A psychiatric injury has stopped me working. What do I need to know?

A change to the Return to Work Act means workplace psychiatric injury compensation claims are now assessed differently. TGB senior associate Dimitra Bouras and lawyer Alexandra Harris explain the change and how it may effect your chances of a successful claim.

If a psychiatric injury has stopped you working, you need to know about changes to the Return to Work Act before making a claim.

In order to have a psychiatric claim the first thing you must do is provide medical evidence. Under Section 7 of the Return to Work Act, you can only be compensated for an injury if it was sustained in the course of employment and, in cases of psychiatric injury, employment was the significant contributing cause.

This part of the legislation is new. Previously a psychiatric injury was only compensable if employment was ‘a substantial cause’ of the injury. Now employment must be ‘the significant contributing cause’. It appears, on the face of it, that the barrier to compensation has been raised.

If employment is accepted as the main cause of your psychiatric injury, compensation will still be blocked if the injury happened because of the following:

1. Reasonable action taken in a reasonable manner by the employer to transfer, demote, discipline, counsel, retrench or dismiss the worker or a decision of the employer not to renew or extend contracted services;
2. A decision of the employer based on reasonable grounds, not to award or provide a promotion, transfer or benefit in connection with the worker’s employment;
3. Reasonable administrative action taken in a reasonable manner by the employer in connection with the worker’s employment;
4. Reasonable action taken in a reasonable manner under this Act affecting the worker.

The wording and interpretation of this section of the Act is important. If the psychiatric injury is a result of ‘reasonable action’/ ‘reasonable administrative action’, the employer must satisfy this was done in a reasonable manner.

For example, if a worker is demoted or their contract is not renewed this is, arguably, a ‘reasonable administrative action’ by the employer. What is important is how the employer demoted the worker or advised them their contract would not be renewed. If it was done in an unreasonable manner, and that was the main cause of a psychological injury, the worker may have a compensable claim.

The decision of Ktisti v Hungry Jacks Pty Ltd (2014) illustrates this. Although this case was considered under the prior workers compensation legislation, the area of law it deals with remains relatively unchanged.

The worker was advised she would need to work more hours if she wanted to keep her job, which would seem ‘reasonable action’ by the employer. However, she was advised of the drastic roster change with just a week’s notice, and was threatened with termination if she did not agree. This, paired with other significant incidents at work, caused her distress and ultimately led to her developing a psychiatric condition.

Redundancies were being offered at the time and the employer submitted this was the key reason for her distress/psychiatric condition. The South Australian Workers Compensation Tribunal held that if a worker’s employment is terminated or affected as a consequence of changes to a business structure, this would certainly be considered as ‘reasonable administrative action’. However, on the facts, this was not the case.

It was held that the worker’s psychiatric injuries stemmed from her increased workload, proposal to change her hours (which was not undertaken in a reasonable manner), conflict with her manager and feelings of being excluded by other colleagues. The above occurrences were held not to be reasonable administrative action, and her claim was accepted.

The Tribunal commented that although changing a worker’s roster/working hours could be considered reasonable, whether it was done in a reasonable manner is a separate issue.

Factors considered included how the worker was informed, the limited time frame in which it was expected she would adjust to her new work arrangement and the fact she was treated poorly throughout the process. This case shows the disqualifying factors outlined in the legislation are not clear-cut, and many factors need to be considered when determining a psychiatric claim.

Entitlements for psychiatric injuries under the Return to Work Act are complex. All too often a worker’s claim is rejected because an aspect of the law is incorrectly applied to them. If this happens you should not immediately accept the insurer’s decision, and should instead seek legal advice. If you think you have a claim Tindall Gask Bentley’s expert workers’ compensation team is ready to help you.