The Section 11A Defence for Psychological Injury in the Workplace

Article David Pena 07 November 2024

A recent Safe Work Australia report found that in 2021-2022, 27.5% of the significant work related psychological injury claims lodged were attributed to work related harassment and/or bullying, 25.2% to workplace pressure and 16.4% to exposure to workplace or occupational violence.

In New South Wales (NSW), workers' compensation claims for psychological injuries are assessed under the Workers Compensation Act 1987 (NSW) and the Workplace Injury Management and Workers Compensation Act 1998 (NSW).  This means that the ‘no-fault’ principle applies in the same way as other workplace claims, and that the injured worker does not need to prove that their employer was negligent, simply that their injury is work-related.

However, even as awareness around mental health issues grows, navigating the criteria for these claims can be complex and challenging.

 

What is a Psychological Claim?

Psychological claims are typically made for conditions like anxiety, depression, major depression, PTSD and other recognised psychological conditions that arise from workplace events. The NSW workers' compensation system recognises these injuries and that a worker has the right to claim the cost of their injury treatment and wage benefits for periods of incapacity.  Depending on the severity and permanent nature of the psychological condition, a claim of lump sum compensation may also be made.

In our experience, psychological claims currently face high rates of denial.  One of the main reasons for such high rates is the fact that, when arguing against paying out a claim, workers compensation insurers often rely on a defence known as the “Section 11A defence”.   

Section 11A of the Workers Compensation Act 1987 (NSW), states that if the psychological injury is a result of reasonable management actions, such as performance appraisals, disciplinary actions, retrenchments, transfers, performance appraisal or termination, no workers compensation is payable. This is intended to prevent compensation for distress or dissatisfaction arising from standard workplace activities.

Importantly, the employer bears the onus of establishing that its conduct was ‘reasonable’ and that the employer’s action was the whole or predominant cause of the worker’s psychological injury.

 

What constitutes ‘reasonable’ action by the employer?

‘Reasonable’ action on the part of the employer can be subjective, creating a grey area in the claims process.

When a claim is made, all relevant factors must be taken into consideration - including the rights of both the injured worker and the employer.   It is not enough that an employer believed that the action that caused the worker’s psychological injury was reasonable.  Any procedural and policy documents of the employer will be considered as evidence and consideration would be given not only to the result, but also to the manner in which the employer effected the end result.

For instance, if an employee alleges that an employer's action was excessive or conducted in a manner that negatively impacted their mental health, determining reasonableness can involve detailed examinations of workplace practices, performance management, and the specific context of each action.

The defence of the claim by an insurer is assessed on the facts of the individual matter, which differ from case to case.  When considering the employer’s action, the Personal Injury Commission (hearing the case) needs to take into account the whole process of the employer’s action that caused the worker’s psychological injury.

 

Have you had a claim denied?

NSW workers' compensation law acknowledges psychological injuries, yet the 11A Defence has become an increasingly popular way for workers compensation insurers to deny claims.  In our experience, a successful claim may still be possible.

If you are suffering psychological injury as a result of your employment and have had a workers compensation insurance claim declined on the basis that the actions of your employer were reasonable, we would encourage you to seek legal advice. 

For further information, contact David Pena, CDQ’s Accredited Specialist in Personal Injury Law, on ph: 02 8556 0130.

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