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

NSW workers comp psychology - guide cluster: Pathway overview (pillar) ↑ · icare billing guide · SIRA approval guide · Claim timeline · Work stress claims (s.11A) · Stress leave explained · Mental health: can you claim? · 2026 reform: what changed →

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), an injury means personal injury arising out of or in the course of employment (section 4), and this can include psychological conditions. A psychological injury is an injury that is a mental or psychiatric disorder that causes behavioural, cognitive or psychological dysfunction (section 8D). For a primary psychological injury (one that is not secondary to a physical injury), section 8O also requires that a relevant event or series of relevant events caused the injury, that there is a real and direct connection between those events and the worker's employment, and that employment is the main contributing factor to the injury.

This includes:

• Post-traumatic stress disorder (PTSD) arising from a traumatic workplace incident (assault, accident, witnessing harm)
• Adjustment disorder arising from excessive work demands
• Anxiety disorders caused or worsened by bullying, or sexual or racial harassment
• Depressive episodes following 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. SIRA says that if a worker's psychological injury was caused by something that is not on the list of relevant events, they will not be entitled to compensation. Since 1 July 2026, section 11A of the Workers Compensation Act 1987 (NSW) provides that no compensation is payable for a psychological injury if the significant cause of the injury was reasonable management action taken or proposed to be taken by the employer, the worker's expectation of reasonable management action, or the worker's perception of reasonable management action. Reasonable management action is defined in section 8F as management action taken in a reasonable way and that is reasonable in all the circumstances. These rules apply to injuries first notified to the employer on or after 1 July 2026. For an injury the employer was notified of before that date, and for police officers, paramedics, firefighters, coal miners and volunteer claims under the Workers Compensation (Bush Fire, Emergency and Rescue Services) Act 1987, the earlier version of the law continues to apply. 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: A psychological injury that is not a secondary psychological injury (section 8C). For example, PTSD from witnessing a serious incident, or an anxiety disorder caused by sustained workplace bullying. Since 1 July 2026, section 39A of the Act generally ends weekly payments for a primary psychological injury after an aggregate period of 130 weeks. It does not apply if the degree of permanent impairment is at least 25%, and section 39B allows limited further payments, up to an aggregate of 182 weeks, for some workers assessed at least 21% but less than 25%. Transitional and exempt-worker rules in Schedule 6, Part 19R can affect whether this applies to you.
• 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.

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. The listings include 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 $284.40 for an initial session (item PSY301, up to 60 minutes) and $237.60 for a subsequent session (item PSY302, also up to 60 minutes).

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, subject to the section 59A treatment time limit described below.

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 Legislation Amendment Act 2025 introduced significant reforms to the NSW workers compensation scheme, including changes that took effect from 1 July 2026. Key points for workers with psychological injuries:

• New tests for primary psychological injuries: For a primary psychological injury (one that is not secondary to a physical injury), section 8O also requires that a relevant event or series of relevant events caused the injury, that there is a real and direct connection between those events and the worker's employment, and that employment is the main contributing factor to the injury. Section 11A now applies where reasonable management action was the significant cause of the injury.
• Income replacement limit (primary psychological injuries only): Since 1 July 2026, section 39A of the Act generally ends weekly payments for a primary psychological injury after an aggregate period of 130 weeks. It does not apply if the degree of permanent impairment is at least 25%, and section 39B allows limited further payments, up to an aggregate of 182 weeks, for some workers assessed at least 21% but less than 25%. These limits do not apply to secondary psychological injuries (those arising from a physical injury).
• Treatment funding limit: For a primary psychological injury first notified to the employer on or after 1 July 2026, section 59A of the Act limits compensation for treatment to a period of 1 year starting on the day weekly payments cease to be payable (or, if weekly payments are not payable or have not been paid, the day the claim was first made). This limit does not apply to a worker with highest needs.
• Who is carved out: These rules apply to injuries first notified to the employer on or after 1 July 2026. For an injury the employer was notified of before that date, and for police officers, paramedics, firefighters, coal miners and volunteer claims under the Workers Compensation (Bush Fire, Emergency and Rescue Services) Act 1987, the earlier version of the law continues to apply.

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