The Work Health and Safety Act 2011 (NSW) (WHS Act) defines 'health' as both physical and psychological health. Each year, 7,200 Australians receive compensation for work-related psychological injuries, equating to around six percent of workers' compensation claims and approximately $543 million in payments for workers' compensation.1

Psychological injury includes a range of cognitive, emotional and behavioural symptoms that interfere with a worker's life and can significantly affect how they feel, think, behave and interact with others, including at work. Relatively common psychological disorders include depression, anxiety and post-traumatic stress disorder.

A worker's psychological health can be adversely affected by a range of workplace issues including exposure to:

  • a poorly managed work environment;
  • a poorly designed work environment;
  • a traumatic event;
  • workplace violence;
  • fatigue
  • bullying or harassment; and
  • excessive or prolonged work pressures.

Increased frequency or duration of stress responses can cause high rates of sick leave, staff turnover, withdrawal and presenteeism as well as poor work performance.

Who has WHS duties in relation to psychological hazards?

A person conducting a business or undertaking (PCBU), such as a Council, has a primary duty under section 19 of the WHS Act to ensure, so far as is reasonably practicable, the health and safety of workers engaged or directed by the PCBU while the workers are at work in the business or undertaking. The Council's duty extends to ensuring the psychological health of its workers.

Workers also have duties. They must:

  • take reasonable care for their own health and safety, including their psychological health; and
  • take reasonable care that they do not adversely affect the health and safety of other persons, including psychological health.

Workers also have a duty to cooperate with any reasonable policies and procedures and comply with reasonable instructions about work health and safety matters. This includes complying with policies regarding bullying and harassment, workplace injury management, and the reporting of psychological injuries.

How to manage risks associated with psychological hazards

Psychological risks and hazards are often not as well identified and managed as their physical counterparts, but they are certainly no less important.

PCBU's such as Councils should ensure that they properly identify, assess and manage risks to psychological safety in their workplace. Useful controls to manage psychological risks include:

  • training and education, particularly with a view to increasing awareness of psychological health issues;
  • ensuring that psychological health is addressed in any change management plans;
  • considering fatigue management when developing rosters for shift workers;
  • providing EAP services, particularly following any traumatic events;
  • encouraging workers to be healthly and active; and
  • ensuring that workers on return to work plans are well-supported to return to their pre-injury role as quickly as possible.

When is a psychological injury compensable?

In all jurisdictions, an injury is only compensable if it arose out of or in the course of employment. The Workers Compensation Act 1987 (NSW) (WC Act) qualifies this further by stating that the employment must have been a significant, material, substantial or major contributing factor to the injury. Under section 11A of the WC Act, a claim will not generally be accepted if it is wholly or predominantly caused by reasonable action taken by the employer with respect to dismissal, retrenchment, transfer, performance appraisal, disciplinary action or deployment.

There can often be a blurred line between reasonable management action carried out in a reasonable manner and a perception of bullying in the workplace. Action that is found to be 'reasonable management action' will generally fall outside the scope of a compensable psychological injury under the WC Act and also outside the scope of bullying for the purposes of the Fair Work Act 2009 (Cth) (FW Act).

Practical guidance

Councils should ensure that psychological risks and hazards in the workplace are managed in a conceptually similar manner to the way in which physical risks and hazards are managed. The key is to ensure that the organisation has systems in place to identify, assess and manage those risks, and to regularly revisit that process.



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.