Stressed out: are you eligible for workers comp?

Stressed out: are you eligible for workers comp?

By Gaby Grammeno on 8 October 2018
Mental stress is reportedly one of the biggest issues in Australian society today.

Employers, unions, GPs, individuals and their families are struggling to cope with the tide of psychological conditions that afflict a significant proportion of the population. Surveys reveal that about three in every 10 workers often feel high levels of stress in their jobs.
Safe Work Australia reports that, every year, more than 7000 Australians are compensated for work-related mental health conditions, resulting in more than half a billion dollars in payments. 

These costs of course are passed back to employers in the form of higher workers compensation premiums, though the direct costs are small compared to the indirect costs of lost productivity – such as sick leave, replacement and staff turnover costs, and the diminished efficiency and effectiveness of the ‘working wounded’.

Employers’ obligations

An employer’s first line of defence against workers compensation claims – or extended sickness absence – for stress is to take all reasonably practicable steps to minimise harmful levels of work pressure, sexual or racial harassment, bullying and violence, and to recognise that some individuals are more vulnerable than others.

Good two-way communication with the person is key to managing such an issue. This is particularly important for employers of people in the highest-risk occupations, including police, defence force members and fire fighters; train, tram and bus drivers; health and welfare support workers; prison and security officers; ambulance officers and other paramedics; and social and welfare professionals.

Workers compensation claims

Given the nature of certain occupations, and given that most people will experience a mental health issue at some time in their lives, some employers will face the situation where an employee is seeking to claim a lump sum in compensation for permanent impairment due to work stress. 

But what is required for such a claim to succeed?

Claimants must have robust medical evidence to support their claim of a work-related psychological injury or disorder. It is not enough merely to get a medical certificate citing ‘stress’. An accredited specialist in mental health conditions will be required to assess the individual’s ‘whole person impairment’. This is a measure of the degree to which a person is restricted in terms of their capacity to work and their ability to manage activities of daily living. Claimants must meet a whole person impairment (WPI) threshold of 15% in order to claim for a psychological injury.
A specialist will assess a person in terms of the criteria set out in the Psychiatric Impairment Rating Scale, including:
  • ability to take care of oneself and personal hygiene
  • engagement in social and recreational activities
  • ability to travel, both with and without assistance
  • social functioning and relationships with other people
  • ability to concentrate on tasks
  • employability.
Note that compensation is not payable if it can be shown that the claim is primarily due to reasonable management action such as performance appraisal, transfer, discipline or demotion, provided that management’s actions were undertaken in a reasonable manner. Nor will a stress claim be accepted if it is held to have arisen mainly in response to personal problems such as financial, marital or health issues. To be eligible to claim compensation, the stress must be clearly attributable to the work the person was doing.

Claims of negligence

Under some circumstances, a worker may succeed in suing an employer for negligence and receiving a payout for damages.

In March 2017, for example, a Victorian woman employed as a case manager assisting in youth welfare within the criminal justice system was awarded damages of $625,000 by the Supreme Court of Victoria. It ruled that inappropriate supervision had aggravated her pre-existing psychological condition. The court considered that the employer had breached its duty of care by failing to investigate her complaint and deal with the interpersonal conflict issues she had with other staff. 
The court had previously awarded a former school teacher almost $1.3 million after he suffered a mental breakdown as a result of being allocated classes made up almost entirely of the school’s most challenging students.

Such cases began to appear in the courts in the 1990s, and have proved something of a growth area, which is why eligibility to make such claims has been progressively restricted.

Support recovery and early return to work 

Early intervention by employers is vital, particularly if at-risk individuals have already taken sick leave citing stress, or are currently on ‘stress leave’. Management should stay in touch with anyone in this situation and look for ways to fix whatever work-related issues they may have. Such contacts should seek to strike a rapport with the person and make changes to help the person return to work, while maintaining the confidentiality of the information relating to their situation.


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