Beyond the Workers’ Compensation Claim: What Queensland Courts Are Now Awarding for Psychiatric Injury at Work

A Queensland council paid $2.35 million to a former employee last year. Not for a physical injury. For a psychiatric injury caused by a fabricated email that a third party wrote in her name — and which the council failed to publicly correct. 

That figure is the point of this article. Employers have adjusted to the idea that psychological injury generates workers’ compensation claims. Far fewer have adjusted to the second wave: common law damages claims, where the sums are not capped by a statutory scheme, and where the evidence that decides the case is the quality of the employer’s own process. 

What’s the real issue? 

The real issue is that most employers are managing for the wrong test. 

The statutory workers’ compensation regime and the common law claim ask different questions, and an employer can defeat the first and lose the second. 

• The statutory claim asks whether the worker suffered an injury arising out of or in the course of employment, with employment a significant contributing factor. Critically, section 32(5) of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) excludes a psychiatric disorder arising out of reasonable management action taken in a reasonable way — including action to transfer, demote, discipline, redeploy, retrench or dismiss, and the worker’s expectation or perception of such action. 
• The common law claim asks whether the employer breached its duty of care, and whether that breach caused the injury. The reasonable management action exclusion does not answer that question. 

So “we successfully resisted the statutory claim” is not the end of the matter, and “our management action was reasonable” is a proposition that has to be proved on the facts, not asserted. 

Meanwhile the direction of travel is clear: claims for primary mental injury are a large and growing part of the scheme, the hurdles that once made them hard to prove are becoming easier to clear, courts are readily finding that mental injuries are permanent, and — as the figures below show — they have no difficulty making very substantial awards. 

What this looks like in practice 

Two composites, drawn from the pattern of recent decisions. 

Where the employer won. A community services organisation placed a support worker in a role involving young people with significant mental health needs. It warned her about the nature of the role at commencement, required relevant qualifications, completed and communicated a risk assessment for each young person, ran regular house meetings and individual supervisions, allowed staff to decline being rostered with particular clients, provided post-incident supervision, and offered employee assistance. When a serious incident occurred and she claimed psychiatric injury, the claim failed. Not because the risk was absent — because the employer had done the orthodox things and could prove it. 

Where the employer lost. A business decided to demote a supervisor and cut his salary. Management knew he was an emotional person who became stressed and anxious easily. He was given no notice of the meeting or its purpose, was not provided with the job description he asked for, and the conversation took place in an open-plan office where colleagues could hear. His mental health deteriorated sharply. The court found a reasonable employer would have given written notice of the specific performance concerns, given him a proper opportunity to respond beforehand, held the conversation confidentially and calmly, and offered him a support person. 

The difference between these two outcomes is not the severity of the risk. It is process, documentation, and whether the employer acted on what it already knew. 

What does the law say — and how must it be applied? 

The statutory framework in Queensland 

Section 32 of the Workers’ Compensation and Rehabilitation Act 2003 (Qld) defines injury and, in subsection (5), carves out psychiatric or psychological disorders arising out of reasonable management action taken in a reasonable way, the worker’s expectation or perception of such action, or action by the Regulator or insurer in connection with a claim. 

For a common law damages claim, sections 305B to 305D of the same Act apply: 

• Section 305B — no breach unless the risk was foreseeable (a risk of which the person knew or ought reasonably to have known), the risk was not insignificant, and in the circumstances a reasonable person would have taken the precautions. The court weighs the probability of injury, its likely seriousness, and the burden of taking precautions. 
• Section 305C — the burden of precautions includes the burden of guarding against similar risks elsewhere; the fact that a risk could have been avoided by doing something differently does not itself create liability; and taking remedial action afterwards is not an admission. 
• Section 305D — causation requires that the breach was a necessary condition of the injury (factual causation) and that it is appropriate for liability to extend to it (scope of liability). 

Foreseeability: the two lines of authority 

The general rule comes from Koehler v Cerebos (Australia) Ltd [2005] HCA 15: a plaintiff will usually need to show that psychiatric injury to that particular worker was reasonably foreseeable before the duty is engaged. The High Court declined to accept as a universal proposition that because stress may cause psychiatric injury, every employer must treat every employee as at risk. 

But Kozarov v State of Victoria [2022] HCA 12 recognised the other route: where the circumstances of the relevant event, or the nature of the worker’s duties, so obviously had the potential to cause psychiatric injury to any worker, the plaintiff need not establish a particular risk to the individual. Roles involving repeated exposure to traumatic material or vulnerable, volatile clients sit squarely in this territory. 

Investigations and disciplinary processes: a narrower duty 

New South Wales v Paige [2002] NSWCA 235 and Govier v The Uniting Church in Australia Property Trust (Q) [2017] QCA 12 establish that, ordinarily, an employer does not owe a duty of care in respect of psychiatric injury to a worker who is the subject of an investigation process. In Paige the extension of a duty of care to procedures for discipline and termination was rejected; in Govier, the allegations related to the employer’s exercise of contractual rights to investigate an incident and make decisions about the employment contract. 

That is a genuinely important protection — but it is narrower than it first appears. In Ackers v Cairns Regional Council [2021] QSC 342 the court distinguished both authorities precisely because the council’s conduct did not occur in the context of investigating or deciding complaints of unlawful conduct or a breach of discipline: the process undertaken was not a disciplinary process; it was a purported performance management process.

The practical lesson: the Paige and Govier protection attaches to genuine disciplinary and investigative processes. Label a performance management process an investigation, or run a disciplinary process that is not really one, and you may not be within it. 

Breach: the duty is not to provide a happy workplace 

Gairns v Pro Music Pty Ltd [2024] QDC 118, applying Eaton v TriCare (Country) Pty Ltd [2016] QCA 139, restated the boundary usefully. An employer’s duty is not to provide a happy workplace, to ensure there is no conflict between employees, or to guarantee that employees are always spoken to temperately. It is an obligation to take all reasonable steps to provide a safe workplace and to take reasonable care to avoid exposing the worker to an unnecessary risk of injury. 

Causation: where many claims fail 

Causation is often the employer’s strongest ground. Lusk v Sapwell [2012] 1 Qd R 507 confirms that the duty is non-delegable and a high standard is expected, but it is not absolute — and where the alleged negligence is an omission, the worker must establish that performance of the duty would have averted the harm. New South Wales v Mikhael [2012] NSWCA 338 makes the point sharply: the plaintiff must identify a factual circumstance enabling the court to find that but for the negligent omission the harm would not have happened. Presenting a range of possibilities is insufficient.

The rest of the federation 

The tests differ, and multi-state employers should not assume the Queensland position travels: 

• Commonwealth — the Safety, Rehabilitation and Compensation Act 1988 (Cth) excludes injury suffered as a result of reasonable administrative action taken in a reasonable manner, expressly including reasonable performance appraisal, counselling, suspension and disciplinary action. 
• New South Wales — section 11A of the Workers Compensation Act 1987 (NSW) denies compensation for psychological injury where the significant cause was reasonable management action, or the worker’s expectation or perception of it. A disease injury requires employment to be the main contributing factor. 
• Victoria — section 40 of the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) excludes mental injury caused wholly or predominantly by management action taken on reasonable grounds and in a reasonable manner. Notably, it also excludes mental injury predominantly caused by work-related stress or burnout arising from events that may be considered usual or typical and reasonably expected to occur in the course of the worker’s duties. 

What the recent Queensland decisions actually show 

Claims the employer defeated 

• A hospital and health service successfully resisted a claim by an employee who alleged psychiatric injury after her identity was erroneously disclosed internally following a complaint she had made to the Health Ombudsman. The court was satisfied the organisation’s processes meant appropriate steps had been taken against the risk of psychiatric injury from inappropriate conduct, and that it had acted consistently with its own HR policy. (Kemp v Gold Coast Hospital and Health Service [2024] QSC 259.) 
• A community services provider defeated a support worker’s claim arising from incidents involving young people with mental health difficulties, including a threat made with a razor blade. It had taken the orthodox precautions: warning at commencement, qualification requirements, per-client risk assessments communicated to staff, house meetings, supervisions, the right to refuse rostering with particular clients, post-incident supervision and employee assistance. The court also accepted that mandatory counselling can be detrimental, that funding a second worker was not available and would not necessarily have been a fix, and that relinquishing care was not reasonable given staff could decline rostering. (Hoyes v Wellways Australia Ltd [2025] QDC 125.) 
• A school successfully defended a claim by a teacher who was the subject of criminal charges and then of an angry parent’s confrontation at the school. The court held the school’s response was reasonable, that using physical force against the parent would not have been reasonable, and that calling a lockdown would have placed the teacher in more danger. (Frazer v State of Queensland [2026] QSC 82.) 

Claims the employer lost 

• $2,359,037.64 — a council employee suffered a career-ending psychiatric injury after a fabricated email in her name, portraying her as racist, was circulated and ultimately tabled in the Queensland Parliament. The court found a foreseeable risk, before the tabling, that she would suffer psychiatric injury if the fabricated email were perpetuated in the public domain, and that the council breached its duty by failing to take timely steps to tell the relevant people that the email was a fabrication — including by not engaging an independent IT expert to verify her repeated denials. (Habermann v Cook Shire Council [2025] QSC 214.) 
• $395,767 — the demotion meeting described above: no notice of the meeting or its purpose, no job description provided, conducted in an open-plan office where others could hear, and no support person, in circumstances where the employer knew the employee became stressed and anxious easily. (Gairns v Pro Music Pty Ltd [2024] QDC 118.) 
• $239,272.98 — a personal carer was sexually assaulted by a resident, who was not her employer’s client, at a hostel predominantly housing men with mental health and addiction issues. The employer breached its duty by failing to conduct any appropriate and effective risk assessment of the premises, failing to require staff to work in pairs, and failing to warn or instruct her about the dangers of the work. (Gilmour v Blue Care [2024] QDC 189.) 
• $148,114.85 — a corrections officer was punched by a supervisor and claimed psychological injury from the assault and the subsequent treatment of him, including a lack of managerial support. The employer was vicariously liable for the supervisor’s conduct and was required to do more than just offer employee assistance: it failed to ensure the officer was not rostered with the supervisor, and failed to follow up properly. (Mason v State of Queensland [2023] QDC 80.) 

Read together, the pattern is unmistakable. The employers who won had systems, applied them, and could produce them. The employers who lost knew something — a known vulnerability, a fabricated email, a hostile environment, an assault by a supervisor — and did not act on it. 

What are the risks and pain points for employers? 

• Uncapped exposure. Common law damages are assessed on the loss, and where a career-ending psychiatric injury is found in a mid-career professional, the economic loss component alone can be very large. 
• Winning the statutory claim proves less than you think. The reasonable management action exclusion is a statutory bar to compensation, not a determination that you met your duty of care. 
• EAP is not a control. Offering employee assistance has repeatedly been held insufficient where a specific, known risk called for a specific response. 
• Known vulnerability raises the standard. Once you know an employee is susceptible, foreseeability becomes much easier to establish — and the precautions expected of you increase accordingly. 
• Third-party conduct is in scope. Where a third party’s conduct creates a foreseeable risk of psychiatric injury and you have the capacity to take reasonable protective steps, the duty can extend to it. 
• The manner of a meeting is evidence. Notice, privacy, the offer of a support person and the provision of requested information have each been decisive. 
• Cost beyond the judgment. These claims are expensive to investigate, both financially and in their effect on culture, and they typically require managers to give evidence about conversations that were never documented. 
• Interaction with WHS enforcement. The same facts can support a regulator’s improvement or prohibition notice and a psychosocial risk finding, independently of any claim. 

Our top five tips: what every employer should do 

1. Have clear, simple policies — and follow them. This is the single most consistent theme in the decisions that employers won. Not elaborate policies: usable ones, understood by managers, and demonstrably applied to the matter in question. Acting consistently with your own HR policy has been decisive. Departing from it is the first thing a plaintiff’s lawyer will look for.
2. Risk assess the environments and clients your people are exposed to — and communicate the assessment. Where staff attend third-party premises, work with volatile or vulnerable clients, or work alone or after hours, conduct a genuine assessment of that specific setting, decide on controls (working in pairs, the right to decline particular rostering, escalation protocols), warn and instruct staff about the risks, and record it. A generic organisational risk register is not a risk assessment of the hostel, the house or the client. 
3. Act on what you already know — promptly and visibly. If you know an employee is vulnerable, if you know a supervisor has assaulted someone, if you know a damaging falsehood about an employee is circulating, the duty crystallises around timely action. In Habermann the breach was a failure to tell the relevant people, in time, that the email was fabricated. Delay is where liability accrues. 
4. Run performance, disciplinary and investigation processes as though the meeting itself is the evidence. Give written notice of the meeting and its purpose, set out the specific concerns in advance, provide any document the employee reasonably requests, hold the conversation in private, offer a support person, and keep the tone calm. And be honest about which process you are running — the limited duty recognised in Paige and Govier attaches to genuine disciplinary and investigative processes, not to a performance management process dressed as one. 
5. Do more than offer the EAP — and separate people after an incident. Employee assistance is a support, not a control, and courts have said so. After an incident, take the operational steps: adjust rostering so the affected worker is not required to work with the person involved, follow up personally and repeatedly, and document what you did. Note also that mandatory counselling has been recognised as potentially detrimental — the answer is a considered, individual response, not a reflexive referral. 

Frequently asked questions 

What is the difference between a statutory claim and a common law claim? 

A statutory workers’ compensation claim provides defined benefits under the scheme. A common law damages claim alleges the employer breached its duty of care and seeks damages assessed on the actual loss, which is not subject to the scheme’s benefit limits. The tests are different, and the outcomes can differ. 

Does “reasonable management action” protect us from a damages claim? 

Not directly. The reasonable management action exclusion in section 32(5) of the Queensland Act bars entitlement to statutory compensation for a psychiatric disorder arising from such action. Whether you breached your duty of care at common law is assessed separately, under sections 305B to 305D. 

Do we owe a duty of care to an employee we are investigating? 

Ordinarily, in respect of psychiatric injury, no — that is the effect of Paige and Govier. But the protection applies to genuine investigative and disciplinary processes concerning alleged unlawful conduct or breaches of discipline. A performance management process is not within it, as Ackers v Cairns Regional Council shows. 

Do we have to foresee that a particular employee might suffer psychiatric injury? 

Usually yes — that is the general position from Koehler. But where the nature of the work or the event so obviously has the potential to cause psychiatric injury to any worker, Kozarov means you need not have foreseen a risk specific to the individual. 

Is offering the EAP enough? 

No. It has been expressly held insufficient where a specific known risk required a specific response — for example, ensuring a worker was not rostered with a supervisor who had assaulted him, and following up properly. 

Can we be liable for what a third party does to our employee? 

Yes, where the third party’s conduct creates a foreseeable risk of psychiatric injury and you have the capacity to take reasonable protective steps. Habermann extended this to a failure to correct a fabricated document circulating in the public domain, and Gilmour to an assault by a person at premises the employee attended for work. 

Is our duty to make sure nobody is ever upset at work? 

No. The duty is not to provide a happy workplace, to eliminate conflict between employees, or to ensure people are always spoken to temperately. It is to take all reasonable steps to provide a safe workplace and to avoid exposing workers to unnecessary risk of injury. 

Why does causation matter so much? 

Because where the alleged breach is an omission, the worker must prove that doing the thing you failed to do would have averted the harm. Establishing a range of possibilities is not enough. A well-documented account of what you did, what you considered and why alternatives would not have helped is often the strongest part of a defence. 

Do these principles apply outside Queensland? 

The common law principles are broadly consistent, but the statutory frameworks are not. The Commonwealth, New South Wales and Victoria each define injury and the management action exclusion differently, and Victoria additionally excludes mental injury predominantly caused by stress or burnout arising from usual or typical events. Multi-state employers need jurisdiction-specific advice. 

We’re a council or not-for-profit — is our exposure different? 

No. Two of the most significant recent Queensland awards involved a local council and a not-for-profit care provider. If anything, organisations whose work involves vulnerable or volatile client groups carry higher inherent risk and should expect a correspondingly higher standard of risk assessment. 

How Harrisons can help 

A psychiatric injury claim that reaches judgment is measured in hundreds of thousands of dollars — and in one recent Queensland case, in millions. What decides these matters is almost never a difficult point of law. It is whether you had a system, whether you followed it, and whether you acted on what you already knew. 

We help Australian employers — SME business owners, Queensland local government councils, and community and not-for-profit organisations — build defensible practice before a claim, and manage it properly when one arrives: 

• Review your policies and systems for the specific risks your workforce is exposed to, so they are simple enough to be followed and detailed enough to be evidence. 
• Design risk assessments for high-exposure work — third-party premises, volatile clients, lone and after-hours work — with controls that go beyond employee assistance. 
• Structure performance, disciplinary and investigation processes so they are fair in substance and in manner, and so the record supports you. 
• Advise on incident response, including the immediate operational steps that materially reduce both harm and liability. 

The cheapest time to fix a process is before it is the evidence. Get in touch with our team today and start with a psychological injury risk and process review. 

This article provides general information for Australian employers and is not legal advice. The decisions discussed turn on their particular facts, statutory frameworks differ between jurisdictions, and some decisions may be subject to appeal. For advice tailored to your organisation, contact Harrisons.