Stress claims: Workcover or a separation package?


Further to some to some interesting and intense commentary regarding injured worker “A” who experienced bullying and sexual harassment in her workplace and has been offered a “deal” consisting of three months salary and a quick and presumably very quiet separation, we looked a little deeper into the pro’s and con’s of going down the workcover path or the complicated matter of accepting a “separation” package.

Injured worker “A” wrote on our “Need Help” Page

My workplace bullying/sexual harassment claims were recently investigated by an independent person and the report concluded that there had been many inappropriate goings on by my boss. I have been not at work on doctor’s orders – the anxiety being at work was too great. Management have offered me 3 months pay if I resign and sign a confidentiality deed. I am just worried about finding another job and whether I am going to be able to go back to full time work and don’t want to be worse off by accepting the deal (3 months pay equates to around $15,000 – probably less once tax hits me for such a big payment). Any thoughts and what would be reasonable to ask for?

“A” also resents going down the workcover path – however is seeking some legal advice on whether the “offer” is reasonable…

Stress claims: Workcover or a separation package?


Workcover and stress claims

Contrary to popular belief, filing a “stress claim” is NOT your ticket out of a horrible job or evil boss

As we’ve mentioned many times, and as is stated on our sarcastic “most FAQ answered” page, we believe and advise injured workers to think (at least) twice before lodging a stress claim with workcover.

Contrary to popular belief (and media BIAS), filing a stress claim with workcover is not your ticket out of a “bum job” (we are referring to broad terms here).In fact, it’s almost always an uphill battle. And a horrible one, according to many unfortunates who have gone down that path, and who have had the courage to share their nightmares with us.

The laws have gotten stricter and stricter on filing such claims. Virtually all of them are fought tooth and nail by the insurance company and, unless you’re truly suffering a serious psychiatric problem (aka illness/disease) directly because of your job (MUCH worse than just a horrible boss), we don’t suggest filing one.

Why man, why?

First, it begins with a full (and often extremely biased) inquiry into your “psychiatric well-being.” Your private life becomes an open book. Psychiatrists (those that work for insurance companies) test and evaluate you. “Psychiatric reports” are generated with your name at the top. The insurance company is permitted to look into EVERY POSSIBLE stress factor that might have a bearing on your current mental condition: Criminal backgrounds of you and your family, financial background, deaths in the family, marital problems, kid problems, sexual problems, prior psychiatric incidents, etc. etc.

So unless you don’t mind being questioned and investigated on every possible private aspect of your life, it’s usually not worth the trouble. (And unless you have a real good case, you’ll probably have trouble finding a reputable lawyer willing to handle it anyway.)

Saying that, there are of course real “stress” or “psychiatric” claims that should DEFINITELY get filed. There ARE very real instances of psychiatric work injuries. But these usually require (a) something fairly horrible happening at work which (b) AFFECTS you severely enough to require psychiatric treatment, and usually for a LONG time.

Also in order to get a little more than just your psych therapy  and blue pills to be paid for by workcover (medical treatment), in Victoria you would have to suffer a whopping 30% total permanent psychiatric injury in order to be entitled to the most pathetic “lumpsum”.

To obtain a rating of 30%, you basically are considered INSANE -it happens very rarely that an injured worker is rated 30% or more!!!  in Vic to lose your mind (30% WPI) would give you $11.850 to $13.650 –  if you suffered the injury before 10 December 2009 (*)- yep, eleven thousand dollars for the rest of your life MINUS your legal fees, which can easily be around $5000 to 8000! Is this worth the PAIN and HUMILIATION, the further INSULT to INJURY? THINK AGAIN.

(* Psychiatric injuries suffered of 30% on or after 10 Dec 2009 are awarded $64.000  – see comment section below)

Psych injuries before 10 Dec 2009 (sorry image missing)

Psych injuries on or after 10 Dec 2009 (sorry image missing) (see comment section)

[You can find the compensation tables on the online claims manual in VIC]

On a sarcastic note, if you lose your penis, you get $100.000 – just makes you wonder who on earth put a dollar value on our body parts…huh?

For example: An armed robbery at work, or witnessing a horrible incident at work, are obvious examples of legitimate psychiatric/stress claims that should be filed. Another very valid stress claim is heavy depression which often follows a very serious injury (this ADDS a psychiatric claim to your already existing physical injury case, however may be “secondary” in nature).

Most good workcover lawyers will do the “screening” for you by letting you know whether it’s a good enough stress case worth filing.

More about stress claims

[as stated under our workcover VIC FAQ page – we know there is a lot of repetitive information here, but we feel the need to re-post all our articles again on 1 page to highlight the complexity of stress claims)

If your stress condition is caused or aggravated by work, workers compensation is -SUPPOSEDLY- available.

There is, however, an exception in the WorkCover legislation (VIC) – and in most other states- which is often misused by employers and claims agents to reject work related stress claims.

The exception generally provides that workers compensation is not payable if the stress is predominantly caused by:

  • An employer taking reasonable action in a reasonable manner to transfer, demote, discipline, redeploy, retrench or dismiss a worker; or
  • A decision by the employer based on reasonable grounds not to award or to provide promotion, reclassification or transfer of, or leave of absence or benefit in connection with employment to the worker.
  • An expectation of 1 or 2 above.

The scope of this exclusion is quite narrow for the following reasons:

  1. The exception to the above is very narrow and only applies to reasonable action taken in a reasonable manner. Compensation is payable for stress where reasonable action is taken in an unreasonable manner or unreasonable action taken in a reasonable manner; and
  2. Often the action to transfer, demote, discipline, redeploy, retrench or dismiss a worker is the last stage in a chain of events and the evidence will show that the action has been provoked by poor performance, which is an effect of general work stress which predated any action to transfer, demote, discipline, redeploy, retrench or dismiss a worker.
Stress claims are one of the most difficult areas for WorkCover claims.

The following issues are set out to provide assistance to workers who have or may be submitting a claim in respect of stress arising from employment.

Stress is a general term which is often used to describe a psychological condition. The term is used loosely to describe the feelings that range from ‘feeling pressured’ to being psychologically or psychiatrically ill.

  • The definition of an injury under the WorkCover legislation specifically includes a mental or psychological condition which was caused or made worse by work. A stress claim is a perfectly legitimate WorkCover claim.
  • Under the WorkCover legislation a stress condition is classified as a ‘disease’ which means that employment must be a ‘significant contributing factor‘ to the condition or its aggravation. Employment does NOT have to be the sole, major or dominant contributing factor in order to be a significant contributing factor. In fact, there can be a number of significant contributing factors only one of which may be related to employment.
  • It is important to carefully assess whether you are eligible to make a claim for compensation, what the effects of making a claim may be and exactly what support a claim will provide.
  • In some cases the source of stress is clearly identifiable. For example, an employee may be subjected to severe external stress in the course of their employment e.g. a police officer who has been threatened. Where the source of stress is external but encountered in the course of employment these claims are usually accepted readily by WorkCover.
  • Other claims may involve stress arising from internal sources at the place of employment particularly from interpersonal interactions or supervisory disputes. In some cases this may involve inappropriate or illegal conduct such as sexual harassment, bullying or other criminal activity such as assault.
  • In many other cases of the conduct giving rise to the stress may be more subtle and thus more difficult to establish. There is no specific rule on how to react to inappropriate conduct except that where the conduct is a sexual or other assault, it is important to report the conduct to superiors and where appropriate the police.
  • Where a claim involves internal stressors which arise either from interpersonal conflict, supervisory or performance management issues, the WorkCover Authority is more likely to rely on a specific defence to a claim. [This defence is contained in section 82 of the WorkCover legislation in Victoria ] which provides that compensation is not payable if the stress condition is predominately related to specified management activity which is both reasonable and conducted in a reasonable manner
  • In order to submit a WorkCover claim, it is necessary to demonstrate that you have suffered an ‘injury’ within the meaning of the WorkCover legislation. This means that you must demonstrate that you are suffering from a clinical medical condition rather than mere emotion. The best indicator of whether or not you are suffering from a medical condition is whether or not you are having treatment for the condition.
  • If you have not sought medical treatment for your stress condition, this does not mean that you are not suffering from a clinical medical condition. It does, however, make it more difficult to establish that you are suffering from a condition. Seeking medical advice when you are suffering the effects of stress is very important, irrespective of whether or not you are intending to make a WorkCover claim.
  • If you are suffering from a medical condition which is likely to last for some time, it can be very important to submit a WorkCover claim. It is, however, important to carefully analyse your situation to be satisfied that you are suffering from a medical condition and that submitting a claim is in your interests.
  • In some cases, where there is no evidence of a clinical condition, a stress claim is filed by an employee to help mediate or resolve interpersonal conflict at work. An example may be someone who feels that they are not properly treated by a superior might launch a claim to bring about a change in attitude. Lodging a claim where there is no significant clinical condition or any absence from work may be counter-productive because it changes the focus away from the inappropriate conduct of another person to the illness of the claimant. Often, it can be more productive to attempt to address the behavioural issues first without resorting to a WorkCover claim. Obviously, in cases of significant illness and absences from work there may be no alternative but to lodge a claim.
  • In stress claims, it is important to be able to demonstrate the history of medical treatment which corroborates the source of stress. Therefore, if you do not wish to lodge a WorkCover claim at this time, either because your condition is not serious enough or you are concerned about your employer’s response, it is still very important that you attend your relevant medical practitioners and obtain medical assistance. This will mean that, if at a later date, you submit a claim you will be able to rely on the documented history of your attendances (which will most likely include the doctor’s notes as to the source of your stress).
  • When you lodge a claim it will be necessary to specify in general terms the sources of your stress. This may occur briefly when you fill out the claim form or in more detail if you provide a statement to a WorkCover investigator or attend a WorkCover medical examiner. It is important that you understand the ambit of the exceptions in the WorkCover legislation under which compensation is not payable for stress from certain sources. These sources relate to reasonable actions taken in a reasonable manner by an employer to discipline counsel demote an employee etc. You should read the material in this website about this exception.
  • Many cases are rejected on the basis that they fall within this exception. However, this exception is very narrow and many legitimate WorkCover claims are routinely rejected. Many rejected claims are, ultimately, successful when they are referred to conciliation, a Medical Panel or a court. In fact, no disputed court case has found in WorkCover’s favour on the use of this defence.
  • When you lodge a WorkCover claim you may be approached to provide a statement on the circumstances of your claim. There is no obligation on you to provide a statement but failing to provide a statement can sometimes increase the chance of a rejection of your claim. You should consult a lawyer when providing statements.
  • You will be medically examined by a psychiatrist retained by the WorkCover Authority. This is a normal process and the examination will canvass, in general terms, your life history. The psychiatrist will question you about your education, employment history, personal relationships and other factors. This approach is taken to enable WorkCover to determine whether there may be any other source of your stress.
  • It can be important to understand the exact benefits that WorkCover provides. In most cases that are accepted, WorkCover provides some limited weekly payments of compensation and medical expenses. In more severe cases, long-term weekly payments may be made. In these cases, a limited lump sum for permanent impairment may also be available. In cases of serious permanent psychological illness caused through negligent behaviour, a claim for common law damages is possible. These later payments are only made in a minority of stress claims. Time limits apply to common law claims.
  • Stress claims are more likely than other claims to be disputed by WorkCover. This is because these claims are highly volatile and usually involve very different perceptions of the same circumstances by employees and employers. Ultimately, a court must decide which perception is correct. This often makes it very difficult to predict the likely outcome of court proceedings. If a claim is rejected, it may be necessary for an injured worker to carefully weigh up whether they should proceed to litigate their claim or refer it to a Medical Panel (VIC).
  • Litigating a stress claim is an option that needs to be very carefully assessed. These claims are usually litigated in the Magistrate’s Court. When assessing whether or not to litigate, it is necessary to do a very careful risk analysis (what are the chances of success?) and then to undertake a cost benefit analysis (what net benefit will I receive after transaction costs, Centrelink and other payments are deducted?).
  • If you decide to litigate a claim, it is important to appreciate that it may take 6 to 10 months for your matter to be heard by a court. During this period several things can occur. In some cases injured workers obtain alternative employment, recover and lose interest in maintaining the litigation. In other cases, an injured worker’s condition does not improve and the spectre and stress of litigation may add to the extent of the condition. This is not a good reason not to pursue litigation, but it should be carefully taken into account in deciding whether or not to litigate.
  • In some cases, a person who has made a claim or is thinking about making a claim may look for an alternative strategy to overcome the source of their stress. This can include negotiating a separation arrangement or a redundancy package or changing employment (see below for more info and tips re separation package)
  • Some employers may offer such an arrangement. We do not recommend initiating this option yourself. Requesting this option without some indication that it may be available may provoke employer hostility. Each of these options has advantages and disadvantages which must be carefully assessed in each person’s own circumstances. This assessment can cover a whole lot of issues which may affect entitlements such as superannuation, leave entitlements etc. In these situations, it is important to make a realistic assessment about the chances of obtaining alternative employment. At this point, people are usually highly optimistic about those prospects. This may not reflect reality.
  • A negotiated separation package will not usually extinguish a right to claim WorkCover at a later date. It might, however, make a later claim more difficult. Where obtaining a court order forms part of a settlement and an order is obtained, it is likely that future entitlements may be extinguished.
  • Receipt of a redundancy or superannuation payment may disqualify a claimant from receiving weekly payments for a defined period.


When you suffer from a stress condition, the most important issue is to obtain competent professional medical assistance. This assistance will help you clearly analyse your options and to work out your long term goals. It is important not to lose focus about your long-term goals, as this will help you make choices about how to react to your situation. This will often, however, be difficult as the effect of stress itself can reduce your capacity to think clearly and focus on long-term goals.

Remember, that WorkCover will provide a measure of support to persons who have suffered a medical condition which affects their capacity for work. WorkCover, however, will not change structural problems that have given rise to a stress condition. WorkCover’s rehabilitation services may help to restore someone to alternative appropriate work. This, however, will be entirely dependent on the extent of an employer’s commitment to address the issue.

Claims for compensation based on stress are regularly accepted but many are disputed. Disputing claims at Conciliation is a relatively stress free process than can result in the acceptance of a claim. Pursuing a claim, thereafter, can require some resolve but it can ultimately be successful. In litigating all claims, it is important to ensure that the risks of litigation have been carefully evaluated and that a cost/benefit analysis of litigation has been undertaken.

When an entitlement WorkCover benefits is established additional entitlements can be available. These include a lump sum for permanent impairment and the right to pursue claim common law damages in limited circumstances. A claim for common law damages is restricted circumstances where the psychological condition constitutes a serious injury under the WorkCover legislation and negligence can be demonstrated.

This is a very complex area of law and some recent have reinforced the fact that excessive work pressure or appalling management behaviour does not automatically constitute negligence. It is always necessary to demonstrate that it was reasonably foreseeable that the behaviour would result in psychiatric illness.

Separation Package or “deal”  (not workcover)

Sometimes injured workers are offered by an employer a “commercial” agreement, aka as a “deal” or “separation package” to pay a kind of redundancy payment and their accrued entitlements as an alternative to proceeding with a WorkCover claim.

Whether or not a psychologically injured worker (stress victim – and we use a broad term here) should accept this offer, is, indeed, a very complicated issue, and depends on several factors.

From our research into the subject, it is not possible to give a clear recommendation between the options of acceptance of an offer or litigating a claim

The following are a number of important issues, but these do not constitute specific legal advice for your individual situation – again we recommend all stress victims to seek decent legal advice:

  • It is very important to carefully assess the extent of your medical condition and its effect on your future capacity for work. It can often be very useful to have a detailed discussion with your treating doctor(s) about your (the injured worker’s) prognosis for your (mental) condition in the future. Of particular importance, is their assessment of your prospects of returning to appropriate work.
  • Litigating (suing) a WorkCover stress claim at Court can be a very expensive process. Unfortunately, where there is a direct “factual conflict” (refer above, where the defense will inevitably try to blame something else in your life for what has happened) in a case, it can involve protracted evidence from both parties. Predicting an outcome is – according to many good personal injury lawyers -notoriously difficult, as the judge will be significantly influenced by the evidence of each particular witness. If you were successful in your claim, some (that is: a little), but not all of the legal costs would be payable by WorkCover. It is possible that the value of your claim could be markedly eroded by the transaction costs, and that you end up OWING money to your lawyer and walk away in debt (however with a sense of justice).
  • It is conceivable that a judge may decide a claim in your favour but, conclude that your incapacity was only for a limited period. e.g. 6 months. Thus, they can argue that you are not permanently “injured” or “damaged” and that “you got over it with medicaltion/couseling etc” (just like a broken bone).
  • If weekly payments were ordered on an ongoing basis, it would be necessary to assess the length of time that payments could continue. Payments are payable during periods of certified incapacity that can be reduced when a capacity for employment emerges- same as with physical injuries. In Victoria, it is extremely difficult to obtain weekly payments of compensation beyond 130 weeks, unless the injured worker has no work capacity which is likely to continue indefinitely into the future. Now you can just imagine how hard it is to prove this, and how hard it is for your treaters to prove that you will never ever get better!
  • Generally, it is only in cases of profound disability that weekly payments would be payable to an ordinary retirement date. This, in the context of a stress claim, would mean that the injured worker would be classified as “nuts, if not confined to a mental institution for life.
  • And so the acceptability or otherwise of a redundancy payment should, in our injured opinions, definitely be assessed against the possible (pathetic and temporary- at best- in 99% of the cases) WorkCover benefits.
  • Other factors, such as your assessment of your employability (work) in the medium term, would also have an impact. Often, an injured worker may have a view that they will readily return to work but, in reality, the obtaining of alternative employment is often more difficult than first anticipated. The relaying of information by a former employer or colleague, say in a reference check, of your having made a claim for WorkCover benefits can sometimes be an impediment to obtaining alternative employment, same for psychically injured sod, and should not be underestimated, especially in cases where there is resentment from the part of the employer or a colleague etc.
  • However, according to the law in Vic, accepting a redundancy payment/deal will not of itself extinguish (squashing) an ability to pursue a WorkCover claim at a later date (within the time limits). It will, however, cause a limited period of exclusion from weekly payments. Some offers include the requirement that the injured worker take steps to achieve the permanent extinguishment of future WorkCover benefits. Achieving an extinguishment that is legally effective can be difficult. Where commencing and then dismissing court proceedings is sought, the extinguishment is likely to be effective.
  • Pursuing a WorkCover claim can, in rare cases, create an entitlement to additional benefits. These are principally the right to claim a lump sum for permanent impairment or to pursue damages (subject to a 6 year time limit). Each of these options is subject to strict criteria (as state above). A permanent impairment score of 30% or more is necessary to obtain a payment for a psychological injury is needed in Victoria. This is an extremely high (most often unattainable) threshold which can be very difficult to achieve indeed.
  • A claim for common law damages is contingent on obtaining certification that you are suffering from a severe permanent psychological condition. This requires obtaining a 30% score or above, or establishing that you are suffering from ‘a severe and permanent behavioral or mental disorder. It is then necessary to demonstrate negligence on the part of another person. Often, negligence can be demonstrated, but it is important also to remember that inappropriate, unwise, inept or unfounded action by an employer is not automatically negligence in the legal sense.
  • In order to assess the acceptability of a redundancy arrangement, make a very careful analysis of the career prospects available to you in your current employment. If you believe that the prospects of a meaningful or permanent career are limited, this can obviously affect the acceptability of a redundancy payment.
  • Assess whether or not the acceptance of a redundancy at this time will have an effect on any accrued or accruing entitlements. For example, will long service leave be payable or is the employer prepared to pay pro rata long service leave? It is also important to clarify any tax liability on the payment. Also assess any alternative entitlements you may have under any superannuation scheme you may have. Some schemes have provisions for either temporary or permanent disability benefits. There are, however, usually strict eligibility criteria for these benefits….

Hopefully this article helps somewhat clarifying the pro’s and con’s of claiming for a stress claim through workcover, or whether you would be much better off taking (and running) with an offered ‘package’.

Again, this information is provided as  general information only and is obviously not a substitute for individual legal advice.


Post dedicated to “A” !

[Post dictated by workcovervictim and manually inserted on behalf of workcovervictim]

9 Responses to “Stress claims: Workcover or a separation package?”

  1. I am going down this path atm. Just an interesting read to decide if I should return to court for any compensation.

    trax stress victim April 23, 2013 at 3:16 am
  2. I was offered money to leave my job after being bullied but was told by my solicitor not to leave as I was still fighting to have my workcover claim accepted. I was offered two lots of payments but refused both of them. I was eventually sacked and took them to FWA for unfair dismissal and ended up getting more from them then. The thing is that I believe if you dont settle then you can take them to court and get heard and maybe some kind of recognition for what you went through there. Not positive on this though and it could be easier than going down the workcover path which is horrendous and something I wish I had never done.

  3. 11 March 2010 the Accident Compensation Amendment Bill 2009, was passed by the Victorian Parliament.

    The no-fault lump sum impairment benefit for a worker who has a permanent psychiatric impairment and satisfies the existing 30% ‘whole person impairment’ threshold, was raised from $13,650 to $68,240.

    Therefore if an injured worker reaches the 30% min psychiatric threshold measured against outdated AMA standards, the min payout is $68,240.    Maximum no-fault payment is $503K.


    Psych injuries caused by Psychopath boss April 14, 2013 at 8:29 pm
    • You are right, but it is well hidden on the online’s claim manual (VIC). Here it is: – Compensation tables for
      psychiatric impairment
      Claims made on or after 10 December 2009Compensation applicable for
      claims for Impairment Benefits made on or after 10 December 2009 or existing
      claims where the first Impairment Assessment attended, for that claim,
      is on or after 10 December 2009.
      For claims with Impairment Assessments prior to 10 December 2009 refer to
      ‘Compensation tables for psychiatric impairment – Claims
      made prior to 10 December 2009’
      Currently, for psych injuries of 30% that occurred in 2012/13, $73820 is awarded as a lumpsum. Indeed way better than the $11K of 2004/05 … etc.
      See attached PDF “compensation tables for psychiatric impairment after Dec 2009)
      All the tables can be found on the online claims manual (VIC)
      workcovervictim April 15, 2013 at 7:10 am
      • It’s hard to keep track of WorkcoverVictim, as it also changes according to when you make your application! The Table of Maims is a living example of the outrageous discrimination and impoverishing “compensation” offered by the Workover. Wish I had a willy to lose, but I doubt I’d feel compensated for it’s loss with a miserable $100,000. The lifelong problems caused by the loss of man’s best friend (no not the dog) are horrendous, to say nothing of the total loss of one’s sex life and the damage that would be done to one’s sense of self. A little like getting Major Depression for life.

  4. No fault compensation for 30% psychiatric injury now pay between $40,000 and $60,000 depending upon the year of your injury. This huge rise happened in 2009, just a year after my claims were settled. It’s an indication of the system knowing that the original $11,000 figure was very discriminatory.

  5. I think in the case of “A”, it may indeed be a good idea to discuss with her treating doctors what her prognosis is and how and to what extent her condition may affect her future employability/employment. If, let’s say, the doctor(s) were to be f the opinion that she would need 6 months time off, or 1 year, then this may give some leverage in negotiating the “deal”, as she could provide the medical reports in evidence. Surely this would add negotiating power to a 6-month’s package rather than the offered 3 months?  Cost of medical treatment should also be considered (in my opinion). Guess it all depends on your individual circumstance(s) and your condition, prognosis and especially current and future work capacity.

    Mhhhh… very stressful indeed!

    workcovervictim3 April 14, 2013 at 1:17 pm
  6. Great article WorkcoverVictim. I don’t know about people thinking that a stress claim is the ticket out of a nasty job. Mind you I haven’t been in a workplace for ten years, so maybe things have changed. My own decision to take a claim was based on advice from my Psychiatrist, doctor, and the realisation that I was way too sick to work or look for a new job.

    the insurers trolling through the Injured Workers psychiatric history to find other blameable “causes” strikes me as ridiculous. They did that to me, but the kept changing the possible cause. First it was the Blackshirts, then it was my dysfunctional childhood (hello I’d worked successfully for decades since then), then it was “being in the Workcover system” itself. How handy is it that the Workover doesn’t accept responsibility for “secondary” psych injuries given their modus operandi definitely causes heaps.