For Businesses
For Workers
• 6 min read
By
Suzzy at AusRehab
A psychological injury claim is a type of workers’ compensation that arises when an employee experiences harm to their mental health as a result of their work. Unlike physical injuries, which may involve visible trauma or medical treatment for the body, a workplace psychological injury affects an employee’s mental and emotional well-being.
Simply put, if work-related stress, bullying, harassment, or traumatic events cause a diagnosed mental health condition, such as anxiety, depression, or post-traumatic stress disorder, employees may be eligible to lodge a psychological injury claim.
Understanding what a psychological injury claim involves is important for both employers and workers. For employees, it ensures their right to seek fair compensation and access recovery support. For employers, fostering a safe and supportive workplace is crucial in reducing risks to mental health and providing early intervention when issues arise.
A psychological injury claim is designed to recognise the impact of psychological harm in the workplace. While every claim is assessed individually, the common thread is that the worker’s mental health condition has been significantly caused or aggravated by their employment. These psychological workplace injury claims are just as serious as physical injuries, but they are often more complex because symptoms can be less visible and recovery pathways vary.
A workplace psychological injury generally refers to a diagnosed mental health condition that has developed as a direct result of work. This may include:
For a claim to be considered, the injury must typically be supported by medical evidence and demonstrate a clear connection to the work environment or practices.
While both physical and psychological injuries fall under workers’ compensation, the way they are recognised and managed differs:
The difference highlights the importance of early reporting, medical documentation, and supportive workplace practices to ensure that employees with psychological injuries are not overlooked.
The most frequent contributors to psychological harm in the workplace include:
Identifying these causes is the first step in preventing psychological workplace injury claims and fostering a safe and supportive environment.
A psychological injury claim follows many of the same principles as physical injury claims, but workers’ compensation for psychological injury has unique requirements. Both employers and employees need to understand eligibility, the process for workcover psychological claims, and how psychological injury payouts are assessed. Clear knowledge of these rules is essential for achieving successful psychological injury claims.
Any employee who suffers psychological harm in the workplace that can be medically linked to their employment may qualify for workers’ comp psychological injury benefits. Common scenarios include:
Eligibility usually requires a formal medical diagnosis and supporting evidence that the condition was caused or significantly worsened by employment. Employees seeking psychiatric injury workers’ compensation should also be prepared to show how their injury impacts daily functioning and work capacity. For a detailed guide on lodging claims and what to expect, see Workplace Rehabilitation 101: Your Comprehensive Guide.
Compensation can cover treatment, wage replacement, and rehabilitation costs. The psychological injury workers’ compensation system may provide:
The amount of a mental health compensation payout depends on the severity of the injury, its effect on work capacity, and the likelihood of long-term recovery. For a deeper look at how early intervention supports fair and timely outcomes, read Best Practices in Workplace Rehabilitation.
In some cases, workers may pursue common law claims if negligence by the employer can be proven. Unlike statutory benefits, these claims seek damages for pain, suffering, and future economic loss. While less frequent, they can result in larger psychological injury payouts, particularly where psychiatric harm is severe and long-lasting.
Understanding the full pathway, from statutory claims to potential common law action, helps employers and workers navigate the process with confidence. For insights into what assessments and planning look like, see What to Expect From Your Workplace Rehabilitation Provider.
Making a mental injury claim can feel overwhelming, but understanding the steps involved ensures the process is smoother for both workers and employers. In New South Wales and across Australia, workers’ compensation for psychological injuries follows a structured process that aims to support recovery while ensuring fairness. Employers also play a key role in managing psychological injury claims in the workplace, which helps reduce stress and uncertainty for employees.
Workers often ask how to lodge a psychological injury claim. The process usually begins with:
These steps ensure that the claim meets the requirements of NSW workers’ compensation and helps prevent unnecessary delays in accessing benefits.
Once a mental health injury workers’ comp claim is lodged, the insurer reviews it while the employer, worker, and rehabilitation provider coordinate support. Effective management can involve:
AusRehab emphasises clear communication and early coordination to prevent delays. In fact, research shows that when psychological workplace injury claims are addressed quickly, recovery rates and outcomes improve significantly.
Not all claims are the same. In workers’ compensation, psychological injuries generally fall into two categories:
These distinctions are important, as the assessment process, eligibility, and psychological injury payouts can differ.
Early intervention strategies are among the most effective ways to reduce the impact of psychological injuries. Acting quickly not only helps lower the severity of harm but also decreases the risk of long-term disability and improves overall recovery outcomes for employees.
Delays in recognising and addressing psychological strain often result in worsening symptoms and higher costs for businesses. Employers who adopt proactive early intervention workplace mental health practices consistently see better morale, faster recovery, and fewer long-term claims.
Psychological hazards often arise from stress, high workloads, or poor organisational culture. Bullying, lack of support, and exposure to traumatic events can also lead to psychological harm in the workplace.
Effective psychological hazard management in the workplace involves identifying these risks early and putting systems in place to control them. One practical approach is ergonomic and environmental adjustments. Even simple changes to workload distribution, communication practices, or even physical workplace design can significantly reduce stressors and improve mental well-being. Learn more in Why Every Office Worker Needs an Ergonomic Assessment.
Employers can also lower the likelihood of workplace trauma compensation claims by implementing supportive systems, such as:
These prevention strategies not only reduce the risk of claims but also promote a culture of safety and care. When strong psychological hazard management in the workplace is combined with timely interventions, businesses can safeguard both employee well-being and long-term organisational health.
A well-structured return-to-work plan for psychological injury is different from a plan for physical conditions. It must address not only the worker’s ability to perform tasks but also the psychological and social factors that influence recovery.
An effective return-to-work plan typically includes:
Practical recovery support often mirrors what is expected in broader workplace rehab settings. It requires careful consideration of suitable duties for psychological injury recovery. Workers may benefit from:
At AusRehab, our approach to workplace rehabilitation for psychological injury follows a structured 8-step process to support injured workers in achieving a safe and sustainable return:
This structured pathway ensures that psychological injury claims are handled with the same rigor and care as physical injuries, while also acknowledging the unique challenges of mental health recovery.
Recovering from a workplace psychological injury is rarely a solo effort. Success relies on the collective effort of all stakeholders in the psychological injury claim process—workers, employers, insurers, and rehabilitation providers—working together to achieve a safe and sustainable recovery.
The psychological injury claim process involves several key stakeholders, each playing an essential role in supporting the injured worker:
Rehabilitation providers – organisations like AusRehab coordinate communication, design return-to-work strategies, and ensure the process runs smoothly.
Effective collaboration between employer, worker, insurer, and rehab provider is critical for successful outcomes. Open communication across all stakeholders reduces misunderstandings, speeds up decision-making, and keeps everyone aligned toward the same recovery goals.
When collaboration is prioritised, workers benefit from:
Recent evidence in Best Practices in Workplace Rehabilitation highlights that early collaboration between stakeholders significantly improves recovery outcomes and reduces the long-term costs of psychological injuries.
The AusRehab approach to psychological injury rehab focuses on bridging gaps between all stakeholders. Our role is to coordinate and simplify the process so workers can concentrate on recovery rather than navigating complex systems. We achieve this through:
Through coordinated efforts and strong collaboration, AusRehab ensures the psychological injury claim process is smoother, more efficient, and ultimately more supportive for both workers and employers.
Psychological injuries can disrupt both workers and workplaces, but with the right support, recovery and return to work are possible. AusRehab provides tailored workplace rehabilitation, psychological injury return-to-work planning, and mental health support to ensure sustainable recovery for individuals and long-term stability for businesses.
We offer:
📞 1300 391 947
📧 office@ausrehab.com
Book a Workplace Rehabilitation Consultation with AusRehab
A psychological injury refers to conditions such as depression, anxiety, adjustment disorders, or post-traumatic stress disorder (PTSD) that arise from workplace stressors. These injuries are recognised under workers’ compensation if they are primarily caused by work-related events like bullying, harassment, excessive workload, or exposure to trauma.
Yes. Workers may be eligible to make a psychological injury claim if their condition is caused or significantly aggravated by workplace factors. Compensation usually covers medical treatment, lost wages, and rehabilitation services. However, each claim is subject to medical and legal assessments.
A psychological injury becomes compensable when it can be medically diagnosed and directly linked to employment. For example, claims related to stress caused by reasonable management actions (such as performance reviews or disciplinary measures) are typically excluded unless mishandled.
Early intervention involves identifying and addressing mental health risks in the workplace before they escalate. This may include providing support programs, employee assistance services, and quick engagement with workplace rehabilitation providers to reduce long-term impacts.
A return-to-work plan for psychological injury focuses on graded reintroduction to work, suitable duties, workload adjustments, and ongoing clinical support. It is tailored to the individual and developed collaboratively with the worker, employer, insurer, and rehabilitation provider.
Workplace rehabilitation may include functional capacity assessments, suitable duties planning, workplace adjustments, and regular monitoring of progress. The goal is to create a safe, supportive environment that facilitates recovery while ensuring work demands are realistic and sustainable.
Key stakeholders include the injured worker, employer, insurer, treating medical professionals, and the workplace rehabilitation provider. Collaboration among these groups ensures that claims are managed efficiently and that recovery outcomes are prioritised.
AusRehab delivers tailored workplace rehabilitation programs designed specifically for psychological injuries. From hazard identification and early intervention to structured return-to-work planning, AusRehab ensures workers receive comprehensive, client-centred care that supports both recovery and reintegration into the workplace.
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