Workplace Bullying and Psychological Injury: When Can You Claim Workers Compensation?

At McDonnell Schroder, we see first hand how damaging workplace bullying and prolonged stress can be. Psychological injuries are just as real as physical ones, yet many workers are unsure whether they are covered or worry they will not be believed.

The law in New South Wales does recognise psychological injury from bullying and unreasonable stress, and in many cases you can claim workers compensation for treatment and lost income.

What counts as workplace bullying and psychological injury?

Workplace bullying is more than just a tough day or ordinary performance management. It usually involves repeated, unreasonable behaviour directed at you that creates a risk to your health and safety. Examples include ongoing humiliation, intimidation, exclusion, spreading rumours, or setting you up to fail with impossible deadlines or constantly changing instructions.

To bring a workers compensation claim for psychological injury, you must have a diagnosable condition – such as anxiety, depression or post‑traumatic stress – and work must be a main contributing factor to that condition. General unhappiness at work or a one‑off disagreement is rarely enough on its own.

When psychological injury is and is not covered

Psychological injury claims face an extra hurdle compared with physical injuries. Insurers often investigate closely and may argue that your condition arose from “reasonable management action”, such as a fair performance review, restructure or redundancy. If your condition is wholly or predominantly caused by reasonable management action, it may be excluded.

However, that does not mean all tough conversations or performance processes are automatically “reasonable”. Where management crosses the line into bullying, inconsistency, humiliation or bad faith, you may still have a valid claim. Each case turns on its own facts and the quality of the evidence.

Signs it may be time to get advice

You should consider legal advice if:

• You are experiencing ongoing bullying or unreasonable treatment at work.
• Your GP or psychologist has diagnosed a work‑related psychological condition.
• You are needing time off work or struggling to perform your duties.
• The insurer has rejected or delayed your psychological injury claim.

Early advice helps you understand your rights, gather the right evidence and avoid mistakes that can later be used against you.

What you can claim for a work‑related psychological injury

If your psychological injury is accepted as work‑related, you may be entitled to:

• Weekly payments to replace a portion of your lost wages while you are unable to work.
• Payment of reasonable medical, psychological and rehabilitation expenses.
• In some cases, a lump sum for permanent impairment if your condition is assessed above a certain threshold.

In more serious cases where negligence is involved, there may also be options to pursue work injury damages. We explain these pathways in plain language so you know which type of claim you are making and why.

How McDonnell Schroder can help

Our team has extensive experience running psychological injury and bullying claims through the NSW workers compensation system. We work with your treating doctors, help you document what has happened at work and respond to insurer investigations and independent medical assessments.

Many workers compensation matters are eligible for funding under the Independent Review Office (IRO) scheme, meaning you may not have to pay our legal fees directly.

When you contact McDonnell Schroder, we will tell you upfront how costs work and focus on helping you access the treatment and financial support you need to recover.

Speak With McDonnell Schroder Today!

At McDonnell Schroder, we understand how stressful these situations can be. Our experienced team will listen to your circumstances, explain your rights clearly, and guide you through the process with confidence and care.

Call us today on (02) 9622 1155 or fill out our online form for a free consultation. We’re here to guide you every step of the way.