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If you have suffered a psychological injury or mental health condition because of your work in Sydney or anywhere in NSW, you may be entitled to workers compensation. Recent law reform has significantly changed how psychological injury claims are assessed and paid, so understanding your rights early has never been more important. Mental health conditions arising from the workplace can have a serious impact on your wellbeing, your ability to work and your daily life. Conditions such as anxiety, depression and post traumatic stress can develop from ongoing workplace stress, bullying, harassment or exposure to traumatic events. Obtaining clear legal advice early can help ensure your claim is handled properly and assessed under the correct rules. At Stephen Young Lawyers, we assist workers across Sydney and throughout NSW with psychological injury workers compensation claims. We provide straightforward advice and act on a No Win No Fee basis for eligible matters, guiding you through the process from beginning to end.
If your mental health condition was caused or aggravated by your employment, you may be entitled to workers compensation benefits.
Mental health workers compensation claims in NSW can arise from a range of workplace situations, including excessive workload, ongoing stress, bullying or exposure to difficult or traumatic events. These claims are assessed based on medical evidence and the connection between your condition and your employment.
Workers compensation for a psychological injury may include income support if you are unable to work, along with coverage for reasonable and necessary treatment such as counselling, psychological therapy and psychiatric care. Because these claims can be complex, and because the law has recently changed, obtaining early legal advice can help ensure your claim is properly prepared and supported.
In late 2025 and early 2026 the NSW Parliament passed two major reform Acts, the Workers Compensation Legislation Amendment Act 2025 and the Workers Compensation Legislation Amendment (Reform and Modernisation) Act 2026. Together they change how psychological injuries are defined, assessed and compensated across the scheme. The changes are being introduced in stages, and the NSW Government is still finalising commencement dates and transitional arrangements. Because the timing affects which rules apply to your claim, early advice is important.
The most significant changes for injured workers are outlined below.
A narrower definition of primary psychological injury
Under the reforms, a primary psychological injury is only compensable if it results from a defined relevant event, there is a real and substantial connection between that event and your employment, and employment is the main contributing factor to the injury. This is a more restrictive test than the previous approach.
A relevant event includes:
A new pathway for bullying, harassment and workload claims
Claims for psychological injury caused by bullying, harassment or excessive work demands now follow a specific process. The worker submits a claim form and the insurer has 42 days to determine liability. While liability is being assessed, the worker can receive interim weekly payments at 75% of pre injury average weekly earnings and can access up to $7,500 in medical treatment. If the insurer disputes whether the conduct meets the legal definition, the question of whether the relevant conduct occurred may be determined by the Industrial Relations Commission before the matter can proceed in the Personal Injury Commission.
Changes to the length of weekly payments
Weekly payments for a primary psychological injury are now capped at 130 weeks unless the worker meets an increased whole person impairment (WPI) threshold. A new intensive return to work program provides additional support for workers in certain impairment ranges, including up to an additional 52 weeks of weekly payments, a further year of reasonable and necessary medical treatment, and tailored retraining and rehabilitation.
The table below sets out the key thresholds. The figures represent the position provided for in the legislation and are being phased in over time.
From | WPI for extended weekly payments beyond 130 weeks | WPI range for the intensive return to work program |
1 July 2026 | At least 25% | 21% to 24% |
1 July 2027 | More than 26% | 21% to 26% |
1 July 2029 | At least 28% | 21% to 27% |
Changes to lump sum and work injury damages thresholds
The same increased WPI thresholds also affect access to lump sum permanent impairment payments and to a Work Injury Damages claim for a primary psychological injury. The previous 15% threshold continues to apply to primary psychological injuries notified before the reforms commence, while higher phased thresholds apply to injuries notified after commencement. You can read more on our Work Injury Damages page.
Access to medical treatment
Workers with a primary psychological injury will generally have access to one year of reasonable and necessary medical treatment after weekly benefits cease. Workers assessed with more than 30% WPI, described as highest needs workers, retain lifetime access to medical treatment.
Who is not affected by the new psychological injury rules
The new rules for psychological injury do not apply to certain exempt workers, coal miners and volunteers. Exempt workers include police officers, paramedics and firefighters.
Workplace bullying and harassment remain common causes of psychological injury.
If you have experienced ongoing bullying, intimidation or unreasonable behaviour at work, and this has affected your mental health, you may be entitled to claim workers compensation. As explained above, these claims now follow a defined conduct pathway and may involve the Industrial Relations Commission where the insurer disputes whether the conduct occurred. They often require detailed evidence of workplace conduct and how it has contributed to your condition.
Not all workplace conflict will result in a valid claim. Where the conduct falls within the definitions of bullying or harassment and is connected to your employment, a psychological injury workers compensation claim may be available.
Under the NSW workers compensation scheme, a psychological injury claim may be declined if the condition was caused by reasonable management action carried out in a reasonable way. The reforms have broadened and more clearly defined this concept.
Reasonable management action may include appraisal or feedback about performance, counselling, suspension or stand down, disciplinary action, training, and investigation of alleged misconduct. Disputes often arise about whether the action taken was reasonable in all the circumstances. These matters require careful assessment of both the facts and the medical evidence, and legal advice can help determine whether your claim may still proceed.
Psychological injuries in the workplace can take many forms and may develop gradually or following a specific event.
Common conditions include anxiety, depression, post traumatic stress disorder and other stress related conditions. In some cases symptoms build over time due to ongoing workplace pressures. In others they arise suddenly following a traumatic incident. The severity of your condition and its impact on your ability to work will influence the type of benefits available.
If you have suffered a psychological injury at work, you may be entitled to a range of workers compensation benefits.
Benefits may include income support if you are unable to work, along with coverage for reasonable and necessary treatment such as counselling, therapy and psychiatric care. Where the condition results in permanent impairment, a lump sum payment may be available if you meet the applicable WPI threshold. In more serious cases, and where employer negligence can be established, a Work Injury Damages claim for economic loss may be an option, subject to the higher thresholds now applying to primary psychological injuries.
While each claim is different, and the reforms have changed several of these entitlements, obtaining advice tailored to your circumstances can help you understand what you may be entitled to claim.
Strict requirements apply to workers compensation claims in NSW, and early action is important.
Psychological injuries should be reported to your employer as soon as possible, and medical treatment should be sought without delay. A Certificate of Capacity from your treating doctor will generally be required to support your claim. Because psychological injury claims rely heavily on medical evidence, and because the date your injury is notified can affect which rules apply, early legal advice can help ensure your claim is properly documented and lodged at the right time.
You are not required to have a lawyer to make a claim. However, psychological injury workers compensation claims can be complex, particularly following the recent reforms and where there are disputes about the cause of the condition, whether the conduct meets the new definitions or whether management action was reasonable.
An experienced psychological injury lawyer can assist in preparing your claim, gathering medical evidence and managing communication with insurers. Legal support can also be important if your claim is declined or disputed. Having the right advice can make a meaningful difference to the outcome of your claim.
At Stephen Young Lawyers, we provide clear and practical advice while managing your claim from beginning to end. We assist clients across Sydney and throughout NSW with mental health workers compensation claims, and we stay across the ongoing reforms so that your matter is handled under the current rules. Our team works to ensure your claim progresses efficiently while protecting your rights and entitlements.
If you have suffered a psychological injury or mental health condition because of your work, obtaining early legal advice can make a significant difference to your claim. With the law changing, getting the right advice early helps ensure your injury is properly classified, assessed and pursued under the correct rules. Stephen Young Lawyers assist clients across Sydney and throughout NSW with workers compensation claims. We offer free initial advice, and legal costs for all eligible workers compensation claims are funded by the Independent Review Office (IRO).
Contact our team today to discuss your situation and understand your options.