From 1 July 2026 the NSW Workers Compensation Act 1987 changed to manage and review Workers Compensation Psychological Claims.
What’s Primarily Changed?
-
Psychological claims may now be reviewed by the NSW Industrial Relations Commission in order to proceed; and
-
Insurance companies will have significant role in determining the extent this jurisdiction is used.
What’s Still in Effect?
Employers have always been able to seek denial of a Workers Compensation Claim (WCC) under Section 11A (1) NSW Workers Compensation Act 1987:
“No compensation is payable under this Act in respect of an injury that is a psychological injury if the injury was wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.”
This protection (often known as ‘reasonable management action’) remains in effect.
The Changes
What has changed however, is where an employee makes a claim based on exposure to a relevant event.
This has previously included:
- being subjected to an act of violence or a threat of violence, or
- being subjected to indictable criminal conduct, or
-
witnessing—
- a traumatic incident happen, or
- a dead or seriously injured person at the scene of a traumatic incident, or
- experiencing vicarious trauma, or
- being subjected to sexual harassment, or
- being subjected to racial harassment, or
- being subjected to bullying, or
- being subjected to excessive work demands, or
- another event prescribed by the regulations.
So what’s changed?
Employers can now also raise the assertion that the psychological claim is not caused by a “relevant event.”
How does this work?
(a) The Employer needs to provide sufficient information to the insurer to confirm the incident was not a ‘Relevant Event’
(b) The insurer is then empowered to investigate further, and may legally require the employee is to provide additional information to confirm that it was.
(c) If the employee cannot or does not provide additional information on request, a refusal of the claim may reasonably follow from the Insurer.
The Practical Effect:
This change:
-
Shifts the onus of proof back on the employee to provide more information to substantiate their claim; and
-
If the employee is unsuccessful in challenging the decision internally with the insurer, requires that the employee take the additional step of challenging an insurer determination via the NSW Industrial Relations Commission (NSW IRC), and requires them to prove their claim via the tribunal.
If you have a workers compensation issue developing in your business, contact the MTA NSW Employment Relations Team at
[email protected]
or
(02) 90169000.
If you can address these issues at the ‘front end” of the process, it helps manage and control the issue before it is out of control.