We recently wrote about how safety regulators across Australia have placed psychological safety and mental health in the workplace firmly on their list of priorities.

More recently in NSW, the regulator for Workers Compensation, SIRA, has announced some changes that will strengthen the process for the management of psychological injury claims. It is well reported that psych injury claims are increasing rapidly across all industries, and that the cost and lost time associated with these injuries is significant.

Here are some important legislative changes you must be aware of

Reasonable Management Action

A psychological injury will not be compensable if the significant cause is reasonable management action, a worker’s expectation of reasonable management action, or a worker’s perception of reasonable management action being taken in relation to the worker.
Examples of reasonable management action include performance appraisal, transfer, demotion, redeployment, promotion, dismissal, misconduct investigations, disciplinary action and redundancy processes.

Psychological Injury Claims

New rules apply to primary psychological injuries that are first notified to the employer on or after 1 July 2026. A psychological injury is defined as a mental or psychiatric disorder that causes behavioural, cognitive, or psychological dysfunction.

A worker can only be paid compensation for a primary psychological injury if all of the following are true:

the injury was caused by a relevant event or series of relevant events,
there is a real and direct connection between the relevant event/s and the worker’s employment, and
employment is the main contributing factor to the injury.

Examples of Relevant Events include

bullying & harassment inc. sexual harassment
occupational violence
excessive work demands

Refer to the SIRA webpage for the full list of Relevant Events

3 Key Actions you should take right now in response to these legislative changes

Reasonable Management Action – provide training and guidance to your leaders, managers and supervisors regarding compliant processes for reasonable management action
Codes of Practice – review the regulator approved Codes of Practice for Managing Psychosocial Hazards at Work and Sexual and Gender Based Harassment – remember, most states now have mandatory compliance for Codes of Practice so it is important to understand the requirements
Workers Compensation Regulator – in NSW, the WC Regulator is SIRA. The regulator is different in every state. Jump on your WC Regulator’s webpage and research process and requirements in your state

Final Thoughts

Legislation regarding safety and workers compensation – although overseen by different regulators – continues to evolve and change. It is important to stay up to date with this. Remember – ignorance is not a defence! Subscribe to your regulator’s updates so that you remain current on these topics and you manage your organisation’s risk exposure whilst also supporting your workforce effectively.