Overview
Psychological symptoms can form part of the capacity evidence
A work capacity assessment is not limited to lifting or movement restrictions. Anxiety, depression, sleep disturbance, pain-related fatigue, medication effects or fear of re-injury may be relevant when they arise from the compensable injury and affect work function.
The statutory definitions require the present inability to arise from the injury. The certificate of capacity, GP notes and treating reports should therefore identify the condition, its connection with the accepted injury or claimed consequential condition, and its practical effect on hours, duties, concentration, interaction and safe performance. A diagnosis or the word “stress” alone does not decide capacity.
Where this comes up in weekly payment disputes
Suitable employment
Section 32A requires regard to medical information, age, education, skills, work experience, return-to-work material and rehabilitation. Psychological restrictions supported by the medical evidence can be part of that assessment.
Earning ability
An insurer may assess work even if no actual vacancy exists. The issue is whether the worker is currently suited to the work and what they are able to earn, not whether a local employer has advertised the role.
Rehabilitation reports
Reports can record observed attendance, task tolerance, failed duties and barriers. They should distinguish observation from clinical opinion and do not replace the insurer's statutory decision.
Evidence to focus on
The evidence should make the capacity issue concrete. It should explain the medically assessed condition, how it relates to the compensable injury or claimed consequential condition, and how it affects specified work activities.
- Certificates of capacity that mention psychological symptoms and capacity impact.
- GP notes about sleep, mood, anxiety, pain, medication and fatigue.
- Psychologist or psychiatrist reports about treatment, diagnosis and work functioning.
- Pain specialist or surgeon notes about chronic pain, recovery and restrictions.
- Rehabilitation notes showing attendance problems, flare-ups or failed duties.
- Income and hours records, such as pay slips, payroll summaries, rosters, tax records or bank records, where the decision also concerns current weekly earnings or assumed hours.
- Examples of days missed, reduced hours, concentration problems or inability to tolerate duties.
Common insurer assumptions to check
- The insurer treats physical capacity as the whole capacity picture.
- The proposed duties ignore pain flare-up patterns or sleep-related fatigue.
- The earning-ability assessment assumes particular attendance, pace or interaction without supporting functional evidence.
- The decision gives an examination report greater weight without explaining how it was reconciled with longitudinal treating records and observed function.
- The decision does not address psychological treatment, medication side effects or return-to-work anxiety.
- The rehabilitation report records proposed tasks but not the worker's observed tolerance or the medical restrictions.
Availability and residence are not part of the statutory suitability test
Section 32A says suitable employment is assessed regardless of whether the work is actually available, whether that type of work is generally available in the labour market, the nature of the worker's pre-injury employment and the worker's place of residence.
That does not make medical function irrelevant. For example, a medically supported inability to sit, concentrate, use public transport or tolerate a particular environment may affect whether the worker is suited to the duties. A long commute or lack of vacancies near home, by itself, is not the statutory test.
Capacity and liability are different questions
If the insurer accepts only a physical injury but disputes a consequential psychological condition, the dispute is not solved merely by listing psychological symptoms on a capacity certificate. The medical and legal connection between the physical injury and the later condition may need to be established.
Primary psychological injury claims first notified on or after 1 July 2026 have separate eligibility and entitlement rules. Secondary psychological conditions arising because of a physical injury are treated differently. The claim history and insurer acceptance should be checked before relying on either category.
Practical next steps
Ask the treating practitioner to describe the work impact in plain terms: hours, duties, pace, social interaction, concentration, medically relevant travel limits, recovery time and triggers. If the insurer has made a work capacity decision, compare its assumptions with the certificate, treating records, section 32A factors and the actual demands of the identified work.
An insurer review is optional and, if requested before a PIC referral, must be decided within 14 days. A worker may instead apply directly to PIC. For section 289B to apply, the work capacity dispute must be referred before the section 80 notice period expires; the stay operates from the time the President accepts the referral. This page is general information, not legal advice.
Frequently asked questions
Can anxiety after a work injury affect a work capacity decision?
It can if medically supported anxiety arises from the compensable injury and affects work function, such as attendance, concentration, interaction or safe performance. If the insurer disputes that connection or the condition itself, liability may need to be addressed separately from capacity.
What if the insurer says I can do office work?
Check whether the work is suitable under section 32A having regard to the medical information, age, education, skills, work experience, return-to-work material and rehabilitation. The law disregards whether a particular vacancy exists and the worker's residence. Medically supported limits on sitting, concentration, attendance or travel capacity can still be relevant to incapacity.
Should psychological symptoms be on my certificate of capacity?
If symptoms affect work capacity, it is usually helpful for the certificate and treating notes to record them clearly. The wording should be accurate and based on medical assessment.
Can a rehabilitation provider ignore psychological symptoms?
A rehabilitation report should record relevant functional barriers and the information on which they are based. The provider does not make the insurer's work capacity decision. If a report omits medically documented psychological effects, treating evidence and a factual correction may be needed.
Can weekly payments be reduced if the insurer ignores psychological symptoms?
An insurer may reduce or stop weekly payments after making a work capacity decision, subject to the applicable notice rules. A worker may request an optional insurer review or apply directly to PIC. The evidence must connect the symptoms to the compensable injury and explain their functional effect.
Related NSW workers compensation guides
Need help with a capacity decision that ignores psychological symptoms?
Send the work capacity decision, Certificates of Capacity, rehabilitation material and treating records. We can help identify whether the issue concerns capacity, liability or both, and explain the available procedure.
This information is general in nature and is not legal advice. You should obtain advice about your own circumstances.