Psychological Injuries At Work Explained

TL;DR

• Psychological injuries are mental health harms caused by workplace factors
• Australian WHS laws establish employer duties and employee rights
• Prevention requires early intervention, positive culture, and legal compliance
• Proper management is critical for wellbeing and productivity

Psychological injuries are increasingly prevalent in Australian workplaces, creating significant risks for employee wellbeing and organisational performance.

Without proper understanding and management, businesses face legal liability, reduced productivity, and potential harm to their workforce.

This guide equips HR professionals, WHS managers, and business leaders with current statistics, legal frameworks, and proven prevention strategies for the Australian context.

What Is A Workplace Psychological Injury?

Psychological injuries in the workplace encompass mental health issues that arise due to work-related factors.

Unlike physical injuries that manifest bodily harm, psychological injuries affect mental wellbeing and can include conditions such as stress, employee burnout, depression, or anxiety.

How do psychological injuries at work occur?

Psychological injuries can stem from work-related stress, workplace bullying, or anxiety caused by organisational changes.

Employees might experience prolonged distress, reduced productivity, or develop more serious mental health conditions.

Fair Work and state regulators have established clear definitions to help workplaces recognise and manage these issues.

Psychological injury claims are on the rise, and in some industries they're now occurring at rates similar to physical injury claims.

How Common Are Workplace Psychological Injuries in Australia?

Recent data indicates a significant prevalence of psychological injuries within Australian workplaces, drawing close scrutiny from both governmental bodies and health organisations:

Australian workplace mental health compensation claims reached 17,600 in 2023-24, representing 12% of all serious workers compensation claims

There has been a 47.5 per cent increase in primary psychological injury claims from 2019 to 2023 according to Allianz Australia's national claims portfolio. Mental injury compensation claims crossed the $1 billion threshold in 2024-25—five years ahead of projections.

What Are the Main Causes and Risk Factors?

Workplace psychological injuries stem from a complex interplay of occupational and personal factors:

Workplace Triggers

‍Psychological injuries typically stem from excessive workload, bullying, poor leadership, and organisational upheaval.

Environmental Factors

‍Toxic culture, inadequate support, and lack of resources are primary drivers, though personal factors can contribute.

Identifying Hazards

‍Safe Work Australia frameworks as well as dedicated psychosocial hazard EAP platforms like Foremind help businesses identify and assess psychosocial risks before they cause harm.

How Does Australian Law Approach Psychological Injury?

Australian legislation provides a framework for addressing the challenges of workplace psychological health:

Relevant legislation includes the WHS Act and Workers Compensation Acts, providing guidelines on employer obligations and worker rights.

Specifically, it defines a 'work-related' injury encompasses any mental harm primarily caused by work conditions or occurrences.

Employer obligations cover risk assessment, incident reporting, and facilitation of claim processes, ensuring compliance and support for affected workers.

How Can Employers Prevent Psychological Injury?

Catch Issues Early

‍Spot warning signs and tackle problems before they snowball into formal claims or long-term absences.

What Actually Works

‍Regular training, health check-ins, and creating a workplace where people genuinely feel supported make a real difference.

Learning from the Best

‍Top Australian employers show that putting workers at the center of mental health initiatives pays off, this includes implementing workplace wellbeing programs, as well as putting in place effective support systems like EAPs and easily accessible employee counselling.

The Bottom Line

‍Money spent on mental health isn't just the right thing to do—it improves performance and cuts worker absenteeism.

What Should You Do If a Psychological Injury Occurs?

Act Immediately

‍Respond quickly when distress is reported. Ensure safety, document the incident, and connect the employee with support.

Critical Incident Response

‍Activate your protocol for traumatic events like critical incidents —remove the stressor, arrange counseling, and debrief affected teams.

Follow Requirements

‍Report promptly and arrange professional assessment. State regulators have specific processes for managing claims.

Support Recovery

‍Work with healthcare providers on a tailored return-to-work plan that ensures the employee is genuinely ready.

Build Trust

‍How you handle these situations shapes workplace culture. Your response either builds or breaks employee trust.

Summing Up

Employers must embrace their role in fostering environments that not only prevent psychological injuries but also promote overall wellbeing. A proactive approach, grounded in understanding and managing legal, social, and corporate responsibilities, ensures a robust, resilient workforce.

Early intervention, adherence to national standards, and ongoing education about mental health are pivotal.

Talk to our team at Foremind today to understand how your business or organisation can take poractive steps to preventing psychological injuries at work.