The resources industry is experiencing an increase in workers’ compensation claims for psychiatric injuries, owing largely to the growing awareness of psychosocial hazards in the workplace.
In this article, we discuss claim trends and how to effectively respond to claims and manage accepted claims to reduce costs and ensure compliance with new statutory obligations for rehabilitation.
Insurance for work injuries and the reasonable management action exception
Workers’ compensation insurance in most Australian States and Territories is compulsory for employers. Compensation is paid to an injured worker on a ‘no fault’ basis meaning that it is payable even if the worker causes the injury or the employer was not negligent.
However, there are certain scenarios where a worker who suffers psychological/psychiatric injury in the course of their employment will not be entitled to compensation. That is, the employee may not be entitled to compensation where the injury arises out of reasonable management action taken in a reasonable way. Management action can include action taken to transfer, demote, discipline, redeploy, retrench or dismiss the worker.
Work Safe Review – rising claim trends
In June 2023 Work Safe Queensland released its report on the five-yearly review of Queensland’s workers’ compensation scheme (Work Safe Review). It reported a 92% increase in accepted psychiatric injury claims in the four years to 2021-22. Those numbers increased again by 32% in the last financial year according to WorkCover Queensland’s annual report. The number of secondary psychiatric injury claims (psychiatric injury caused by a primary physical injury) almost tripled between 2013 and 2023.
The Work Safe Review also identified a lower rehabilitation and return to work performance in Queensland compared to other Australian workers’ compensation jurisdictions.
The Work Safe Review recommended:
- increasing early intervention to pre-empt the deterioration of physical injuries into secondary psychiatric or psychological injuries;
- addressing workplace issues that may be causing or worsening psychiatric or psychological injuries; and
- making it easier for injured workers to find gainful employment with their own or another employer.
WorkCover data reveals that psychiatric injury claims involve longer periods of time off work (113 days compared to 42 days for physical injury claims) and workers are less likely to return to work (73.3% compared to 93.3% for physical injury claims).
In response to the surge in claims, Queensland has introduced changes to the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (WCRA), which commenced on 23 August 2024. The changes implement harsher penalties for employer non-compliance around rehabilitation and failing to offer sufficient return to work assistance.
Common claim themes in the resources industry
Safe Work Australia have recognised that many psychiatric injury claims are caused by work-related harassment, bullying or work pressure.
The number of secondary psychiatric injury claims almost tripled between 2013 and 2023.
In our experience, common claim ‘themes’ in the resources industry include:
- lack of adequate support from management (supervisors and line managers);
- inadequate resourcing (including sub-optimal staffing arrangements and insufficient tools and plant and equipment being made available to workers), creating significant time pressure for the completion of work tasks/projects;
- inadequate communication and lack of transparency around:
- the employer’s expectations of the worker;
- change in role or team structure;
- performance management;
- investigations into a worker’s misconduct/behaviour; and
- unprofessional and combative communication styles, including swearing.
It has also been recognised that psychiatric injury claims in the resources industry may also arise because of isolated and remote work, fly-in-fly-out (FIFO) arrangements, accommodation arrangements, roster design and shift lengths.
Effective strategies for managing claims
If a worker has made a claim for psychiatric injury (or there are signs of an emerging claim), employers should take appropriate steps to:
- ensure adequate support is provided to the worker (regular check ins, employee assistance programs, allowing the worker to take time off);
- investigate and document the claim circumstances; and
- if there are concerns about the veracity of the claim, respond to the claim at an early stage by gathering all relevant information and documents and providing that to WorkCover with submissions outlining the employer’s version of events.
Employers should be mindful of the broader impact an accepted claim may have in the workplace. While an accepted claim is an insured risk, it may have repercussions for workplace culture particularly where the acceptance of a claim is seen to vindicate one ‘side’ of a grievance or contradict disciplinary outcomes or performance issues (and actions) identified during a performance management process. WorkCover pays close attention to employer compliance with its own policies and procedures when assessing the ‘reasonableness’ of claims involving management action. Employers should ensure that they have comprehensive behaviour and performance management policies and that these are periodically reviewed and made available to staff.
In our experience, employers are often legitimately concerned about the internal reputation and cultural impact a claim might have on the broader worker cohort who are implicated in the allegations said to give rise to the injury (complaints of bullying and harassment by a supervisor or co-worker). What may start out as an isolated issue can quickly evolve into a larger problem for the organisation.
Proactive claims responsiveness minimises the distraction of the claims process to the organisation.
Obligation to provide suitable duties programs
Employers have a statutory duty to take all ‘reasonable steps’ to assist or provide the worker with rehabilitation and to cooperate with the insurer to provide rehabilitation. That duty applies from the date of injury until the insurer’s responsibility to provide rehabilitation ends.
Importantly, ‘rehabilitation’ includes necessary and reasonably suitable duties programs. What is ‘suitable’ depends on factors such as:
- the nature of the worker’s incapacity;
- pre-injury employment;
- relevant medical information;
- the rehabilitation and return to work plan;
- the employer’s workplace rehabilitation policies; and
- the worker’s age, education, skills and work experience.
It is critical that employers comply with their obligation to provide suitable duties. Amendments to the WCRA, which took effect on 23 August 2024, have increased the maximum penalty for non-compliance to $83,450.
If an employer believes that a suitable duties program is not practicable, it must produce written evidence of that to the insurer. Failing to do so may result in a penalty of $16,690 (prior to 23 August 2024 there was no penalty). If the insurer is not satisfied with the employer’s evidence, it must provide the employer with reasons for that opinion and allow ‘reasonable opportunity’ for further submissions. We expect that these new obligations imposed on the insurer will, at the very least, provide transparency around an insurer’s decision.
Be proactive
The growing number of workers’ compensation claims for psychiatric injury in the resources industry, the higher costs of managing those claims, and new statutory obligations, makes it increasingly important for employers to develop and implement effective claims management strategies.
‘Reasonable management action’ is not a catch all defence for psychological injury claims. Whether a claim for psychiatric injury involves ‘reasonable management action’ will often require close assessment of disputed or complex circumstances. These matters often involve multiple witnesses and contentious factual issues.
If a claim is to be contested by an employer, we recommend that the employer does this at the earliest stage of the claims process (when the claim is first received) rather than relying upon an appeal to the Workers Compensation Regulator or the Queensland Industrial Relations Commission (or similar, depending on the jurisdiction).
Finally, if a worker’s claim is accepted, employers are obliged to take reasonable steps in providing rehabilitation to the injured worker. The obligations in the WCRA have been enhanced to address the deficiencies in rehabilitation and return to work performance in Queensland.