When you’re stressed, it can be tough to continue doing your job, and it can really impact your overall health and well-being. And the situation can be even worse if your workplace is the cause of your stress, whether it’s being overworked, bullied, harassed, or a combination of factors.
If you’re suffering from work-related illness caused by stress, you may be entitled to paid time off through personal leave or workers compensation, plus potential lump sum payments.*
*Updated January 2026: This guide reflects current NSW stress leave entitlements and workers compensation rules as of 2026.
Stress leave is paid time off work to allow you to recover from a stress-related illness. Stress leave is not a specific legal entitlement in New South Wales (NSW), but depending on your situation, there are options that may be available to you to take paid time off.
In this article, we explain everything you need to know about stress leave entitlements in NSW, including whether you can take workers compensation stress leave.
Here are the four most common situations we come across when people come to us for help:
If you’re suffering a stress-related illness that’s not caused by your job, you can generally take perosnal leave in Australia. This is covered in the next two sections of this article.
Paid time off work via the workers compensation scheme may be available if you’re diagnosed with a stress-related illness caused by your job. This is covered in detail in this article.
If you’ve already been diagnosed, the next step is to determine whether your stress-related illness qualifies for a workers compensation claim so that you can take paid time off. Learn more about workers compensation eligibility for stress-related illnesses in this section of the article.
If you can’t return to work because of a stress-related illness, you may be entitled to a lump sum payment through your superannuation. For more information, refer to our guide to making a TPD claim for mental illness.
According to Fair Work Australia (now Fair Work Ombudsman), “An employee can take paid personal leave when they can’t work because of a personal illness or injury. This can include stress and pregnancy-related illnesses.”
In other words, if you have a stress-related illness, your employer should allow you to take paid personal leave. However, while this might provide some short-term respite, it’s not a solution for longer-term stress-related conditions that require treatment and may require longer breaks from work.
If you’re taking personal leave due to a stress-related illness, the length of time you can take will depend on your annual personal leave allowance and any further leave allowances that your employer offers. Many NSW workers get two weeks’ personal leave allowance every year, but it varies from one employment contract to another.
However, if you’re an employee or contractor dealing with a stress-related illness, you might be entitled to a significant amount of paid time off without using up your personal leave, as well as a range of other benefits to help you with your treatment and recovery. The NSW workers compensation scheme provides benefits to support you if you have a diagnosed psychological illness that was caused by work-related stress.
Read on to learn how to get help with getting paid stress leave approved, and whether you might qualify for workers compensation.
A specialist lawyer will review your circumstances and tell you how much you can claim.
To make a workers compensation (Workcover) claim for stress, you need to have been diagnosed with a qualifying stress-related condition, which is referred to as a psychological injury. So it’s important that your GP correctly diagnoses your psychological condition on your certificate of capacity – for example, ‘Adjustment Disorder’. Your claim will be declined if the doctor refers to your injury as “stress”.
You’ll need to show that you have a diagnosed psychological condition that has been caused by a particular event or series of events at work, or that work was the main contributing factor to your condition.
This table lists some common stress-related conditions that may qualify for workers compensation.
| Stress-related condition | Description |
| Post-Traumatic Stress Disorder (PTSD) | Often caused by exposure to traumatic events or work accidents, more common among emergency service workers. |
| Depression | A diagnosis of depression caused by work can result in a workers compensation claim. |
| Anxiety | A diagnosed condition like Generalised Anxiety Disorder may qualify for workers compensation. |
| Adjustment Disorder | An excessive reaction to a stressful change or event that’s much more intense than would typically be expected. |
| Cause | Description |
| Work stress | Prolonged exposure to stress can lead to a stress-related psychological illness. |
| A traumatic event | This can be a single event or a number of events over time. |
| Bullying and harassment | Bullying and harassment in the workplace are common causes of stress-related disorders. |
| Working dangerous hours | Long shifts without sufficient breaks can lead to the development of stress-related conditions. |
| Intimidation | Being repeatedly intimidated by a supervisor or work colleague is a common cause of stress-related conditions. |
| A physical injury | Physical injuries at work can lead to conditions like PTSD. |
You can’t claim workers compensation for stress in NSW, but you can claim if you need time off work and treatment for a diagnosed stress-related condition caused by your work. In other words, you’ll need a medical diagnosis before you can claim, so getting treatment for your condition should be your priority.
In our experience with workers compensation claims, we find that insurers often deny psychological injury claims on the basis that the psychological injury occurred as a result of reasonable actions by management. However, a specialist workers compensation lawyer can look into the circumstances of your injury more deeply, often finding that management’s actions were in fact unreasonable, and liability is then accepted by the insurer.
According to Beyond Blue, potential stress triggers include family or relationship breakdowns, financial problems, health concerns, caring for a newborn baby, and traumatic events.* So with so many potential causes, how do you prove you have work-related stress?
To make a workers compensation claim, you need to prove:
A specialist workers compensation lawyer can build the evidence to support your claim. Building the evidence may include:
*https://www.beyondblue.org.au/get-support/staying-well/reducing-stress
Step 1: See Your Doctor – Get a proper diagnosis of your stress-related condition (not just “stress”)
Step 2: Notify Your Employer – Inform your employer as soon as possible
Step 3: Gather Evidence – Document workplace causes and impacts
Step 4: Lodge Your Claim – Submit within 6 months of becoming aware of your injury
Step 5: Get Legal Help – A specialist lawyer can help you gather evidence and strengthen your claim
Generally, your weekly workers compensation payments in NSW will continue until:
There are three types of lump sum compensation you may be able to claim for stress-related illnesses in NSW:
Depending on the severity of your illness, you might be able to claim a lump sum for permanent impairment.
If your illness was caused by your employer’s negligence, you might be able to sue for a Work Injury Damages lump sum. This is explained in more detail in the next section of this article.
If you can’t return to your job, you might also be entitled to a TPD (total and permanent disability) lump sum payment through your superannuation fund.
If you think you might have a psychological injury caused by stress, or if you’d like to know if you’re entitled to any of these lump sums, you can call 1300 475 851 and get free legal advice. Or for more information, refer to our article on making a successful psychological injury claim.
You can’t sue for stress, however, if you have a diagnosed psychological injury that was the result of negligence by your employer, you might be entitled to sue your employer for a Work Injury Damages lump sum. To be eligible for this lump sum, you’ll need to:
Although this may seem like a daunting process, a specialist workers compensation lawyer who understands psychological claims can take care of the whole process for you. And if you choose Law Partners, we’ll work for you on a no win, no fee basis, so there’s no up-front cost to pursue your claim.
No – the NSW Workers Compensation Act 1987, Part 8, essentially prevents employers from terminating an employee who has sustained a work injury of any kind, purely because they’re unfit to resume work within the first six months. During this ‘protected period’, if an employer terminates an injured worker’s employment because they’re not fit for employment because of the injury, then the employer may be liable to pay a fine of up to $11,000.
Yes, casual and part-time employees in NSW may be able to claim if they’ve been diagnosed with a stress-related condition. If your condition is work-related, you may be entitled to workers compensation regardless of your employment status.
Yes, you’ll need a medical certificate from your GP or psychologist to take stress leave. For workers compensation claims specifically, the certificate must include a proper diagnosis (such as Adjustment Disorder, Depression, or Anxiety) rather than just listing “stress” as the condition, as claims based solely on “stress” will typically be declined by insurers.
The amount of paid personal leave available for stress depends on your employment contract and how much personal leave you’ve accrued. Most NSW employees receive around two weeks of paid personal leave annually, but this varies between employers. If you need longer time off for a work-related stress condition, workers compensation may provide extended paid leave without using your personal leave entitlements.
Stress leave typically refers to using your accrued personal leave for any stress-related condition, while workers compensation for psychological injury requires a formal diagnosis and proof that your condition was caused by work. Workers compensation provides more extensive benefits, including weekly payments, treatment costs, and potential lump sum compensation, whereas regular stress leave only covers the personal leave you’ve already accrued.
If being overworked has led to a diagnosed psychological condition like anxiety or depression, you may be able to claim workers compensation. You’ll need medical evidence of your condition and proof that excessive workload was a significant contributing factor. A specialist workers compensation lawyer can help gather evidence if management’s staffing decisions were unreasonable and contributed to your psychological injury.
Yes, you can still claim workers compensation for a work-related psychological injury even if you’re receiving treatment for personal issues, but you’ll need to prove that work was a significant contributing factor to your diagnosed condition. This can be complex, which is why it’s important to get specialist legal advice to help establish the connection between your work and your psychological injury.
If you’re suffering from a stress-related condition caused by your job, Law Partners can help you find out if you’re eligible for compensation, paid time off work, and payments to cover your treatment costs. We’ll also advise you on whether you can claim lump sum compensation. There’s no cost to speak to one of our no win no fee lawyers and find out about your options.
Chantille Khoury
Partner
Chantille is a multi-award-winning, preeminent workers compensation specialist with over 20 years’ experience. Having ranked top 6 nationwide in the highest category of Doyle’s Guide, Chantille is now providing feedback on policy changes for the Personal Injury Commission and IRO.
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