2026 reforms (see below).

What does not count

Not all psychological distress from work is compensable. Under section 11A of the Workers Compensation Act 1987, a psychological injury is not compensable where it arises "wholly or predominantly from reasonable action taken or proposed to be taken by the employer" in relation to performance management, disciplinary action, retrenchment, or demotion — provided that action was reasonable and lawful. The boundary between reasonable management action and compensable psychological injury is contested in many claims and is one reason these matters often benefit from legal advice early.

Primary vs secondary psychological injuries

NSW workers compensation distinguishes between:

• Primary psychological injury: The mental health condition is the main or sole injury. For example, PTSD from witnessing a serious incident, or an anxiety disorder caused by sustained workplace bullying. The February 2026 workers compensation reform introduced a 130-week cap on weekly income replacement payments for primary psychological injuries (taking effect 1 July 2026 for entitlements). This cap does not affect treatment funding.
• Secondary psychological injury: A psychological condition that develops secondary to, and as a consequence of, a physical injury. For example, depression arising from chronic pain following a back injury at work. Secondary psychological injuries are not subject to the same 130-week cap and continue to be assessed under existing provisions.

In both cases, psychological treatment can be approved and funded by the insurer. The distinction mainly affects income replacement payments, not treatment access.

How to get psychological treatment funded: the pathway

1. Report your injury to your employer

   As soon as you are aware of a psychological injury caused by work, notify your employer in writing. Early reporting protects your claim. Your employer must notify icare or their insurer. Keep a copy of your notification.

2. See your GP

   Your GP issues a Workers Compensation Certificate of Capacity (form 2888). This is your claim certificate and documents the nature of your psychological injury, your capacity for work, and any treatment recommendations. It is separate from an ordinary Medicare referral or Mental Health Treatment Plan.

3. Obtain insurer approval for psychological treatment

   Psychological treatment is authorised via an Allied Health Treatment Request (AHTR). Your GP or treating psychologist submits the AHTR to your insurer (icare or a licensed insurer) requesting a set number of sessions. The insurer is required to respond to treatment requests promptly. For the initial request, treatment can usually begin while the formal approval is pending, provided you have a valid certificate of capacity.

4. Find a SIRA-approved psychologist

   The psychologist must be registered with AHPRA and accept SIRA workers compensation funding. Not all private psychologists accept workers comp claims — check when you enquire. SIRA-approved practitioners accept the gazetted rate and bill the insurer directly. You can search for SIRA-approved allied health providers at sira.nsw.gov.au/information-search/health-care-providers. This directory lists practitioners who assert SIRA accreditation and accept workers compensation referrals.

5. Attend approved sessions — no out-of-pocket cost

   For insurer-approved sessions, you pay nothing. The insurer pays the psychologist at the SIRA gazetted rate. As at 1 February 2026, this is approximately $271.60 for an initial 60-minute session (item PSY301) and $226.80 for a subsequent 60-minute session (item PSY302). Sessions are typically 60 minutes under the workers comp scheme.

6. Ongoing AHTR renewal

   After the initially approved sessions, your psychologist will submit a further AHTR to request additional sessions. This includes a progress report demonstrating measurable improvement and treatment goals aligned with SIRA's Clinical Framework. The process repeats as long as treatment continues to be clinically justified and approved by the insurer.

The role of the treating psychologist

A treating psychologist in a workers compensation claim does more than provide therapy. They also:

• Submit and manage Allied Health Treatment Requests (AHTRs) including progress reports
• Work within SIRA's Clinical Framework for the Delivery of Health Services — a recovery-oriented framework that requires measurable goals, evidence-based treatment, and a plan for return to work where appropriate
• Communicate with other treating parties (GP, employer-nominated insurer, specialist) as part of the treating team
• Write independent medical reports (IMRs) if required, documenting diagnosis, impairment, and prognosis
• Support return-to-work planning in collaboration with the employer and insurer, where this is safe and clinically appropriate

Not all psychologists have experience with the AHTR/SIRA system. When choosing a psychologist for a workers compensation claim, it is important to confirm they understand and accept SIRA funding and are familiar with the workers comp treatment reporting obligations.

Telehealth for workers comp psychology

Telehealth psychology sessions are available under NSW workers compensation under SIRA billing items PSY301 and PSY302. Insurer consent for telehealth may need to be included in the AHTR, though in practice many SIRA-approved psychologists offer telehealth as standard and insurers commonly approve it. Confirm with your psychologist and insurer before your first telehealth session.

Telehealth is particularly beneficial for workers recovering from psychological injuries for several reasons: it removes the burden of travel (significant if managing anxiety or PTSD symptoms that make commuting difficult), provides access to a wider pool of SIRA-approved practitioners (not just those in your suburb), and allows sessions to be scheduled around variable capacity on hard days.

The 2026 workers compensation reforms: what has changed

The Workers Compensation Amendment Act 2026 introduced significant reforms to the NSW workers compensation scheme. Key points for workers with psychological injuries:

• Income replacement cap (primary psychological injuries only): From 1 July 2026, weekly income replacement payments for primary psychological injuries are capped at 130 weeks. This does not affect secondary psychological injuries (those arising from a physical injury).
• Treatment funding is not affected: The 130-week cap applies to weekly income payments only. Treatment sessions (including psychological sessions) are not subject to the same cap and continue to be funded for as long as they are clinically justified and approved by the insurer.
• Administrative changes: Some structural changes took effect from 27 March 2026. The substantive changes to entitlements take effect from 1 July 2026.

If you have a current claim or are considering lodging one, speak with icare (13 44 22), SIRA (1300 656 919), or a workers compensation lawyer for advice specific to your situation and timing.

SIRA fee schedule: current gazetted rates

The SIRA fee schedule sets the maximum rates insurers pay for allied health services under workers compensation. Psychologists are paid at the gazetted rate. Key psychology items from the fee schedule effective 1 February 2026 (following 4.57% indexation):

Source: SIRA Allied Health Fees Order (1 February 2026). Figures are approximate and may vary by item sub-type. Verify current rates at sira.nsw.gov.au. Workers pay nothing for insurer-approved sessions.

Frequently asked questions