Psychological Injury Claims in Australian Workplaces
What employers need to know.
- Mental health claims drive huge financial risks for Australian employers.
- WHS regulations mandate proactive management of 17 psychosocial hazards.
- Policy breaches and toxic cultures expose employers to massive damages.
- Regulators require systemic work design changes, not just EAPs.
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Psychological injuries at work are now one of the most significant legal and financial risks facing Australian employers. In 2023–24 there were 17,600 workplace mental health claims nationally up 161% over a decade, with the average worker taking 35.7 weeks off work.
In NSW alone, psychological claims represent just 12% of claims but drive 38% of total scheme costs, with the average claim nearly doubling to $288,542 in five years.
New psychosocial hazard legislation is now in force across all states and territories including the commonwealth jurisdiction, courts are expanding employer liability beyond the traditional workers' compensation system and regulators are now prosecuting.
This is no longer an HR issue, but rather a governance and compliance priority with serious financial and criminal consequences.
This article covers the landmark cases shaping employer liability, the new legislative obligations in force across Australia and the practical steps every employer should be taking now.
What’s Changed
The model WHS Regulations in relation to the management of psychosocial hazards, were amended in June 2022 and came into effect on 1April 2023.
These amendments require employers to proactively identify, assess, control and review psychosocial hazards using the same systematic approach applied to physical risks.
The Commonwealth, Managing Psychosocial Hazards at Work Code of Practice 2024 codifies 17 specific hazards, including the additional hazards of job insecurity, fatigue and intrusive surveillance, bullying, harassment (including sexual harassment), violence and aggression, job demands and exposure to traumatic events are also included.
Compliance with psychosocial hazard obligations goes beyond policy documents and Employee Assistance Programs (EAP). It requires the implementation of higher order controls such as changing systems of work and implementing structural changes to how work is designed, organised and managed.
Reducing the risk by altering plant and the workplace environment, are also considered higher order controls.
The courts have moved in unison with the regulators. The cases below illustrate exactly what that means for employers.
Psychological Injury Claims Case Examples
Elisha v Vision Australia Limited [2024] HCA 50 — $1.44 million awarded
A Vision Australia employee was stood down and investigated after a work trip incident, without being informed of all allegations against him,breaching the company's own disciplinary procedure. The High Court ruled this breach directly caused a serious psychiatric injury and upheld damages of $1.44 million.
Why it matters: Psychiatric injury is now recoverable as personal injury in an employment contract breach claim,opening a liability pathway entirely outside the workers' compensation system.
This decision overturns long-held legal principles, significantly expanding (potential) employer liability in cases involving psychiatric injuries to its workers. Employers must now consider the risks associated with disciplinary and termination processes, particularly where their employment contracts incorporate policies and procedures.
Employer lesson: Any breach of your employment contract, enterprise agreement or internal policies in a disciplinary context now exposes you to psychiatric injury claims. Settlement deeds must be drafted broadly.
Comcare v Department of Defence — $188,000 fine & adverse publicity order (December 2025)
A RAAF technician died by suicide in 2020 after being subjected to four performance management Work Plans over six months while showing clear signs of distress. Supervisors never referred him for support. Defence pleaded guilty under the Commonwealth WHS Act — the first criminal conviction of a Commonwealth employer for failing to manage psychosocial risks.
Why it matters: Defence had policies in place. However, they failed to provide the necessary training for supervisors involved in using the draft work plan procedure as a performance management tool.
Employer lesson: Supervisors must be able to identify signs of stress and ill-health displayed by workers during the performance management process and be able to act upon them as soon as possible. Including suspending performance management when a worker is struggling.
WorkSafe v Court Services Victoria — $379,157 fine (October 2023)
Court Services Victoria pleaded guilty under the OHS Act 2004 (Vic) for failing to identify and address psychological risks at the Coroners Court, where a toxic workplace culture had developed over several years.
Why it matters: A toxic culture, not just discrete incidents, is a psychosocial risk employers are legally obligated to address. A formal complaint or reported injury is not required for a breach to be found.
Employer lesson: Having a toxic workplace culture is a psychosocial hazard. Regular audits, anonymous surveys and acting on results are legal obligations.
Teacher — Workplace Bullying, NSW — Over $400,000 by way of settlement
A teacher was subjected to sustained humiliating behaviour by a colleague. She reported it to her principal, who took no action. She developed Post-Traumatic Stress Disorder (PTSD) and was certified unfit to continue teaching. The claim was accepted and settled with a lump sum for permanent impairment.
Employer lesson: Failing to act on a bullying complaint is direct evidence of negligence. Document every complaint, investigate promptly and take appropriate and necessary action.
Child Welfare Worker — PTSD and Depression, NSW — Over $700,000 in damages
A child welfare worker in a complex, high-risk role repeatedly sought support from his employer. No support was provided. He was diagnosed with PTSD and depression and considered unfit for work. Compensation included weekly benefits, a $50,000 lump sum and a Work Injury Damages claim of approximately $500,000.
Employer lesson: Workers in high-trauma roles carry a foreseeable risk of psychological injury. Proactive support frameworks are required,not just reactive responses after a claim is lodged.
Workplace Bullying and Harassment — Over $500,000, NSW
An employee experienced sustained bullying from management, resulting in a psychological injury assessed above the 15% Whole Person Impairment threshold. A work injury damages claim followed, with total compensation exceeding $500,000.
Employer lesson: When employers know about bullying and fail to act, the negligence threshold is readily met. The cost of inaction far outweighs early intervention.
What these cases show
Liability is broader than most employers realise. It extends beyond WorkCover into common law and contract claims. It applies to cultures, not just incidents. It catches failures of processes and systems as much as failures of policy.
And the costs in terms of financial, reputational and in the most serious cases criminal convictions, are substantial.
The common thread across every case is the same: the employer knew or ought to have known about the risk, and failed to act.
High-Risk Areas Every Employer Must Address
Disciplinary and performance management. Post-Elisha, a flawed process is a psychiatric injury claim waiting to happen. Follow your own procedures precisely, disclose all allegations upfront and suspend performance management if a worker shows signs of distress and mental ill health.
Bullying and harassment. The largest single driver of claims. A policy is not enough, you must demonstrate active monitoring, investigation and action. When employers know and fail to act, negligence is readily established.
High-trauma roles. Courts accept that psychological injury risk is foreseeable for healthcare, community services andfirst responders as a distinct class of workers. You don't need a prior incident to be on notice. Employers must be aware of the inherent risks of certain roles within various industries.
Organisational change. Poor organisational change including poor communication of restructures, is now an explicitly regulated hazard. Psychosocial risk management must be built into organisational change processes from the start.
Not sure where to start?
Achieving compliance with psychosocial risk management, and doing it well, demands more than revised policies alone.
It calls for robust systems, targeted training, work design, work redesign, systems change, altering plant, altering workplace environment, altering the management of work and having in place a culture of psychosocial safety that leaders and management actively bring to life in their day-to-day practice.
Foremind partners with organisations to evaluate psychosocial risk, develop actionable management frameworks and equip those responsible with the skills to put them into practice.
Answers to the frequently asked questions.
Our last EAP was barely touched. Why would this be different?+
Most EAPs go unused because of how they're accessed, not because staff don't need them. Phoning a stranger, explaining yourself, then waiting weeks is enough to stop most people before they start. Foremind removes all three steps: staff see real counsellor profiles, pick someone themselves, and book the same day.
If you already have a provider, the question worth asking is what your current utilisation is. Most traditional EAPs sit in low single digits, which means you're paying for cover your people aren't reaching. If yours is being used, staff can get seen quickly, and it covers your psychosocial obligations, there's no reason to move. If not, it's worth knowing what you're getting for the spend.
Do you offer 24/7 support?+
Yes. A 24/7 after-hours crisis line means staff can reach someone immediately at any hour, including nights and weekends.
Counselling appointments are also available outside standard business hours, so shift-based and on-call teams aren't limited to a nine-to-five window. Those are two different things, and it's worth checking any provider offers both rather than just the crisis line.
Are your EAP counsellors based in Australia?+
Yes. Every practitioner on the platform holds current membership with an Australian professional body and practises under Australian standards, codes of ethics and disciplinary frameworks. There are no offshore call centres.
Practitioners hold membership with the Australian Counselling Association, the Psychotherapy and Counselling Federation of Australia, or the Australian Association of Social Workers, along with a current Working with Children or Vulnerable People Check.
How much does an EAP cost?+
Pricing is usually per employee per month, based on total headcount rather than how many people use the service. Costs vary widely depending on whether sessions are bundled in and whether compliance tooling is included.
A more useful comparison is cost per employee who actually uses it. An EAP with 2% utilisation can work out several times more expensive per person helped than one that gets used. Foremind offers pay-as-you-go, inclusive session plans and compliance-inclusive plans, with discounted pricing for not-for-profits and charities.
For full breakdown of our plans, see our EAP pricing page or request a quote for a tailored proposal.
What information does an employer receive about EAP usage?+
Nothing that could identify anyone. All counselling is completely confidential and all reporting is anonymous - you'll never see who booked, when, or what was discussed.
What you do see is the aggregated picture: how many people are using it, what psychosocial risks are prevalent in the business, and which teams are under pressure. Enough to know the investment is working and where to act, never enough to identify a person. Reporting thresholds mean small teams can't be reverse-engineered from the data.
Does having an EAP meet an employer's psychosocial duty of care?+
No. An EAP is a control measure, and a valuable one, but it only addresses harm after it has occurred. It doesn't identify hazards, assess risk, or evidence that controls are working.
Australian WHS law requires you to identify psychosocial hazards, assess the risk, control it so far as is reasonably practicable, and review whether those controls are working — with documented evidence at each step. Offering counselling on its own leaves three of those four steps undocumented.
Foremind covers both in one platform. See how the compliance side works in our product tour.