Is a work-related psychological injury covered by workers compensation?

Yes. Work-related psychological injury is compensable in all nine Australian workers compensation schemes, but with a higher bar than a physical injury: your employment usually has to be a significant contributing factor to the injury, supported by medical evidence. The main barrier is the reasonable management action exclusion, which can prevent a claim where the injury was caused by reasonable management action taken in a reasonable way.

What is reasonable management action in a workers compensation claim?

Reasonable management action is legitimate management of staff such as performance management, discipline, demotion, transfer, retrenchment, dismissal, or denying a promotion or benefit. A psychological injury caused by such action is not compensable, but only if the action was both reasonable AND carried out in a reasonable way. The onus to prove that sits with the employer or insurer. Action that was unreasonable, or reasonable action carried out in an unreasonable way, is not excluded. The provision is found in section 11A of the Workers Compensation Act 1987 (NSW), section 40 of the WIRC Act (Vic), section 32 (Qld), section 7(4) (SA), section 5 (WA), section 5A of the SRC Act (Comcare), and equivalents in Tasmania, the ACT and the Northern Territory.

Can I claim workers compensation if I was performance-managed?

Only if the performance management was unreasonable, or was carried out in an unreasonable way. Reasonable performance management taken in a reasonable way is excluded and will not be compensable. But the exclusion is not automatic: the employer or insurer must prove the action was reasonable and reasonably carried out. How the action was conducted, such as timing, process, fairness and communication, is often where reasonable action becomes unreasonable, so it is worth getting advice rather than assuming you have no claim.

What is changing for psychological injury claims in New South Wales?

New South Wales is reforming psychological-injury claims, with a first tranche from 27 March 2026 and further changes from around 1 July 2026, including objective definitions of a relevant event such as relevant work-related conduct or a traumatic event. For ongoing weekly benefits beyond 130 weeks, a primary psychological injury must meet a whole-person-impairment gate that phases in at 25% from 1 July 2026, then 27% in 2027 and 28% in 2029, otherwise benefits are capped at 130 weeks. The 31% figure is the unchanged high-needs threshold, not the new psychological gate. Check the current position with icare or SIRA or a lawyer.

Does psychological injury workers compensation differ by state?

Yes. All nine schemes compensate work-related psychological injury and all carry a reasonable management action exclusion, but the wording, the contributing-factor test and the impairment thresholds differ between states and territories, and New South Wales and South Australia are reforming. South Australia's psychological serious-injury threshold remains 30%. Always check the rules for your specific scheme.

Psychological Injury Workers Comp Claim Checker

A guidance read on whether a work-related psychological injury may be compensable, and how the reasonable management action exclusion applies in your state. Legal information, not a definitive ruling.

Last verified: 21 June 2026Jump to calculator ↓

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Psychological Injury Workers Comp Claim Checker

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