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Work-related stress claims in NSW: what counts as a compensable injury, the section 11A exclusion, and what evidence you need

Stress at work is common. A compensable psychological injury is something specific - a distinction that matters enormously when you are trying to understand whether you can make a claim under NSW workers compensation. This guide explains what the law requires, why many stress-related claims are disputed, what the section 11A exclusion is, and what evidence supports a successful claim.

What is a psychological injury under NSW workers compensation?

Under the Workers Compensation Act 1987 (NSW), a "psychological injury" is defined broadly as an injury (including a disease) that is psychological or psychiatric in nature. This includes conditions such as:

• Major depressive disorder (depression)
• Post-traumatic stress disorder (PTSD) arising from a workplace incident or environment
• Anxiety disorders (generalised anxiety disorder, panic disorder)
• Adjustment disorder
• Burnout, where it meets the threshold of a diagnosable disorder

The condition must be diagnosed by a medical or psychological professional. Experiencing stress, distress, or difficulty at work does not, by itself, constitute a psychological injury under the Act. There must be a clinically diagnosable condition.

The "main contributing factor" test

For a psychological injury claim, the work must have been the main contributing factor to the injury (for a primary psychological injury notified from 1 July 2026, this is part of the section 8O test). This is a higher causal threshold than for most physical injuries, where employment must be a substantial contributing factor (section 9A). The main contributing factor test means that if pre-existing factors (personal history, non-work stressors) were the dominant cause of the condition, the claim may not succeed on this basis alone.

In practice, many psychological injury presentations involve complex interactions between work and non-work factors. Medical and psychological experts are often asked to address causation in their reports, and this is frequently a contested issue in disputes.

The section 11A exclusion: what it is and why it matters

Section 11A of the Workers Compensation Act 1987 (NSW) is one of the most significant provisions in psychological injury claims. Since 1 July 2026 it 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. Examples of management action listed in section 8F include:

• Appraisal of or feedback about performance
• Counselling
• Demotion, redeployment or retrenchment
• Disciplinary action
• Dismissal
• Investigation of alleged misconduct
• Promotion, including being unsuccessful in a promotion
• Suspension or stand-down
• Transfer

SIRA notes the exclusion can now apply where reasonable management action was the significant cause of the injury, even if it was not the only or predominant cause. 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 policy rationale is that employers should be able to carry out these functions without the workers compensation scheme being used to compensate workers for the natural stress of ordinary employment management. The provision reflects a balancing of interests: workers retain the right to claim for injuries caused by genuinely harmful workplace conduct; employers retain the right to manage their workforce.

The "reasonable" requirement is critical

The word "reasonable" is the operative one in section 11A. Section 8F defines reasonable management action as management action taken in a reasonable way and that is reasonable in all the circumstances, so both of these matter:

• Whether the action was reasonable in all the circumstances - for example, whether a performance management process was warranted given the employee's conduct or performance.
• Whether the action was taken in a reasonable way - for example, whether the process was procedurally fair, whether the employee was given notice and an opportunity to respond, and whether the conduct of the process was proportionate.

This distinction is significant. An employer may have a legitimate reason to performance-manage an employee (and so the decision itself is reasonable), but if the process involves humiliation, is conducted in front of colleagues, involves disproportionate scrutiny, or uses the performance framework as a pretext for bullying, the manner of carrying out the action may not be reasonable - and the exclusion may not apply.

What section 11A does not exclude

Section 11A only excludes a claim where reasonable management action (or the worker's expectation or perception of it) was the significant cause of the injury. But for a primary psychological injury notified from 1 July 2026, section 8O also requires that the injury was caused by a relevant event, which section 8G lists as:

• Being subjected to an act of violence or a threat of violence
• Being subjected to indictable criminal conduct
• Witnessing a traumatic incident, or a dead or seriously injured person at the scene of a traumatic incident
• Experiencing vicarious trauma
• Being subjected to sexual harassment or racial harassment
• Being subjected to bullying
• Being subjected to excessive work demands
• Another event prescribed by the regulations

There must also be a real and direct connection between the event and your employment, and employment must be the main contributing factor to the injury. SIRA states that a worker whose psychological injury was caused by something that is not on the list of relevant events will not be entitled to compensation.

Section 11A and bullying: the grey area

The intersection of bullying and performance management is frequently contested. An employer may frame conduct as "performance management" while the worker experiences it as targeted, disproportionate, and harassing. Whether the conduct is characterised as management action (and thus potentially caught by section 11A) or bullying (not caught) is often a factual dispute requiring evidence of the specific conduct, the context, and the manner in which it was carried out.

Contemporaneous evidence - emails, HR correspondence, witness accounts of specific incidents - is important in establishing the true nature of the conduct.

The claims process for a work-related stress or psychological injury

Step 1: See your GP

The starting point is a visit to your GP to discuss your symptoms and their relationship to work. Your GP can issue a Workers Compensation Certificate of Capacity, which is the document required to begin a claim and, if applicable, to certify incapacity for work. The GP should record the diagnosis and a causal link to work conditions in the clinical notes.

Step 2: Lodge a claim with your employer

A workers compensation claim is lodged with your employer, who is required to notify their insurer (via icare for most NSW employers) within 7 days. You should receive a claim number and a decision from the insurer within 21 days of the claim being lodged.

Step 3: Insurer liability decision

The insurer reviews the claim and makes a liability decision. For psychological injury claims, especially those involving workplace conflict or management action, insurers may request a workplace investigation, obtain statements from the employer, and seek a formal medical opinion before deciding. Liability disputes are more common in psychological injury claims than physical injury claims.

What if the claim is disputed?

If the insurer disputes liability (including invoking section 11A), the worker can seek internal review from the insurer, then apply to the Personal Injury Commission (PIC) - a statutory tribunal that resolves workers compensation disputes in NSW. The PIC has the power to determine whether an injury is compensable and whether the section 11A exclusion applies. This process typically involves legal representation.

What evidence supports a work-related stress or psychological injury claim?

Building a clear evidentiary picture is important, particularly given the higher dispute rate for psychological injury claims. Useful evidence includes:

• Medical records and diagnosis. A clear diagnosis (recorded in your medical notes, not just a GP letter) from a treating GP or psychologist, with the treating clinician's view on causation. The earlier in your treatment this is documented, the better.
• Certificate of Capacity. The Workers Compensation Certificate of Capacity from your GP, specifying your condition and capacity for work.
• Contemporaneous workplace records. Emails, meeting notes, HR correspondence, performance management documents, and any formal complaints you made. Where incidents occurred verbally, a written note made at the time (or shortly after) is useful.
• Witness accounts. Statements from colleagues who observed the conduct, particularly where bullying or unreasonable treatment occurred.
• Evidence of reasonableness (or unreasonableness). Where section 11A is at issue, evidence about how the management action was conducted - including any procedural unfairness, disproportionality, or failure to follow policy.
• Psychological assessment and treating reports. A report from a treating psychologist (known as an Independent Medical Report or IMR in the SIRA system) addressing the diagnosis, the relationship between work conditions and the injury, and your current functioning and capacity.

The role of a psychologist in your claim

A psychologist treating you under workers compensation has a dual role: they are your treating clinician, focused on your recovery; and they are also a participant in the claim process, as their treating records and reports form part of the evidentiary picture.

Your treating psychologist will typically:

• Provide a diagnosis and document the relationship between your work history and your condition
• Develop and document a Recovery Plan (required for funded treatment under the SIRA/icare system) focused on meaningful functional goals, not just symptom reduction
• Submit an Initial Medical Report (IMR) after the first few sessions, which is required for treatment approval beyond the initial sessions
• Submit ongoing treating reports as required by the insurer
• Work collaboratively with your GP, case manager, and (where relevant) rehabilitation provider on a return-to-work plan

It is important that your treating psychologist has experience with the workers compensation system - not just clinical expertise, but familiarity with SIRA processes, report-writing requirements, and the claim documentation workflow. See our guide to how to choose a workers compensation psychologist in NSW.

Frequently asked questions