Australia: Psychological Injuries – No Requirement that A Worker’s Perception of Events Be "Reasonable"

Last Updated: 16 September 2010
Article by Fiona King

Attorney General's Department v K [2010] NSWWCCPD 76 (21 July 2010)

Acting President Bill Roche of the Workers compensation Commission of NSW ('WCC') dismissed an appeal lodged by an employer against the decision of the Arbitrator to award a worker benefits of weekly compensation and treatment expenses as a result of a psychological injury. The decision emphasises that there is no requirement at law that a worker's perception of events must pass some 'qualitative test of reasonableness' in order to establish an entitlement to compensation.


The worker commenced proceedings in the WCC alleging that she had sustained a psychological injury as a result of an excessive workload, chronic pain associated with a (work related) foot injury and harassment in the workplace.

The insurer disputed liability, inter alia, on the basis that the injury had arisen as a consequence of her 'misperception of events,' such that the injury did not arise out of or in the course of employment and was not 'substantially work related.'

At first instance, Arbitrator John McGruther found that the worker had received a psychological injury arising out of her employment to which employment had been a substantial contributing factor. The employer appealed the Arbitrator's decision.


On the issue of 'injury' the employer submitted that the 'harassment, victimisation and excessive workload' alleged to have caused the worker's injury amounted to 'a misperception' of actual events. The employer's submission was based upon the purported application of Yeo v Western Sydney Area Health Service (1999) 17 NSWCCR 753 in which His Honour Judge Neilson of the former Compensation Court held that:

"A misperception by a worker of an otherwise innocuous matter, which misperception leads a worker to develop a psychiatric condition, does not constitute an injury arising out of or in the course of employment".

The Acting President concluded that the critical question for determination was whether the events complained of occurred in the workplace. He emphasised that a worker's reaction to events will always be subjective and will depend upon his or her personality and circumstances. The Acting President proceeded to set out a number of conclusions which he had drawn from authorities on this issue:

  • Employers take their employees as they find them (the 'egg shell psyche' principle)

  • A perception of real events, which are not external events, can satisfy the test of injury arising out of or in the course of employment
  • If events which actually occurred in the workplace were perceived as creating an offensive or hostile working environment, and a psychological injury followed, it is open to the Commission to conclude that causation is established
  • So long as the events in the workplace were real, rather than imaginary, it does not matter that they affected the worker's psyche because of a flawed perception of events because of a disordered mind
  • There is no requirement at law that the worker's perception of the events must have been one that passed some qualitative test based on an 'objective measure of reasonableness'
  • It is not necessary that the worker's reaction to the events must have been 'rational, reasonable or proportionate' before compensation may be recovered.

Although the worker's reference to 'bullying and harassment' may have been, on one view, an overstatement, the worker's perception was that she had been unfairly treated at work over work matters. The fact that the manager against whom the worker's allegations of victimisation were directed had a different perception of a particular conversation did not defeat the worker's claim. Even if the worker's perception had been an irrational one (which he did not believe it was), it was based on real events concerning important work issues.

In short, the Acting President accepted that the worker was distressed by her manager's conduct and that it played a significant part in the development of her psychological condition. The worker had based her perception upon real events that happened at work. As such, the Arbitrator did not have to consider whether the worker's perception was erroneous or irrational. He only had to determine if the events complained of actually occurred and, if they did, whether the worker's injury resulted from those events.


The decision puts paid to attempts by employers to dispute claims for psychological injury based upon a broad interpretation of the 'misperception' argument proposed by Neilson J in Yeo, particularly in circumstances where the worker's injury was caused by a reaction to seemingly innocuous events at work or an arguably 'irrational' interpretation of exchanges with other employees. The Acting President has emphasised that the statutory workers compensation scheme operates within a 'no fault' framework. A worker's entitlement to compensation is not dependant upon the worker establishing that his or her perception of events was a rational one. The worker need only establish that the events in question occurred and that the injury flowed from a genuine reaction to those events in order to succeed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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