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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. This is a higher causal threshold than for physical injuries (where the test is whether work "contributed to" the injury). 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. It provides that no compensation is payable for a psychological injury where the injury results wholly or predominantly from reasonable action taken by an employer with respect to:

• Transfer
• Demotion
• Promotion
• Performance appraisal
• Retrenchment
• Dismissal
• Disciplinary action

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, and its scope has been extensively litigated. Courts and tribunals have held that the question of reasonableness applies both to:

• Whether the decision itself was reasonable — for example, whether a performance management process was warranted given the employee's conduct or performance.
• Whether the manner in which the action was carried out was reasonable — 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

The section 11A exclusion applies to injury resulting from management action — it does not apply to injury caused by:

• Workplace bullying or harassment by colleagues (not formal management action)
• Discriminatory conduct
• A traumatic workplace incident (assault, accident, witnessing harm)
• Systemic toxic workplace culture (where no specific management action is the cause)
• Excessive workload or unreasonable demands not framed as formal performance management

Where the cause of the injury is any of the above, section 11A is not engaged. The claim is assessed on its merits without the exclusion.

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