Workers compensation claims relating to psychological or psychiatric injuries sustained in the workplace have increased over the years.

National data collected by SafeWork Australia from 2000 to 2018, noted the number of claims for mental health conditions increased by 51% and by 2018, they accounted for 68% of all disease-related claims.[1]

The types of workers compensation entitlements that workers can receive for their work related psychological or psychiatric injury are the same as any other work related injury.  These include weekly compensation where the worker has suffered or suffers from an incapacity for work as a result of their injury, reasonably necessary medical/treatment benefits, and permanent impairment (lump sum) compensation.  This blog will focus on permanent impairment compensation for psychological or psychiatric injuries.

What is Permanent Impairment Compensation?

Permanent impairment or lump sum compensation is a type of compensation that is available to injured workers if they are suffering from at least 15% whole person impairment as a result of their work related psychological or psychiatric injuries.  Whole person impairment is the degree of permanent impairment of any body part, system or function which is impaired as a result of an injury.

The entitlement is available to workers pursuant to Section 66 of the Workers Compensation Act 1987 (“the Act”), with special provisions applying for psychological or psychiatric injury pursuant to Section 65A. We will explain Section 65A further below.

The entitlement is only available for injuries sustained on and after 1 January 2002. Unfortunately, there is no permanent impairment compensation payable for psychological or psychiatric injuries received prior to 1 January 2002.

How is Whole Person Impairment Assessed for Psychological/Psychiatric Injuries?

The New South Wales Workers Compensation Guidelines for the Evaluation of Permanent Impairment (“the Guidelines”), which adopts the 5th Edition of the American Medical Association’s Guides to the Evaluation of Permanent Impairment (AMA5), dictates how permanent impairment is to be assessed for work related injuries sustained in New South Wales.  A worker’s degree of permanent impairment is to be assessed by a specialist, in these circumstances a psychiatrist, who is accredited by the State Insurance Regulatory Authority (SIRA) to provide an assessment of whole person impairment.

The Guidelines dictate that in order for a psychiatric disorder to result in permanent impairment, the assessing psychiatrist is to consider that the disorder is likely to continue indefinitely.  Regard needs to be given to the duration of impairment, the likelihood of improvement in the injured worker’s condition, whether the injured worker has undertaken reasonable rehabilitative treatment, and any other relevant matters, based upon the specialist’s clinical opinion.

More importantly, the way in which whole person impairment is to be assessed is in accordance with the Psychiatric Impairment Rating Scale (PIRS).  Under the PIRS, the behavioural consequences of the psychiatric disorder are assessed across six (6) categories, each of which evaluates an area of functional impairment as follows:

  1. Self-care and personal hygiene;
  2. Social and recreational activities;
  3. Travel;
  4. Social functioning (relationships);
  5. Concentration, persistence and pace; and
  6. Employability

Each category contains classes ranging from 1 to 5, based upon severity.  The Guidelines demonstrate the features of each class and the assessing psychiatrist would need to score the injured worker depending on which class best fits their functional impairment. The psychiatrist will need to take into consideration the worker’s cultural background and consider activities that are usual for the person’s age, sex and cultural norms.

To provide an example, the classes and their corresponding features in the category of “self-care and personal hygiene” is as follows:

Table 11.1: Psychiatric Impairment Rating Scale – Self-Care and Personal Hygiene
Class 1 No deficit, or minor deficit attributable to the normal variation in the general population.
Class 2 Mild impairment: Able to live independently; looks after self adequately, although may look unkempt occasionally; sometimes misses a meal or relies on take-away food.
Class 3 Moderate impairment: Can’t live independently without regular support. Needs prompting to shower daily and wear clean clothes. Does not prepare own meals, frequently misses meals. Family member or community nurse visits (or should visit) 2-3 times per week to ensure minimum level of hygiene and nutrition.
Class 4 Severe impairment: Needs supervised residential care. If unsupervised, may accidentally or purposefully hurt self.
Class 5 Totally impaired: Needs assistance with basic functions, such as feeding and toileting.


For further and full details regarding the PIRS, please see the Guidelines here.

After the worker has been assessed according to the PIRS, the assessing psychiatrist needs to determine the median class score, and calculate the aggregate score (that is, the total of the class numbers added together).  If the median class score falls between two (2) classes, it is rounded up to the next class.  Thereafter, the assessing psychiatrist is to follow a conversion table (Table 11.7 of the Guidelines) to determine the exact percentage of whole person impairment.   For example, a median class score of 3 with an aggregate score of 15, equates to 15% whole person impairment.

In addition to the above, the assessing psychiatrist needs to consider the effects of medication, treatment and rehabilitation that the worker has received.  The psychiatrist also needs to consider whether there are any co-morbid features and if they are directly linked to the work related injury, and whether there is any pre-existing impairment associated with a pre-existing condition. Additions or deductions to the worker’s whole person impairment may be made to account for these factors.

Disclosure: Please note, the information provided in this blog regarding the assessment of whole person impairment under the Guidelines is not by any means exhaustive.  For further and full details, please refer to the Guidelines.  It is also important to note that ultimately, the assessment of whole person impairment is a matter of medical expert opinion. 

Special Provisions for Psychological or Psychiatric Injuries

Pursuant to Section 65A of the Act, no permanent impairment or lump sum compensation is payable for secondary psychological injuries.

A secondary psychological injury is a psychological or psychiatric injury that has arisen secondary or in consequence to a physical injury.  For example, a worker may develop secondary anxiety and depression as a result of the pain and functional restrictions which they experience owing to their physical injury.  This would typically be considered a secondary psychological injury for which no lump sum compensation is payable.

The above means that if a worker suffering from both a secondary psychological injury and a primary psychological injury (such as post-traumatic stress disorder or a diagnosed psychiatric condition following bullying and harassment in the workplace), the assessing psychiatrist will need to consider the permanent impairment that results from the secondary psychological injury and make the appropriate deductions from the total whole person impairment.

What is the Process in Claiming Permanent Impairment (Lump Sum) Compensation?

The first step would be to have you assessed by a SIRA accredited psychiatrist for an assessment of whole person impairment. Your injury would need to be considered stable to be able to ascertain your percentage of whole person impairment.  This means, it is unlikely that your condition will change substantially in the next year, with or without further treatment.

Following your assessment by a psychiatrist nominated by us, if you are assessed as suffering from 15% or greater whole person impairment, you will be entitled to pursue a claim for permanent impairment compensation.  We would provide you advice regarding your rights and entitlements at that time.

Upon instructing us to then pursue a claim, we will write to the insurer accordingly.  The insurer has two (2) months to determine the claim.  However, should the insurer within the first month of receiving your claim indicate that the degree of permanent impairment is not fully ascertainable and they require you to attend their own medico-legal examination for the purposes of a whole person impairment assessment, that two (2) month timeframe will recommence from the date you are examined by their assessing psychiatrist.

The insurer can respond either by accepting the claim as it is made, making a counter offer where the degree of whole person impairment is greater or less than the percentage that is claimed but still 15% or more, or denying the claim because your level of whole person impairment is less than 15% in their view.  If either of the last two situations occurs, you can then have the option of referring your matte to the Personal Injury Commission for resolution.  You would then be assessed by an independent psychiatrist appointed by the Commission, known as an Approved Medical Specialist, to provide a binding assessment of whole person impairment.

We encourage you to contact Turner Freeman Lawyers on 13 43 63 should you have any enquiries regarding this blog or your rights and entitlements generally under workers compensation. In New South Wales, legal assistance in workers compensation claims for non-Commonwealth employees is free of charge to the worker, as those costs are met by the Independent Review Office (IRO) or through the insurer.

[1] Safe Work Australia. (2021). Australian workers’ compensation statistics, 2018-19. Retrieved from