Your Job Is Hurting Your Mental Health – Can You Get Compensation in NSW?

The demands of modern work are unrelenting. Emails pile up, deadlines loom, and the pressure to perform never seems to ease.

For many Australians, workplace stress isn’t just an occasional bad day—it’s a chronic condition that seeps into every aspect of life.

And increasingly, it’s becoming a legal issue.

In 2022, a Gallup report showed that 44% of employees report having experienced a lot of stress at work. It is no surprise then that among serious claims in 2023-2024, 17,600 were related to mental health conditions, according to SafeWork. As stress-related compensation claims rise, understanding your rights in NSW has never been more critical.

What You Need to Know Now

Workplace stress can be debilitating, but having a diagnosis of “stress” does not qualify for compensation. Under NSW workers compensation laws, a claim must meet specific legal criteria:

• A diagnosed psychological condition (such as anxiety, depression, or post-traumatic stress disorder)
• A direct connection between the work environment and the diagnosed condition
• Work being a significant contributing factor to the injury
• The injury not resulting from “reasonable management action” (e.g., performance reviews, workload distribution, or disciplinary action)

Understanding these criteria is crucial to determining whether you have a viable claim and what steps to take next.

Employer Responsibilities: Preventing Workplace Stress

Employers in NSW have a legal duty to manage and minimise workplace stress risks. This includes:

• Implementing mental health policies and programs
• Offering access to Employee Assistance Programs (EAPs)
• Monitoring workloads and ensuring fair task distribution
• Addressing workplace bullying and harassment
• Training managers to support employees experiencing stress

Failure to meet these responsibilities can increase the likelihood of workers compensation claims and legal liability.

Is All Stress Bad?

The Fine Line Between Healthy and Harmful Stress

Not all workplace stress is bad. In fact, moderate stress can enhance performance by boosting focus, motivation, and productivity.

But according to the WHO, a healthy workplace promotes, among others, psychosocial wellbeing through a respectful culture with:

• Reasonable workloads;
• Consultative management;
• Anti-harassment policies;
• Work-life balance support; and
• Clear communication.

However, stress becomes harmful when job demands exceed a worker’s resources and capabilities. According to the US CDC, factors that contribute to excessive stress include:

●        Unmanageable workloads and conflicting expectations

●        Little control over tasks or decision-making

●        Inadequate breaks and unrealistic deadlines

●        Repeated criticism or lack of support from supervisors

●        Workplace harassment and bullying

When these stressors persist, they can lead to burnout, anxiety, and decreased productivity. If you develop a diagnosed psychological injury as a result, you may be eligible for workers compensation in NSW.

The Toll of Workplace Stress

Workplace stress doesn’t exist in isolation—it ripples out, affecting families, businesses, and society as a whole. The personal and economic costs are staggering.

Personal Impact

Persistently high workplace stress takes a personal toll by:

●        Harming mental health and emotional wellbeing

●        Making people feel tired and frustrated

●         Interfering with a healthy work-life balance

●        Reducing how well people can do their jobs

●        Decreasing engagement and satisfaction at work

Research shows these problems got worse during COVID-19, especially for:

●        Women professionals

●        Healthcare workers

●        Teachers and academics

Studies found that having good relationships at work and supportive leaders helps reduce these negative effects. However, when people feel isolated or unsupported at work, the stress tends to be worse.

Family and Business Impact

●        Increased household tension and emotional distress for loved ones

●        Financial instability affecting the entire family unit

●        Higher absenteeism reduced productivity, and lost workplace efficiency

●        An estimated $14.1 billion annual productivity loss in Australia due to workplace stress

●        Increased turnover rates, sick leave, and workers compensation insurance premiums for businesses

Navigating a Workers Compensation Claim for Stress

Lodging a workers compensation claim for a psychological injury is a multi-step process. Being prepared and understanding your rights can make the difference between a successful claim and a rejected one.

Types of Claims Available

Standard Workers Compensation:

• Covers weekly income payments
• Pays for medical expenses and psychological treatment
• Includes rehabilitation costs
• No requirement to prove employer fault

Common Law Claims:

• Available in cases of serious permanent impairment (15% or higher)
• Requires proof that the employer’s negligence directly caused the injury
• Provides higher compensation amounts
• Covers long-term economic losses and pain and suffering

Compensation Structure: What You’re Entitled To

Workers who successfully claim compensation are entitled to payments based on their pre-injury earnings. It’s important to note that these payments are also subject to the maximum weekly compensation amount, which varies and is adjusted twice a year. From 1 October 2025 to 31 March 2026, the maximum weekly compensation amount is $2,604.80.

Compensation Rate

• First 13 weeks: 95% of pre-injury average weekly earnings (PIAWE)
• Weeks 14-130:
  • Working 15+ hours per week: 95% of PIAWE minus earnings
  • Working less than 15 hours per week: 80% of PIAWE minus earnings
• Weeks 131-260: Subject to work capacity assessment
• Beyond 260 weeks: Available for severe cases (20%+ impairment)

Understanding this structure can help set realistic financial expectations while navigating the claims process.

Essential Steps to Lodging a Claim

1. Seek Medical Treatment

• • Obtain a formal diagnosis from a doctor or psychologist
  • Request a Certificate of Capacity, which is required for workers compensation claims
  • Keep detailed records of symptoms, medical visits, and prescribed treatments
  • Document Workplace Triggers

2. Maintain a log of incidents that contributed to your condition

• • Save emails, messages, and documents that provide evidence of workplace stress
  • Identify and list witnesses who can confirm stressful or harmful work conditions

3. Notify Your Employer

• • Provide formal written notice of your injury
  • Include details of the incidents that led to the psychological injury
  • Keep a record of all correspondence and paperwork related to your claim.

4. Consult a Specialist Workers Compensation Lawyer

• • Early legal advice increases your chances of a successful claim
  • A lawyer can help gather the necessary evidence and documentation
  • Ensures you meet all legal deadlines and procedural requirements

By taking these proactive steps, you improve the likelihood of receiving fair compensation while protecting your legal rights.

Common Reasons Claims Are Denied

• Lack of sufficient medical evidence linking stress to work
• Employer disputing the claim as “reasonable management action”
• Missed deadlines for lodging the claim
• Insufficient documentation of workplace incidents
• Pre-existing psychological conditions being cited as the primary cause

If your claim is rejected, legal assistance can help you challenge the decision through a dispute resolution process.

Managing Stress While Pursuing Your Claim

The claims process itself can be stressful, and managing your wellbeing during this time is essential.

Professional Support

• Regular consultations with a doctor or psychologist
• Engaging in workplace mental health programs (where available)
• Participating in peer support groups for stress-related injuries
• Exploring return-to-work programs if appropriate for recovery

Personal Coping Strategies

• Sticking to a structured daily routine to maintain stability
• Engaging in regular physical activity (if medically approved)
• Prioritising healthy sleep habits and relaxation techniques
• Staying connected with family, friends, and a support network

Legal Support: What Your Lawyer Can Do for You

• Update you on the progress of your claim
• Provide clear communication and expectations about timeframes
• Handle negotiations with insurers and employer representatives
• Assist with appeals if your claim is disputed or denied

Why This Matters

Workers compensation for stress isn’t just about money—it’s about protecting mental health, securing financial stability, and holding workplaces accountable for unsafe environments. If you’re struggling with workplace stress, taking action could mean the difference between ongoing hardship and a path to recovery.

At BPC Lawyers, our team of expert Workers Compensation Lawyers Sydney understands the complexities of psychological injury claims. Call us for expert advice or get a FREE claim review now.