A federal avenue NSW's psychological injury reforms haven't touched: Leggett v Hawkesbury Race Club

Since 1 July 2026, the door to damages for psychological injury in NSW has all but closed. To sue for work injury damages, a worker now needs a whole person impairment rating of at least 25%, up from 15%, rising to more than 26% for claims made after July 2027 and more than 28% after 2029. Weekly payments for most psychological injuries stop at 130 weeks. The injury must now come from a defined list of "relevant events", employers have a wider "reasonable management action" defence, and where the insurer disputes that bullying, harassment or excessive work demands actually happened, that question must go to the Industrial Relations Commission before the claim can progress. Workers rated between 15% and 24%, which covers most people with a serious psychological injury, can only access a s. 66 lump sum claim, and not a negligence claim against their employer under the state scheme at all. 

Which is exactly why Leggett deserves a fresh look. It sits entirely outside that scheme.

Relevant documents:

• Leggett v Hawkesbury Race Club Limited (No 3) [2021] FCA 1658

• Leggett v Hawkesbury Race Club Limited (No 4) [2022] FCA 622; (2022) 293 FCR 608 (Rares J).

Disclaimer: The information provided in the articles in this section are of a general nature and should not be construed as specific advice or relied upon in lieu of appropriate professional advice. Whilst LEAP uses commercially reasonable efforts to ensure the information in these articles are up to date at the time of publication, LEAP does not warrant their accuracy, currency or completeness and excludes all loss or damage howsoever arising (including through negligence) in connection with the information contained in these articles.  

Quick takeaways

• The NSW door has narrowed: from 1 July 2026 a psychological injury needs at least 25% WPI for work injury damages, and weekly payments generally stop at 130 weeks.

• Leggett sits outside the scheme: the Federal Court awarded about $1.77 million to a worker assessed at 19% WPI, under the Fair Work Act's general protections.

• State caps cannot touch federal claims: s 109 of the Constitution means NSW damages restrictions do not confine Fair Work remedies.

• The trigger matters: a complaint, a safety concern, leave or a compensation claim followed by detrimental action may found a general protections claim.

Background: a complaint, then adverse action

Vivienne Leggett had run sponsorship and marketing at the Hawkesbury Race Club since 1991.

A new CEO arrived in May 2016, told her she was earning "too much money", and spent months bullying and undermining her.

On 9 October 2016 she complained in writing and asked that it go to the Board. The next morning, the CEO summoned her to a meeting about her performance. She broke down, went on sick leave, and never came back, and the Club then withheld the commissions she had already earned. By March 2017, her employment was finalised. 

Her workers compensation claim was accepted: five years of weekly payments, plus a lump sum for an impairment rating of 19%. Additionally, she also sued in the Federal Court under the general protections provisions of the Fair Work Act 2009 (Cth), arguing the Club had punished her for doing things the Act protects: making a complaint about her employment, and taking sick leave. 

The Federal Court's decision: adverse action and the s 361 reverse onus

Rares J confirmed the plaintiff’s position. The CEO's conduct on 9 and 10 October was unlawful adverse action, and it caused the major depressive disorder that had left her permanently unable to work. Withholding her pay compounded the harm and further undermined the Club's position.

Notably, the Fair Work Act flips the burden here: once a worker shows they exercised a workplace right and were then treated poorly, the employer must prove the two were not connected. In Leggett’s instance, the Club couldn't. 

What makes this matter relevant to the 1 July changes?

The Fair Work Act lets the Court order an employer who breaches it to compensate for all the loss the breach caused; lost income past and future, superannuation, and pain and suffering. This is where the two Acts came into direct contention.

The Club argued that the damages restrictions in Part 5 of the Workers Compensation Act 1987 (NSW), namely the impairment threshold, the "economic loss only" rule and the salary cap, should still confine what the Federal Court could award under the Fair Work Act 2009 (Cth).

Rares J rejected that argument. A state parliament cannot reduce a remedy created by federal law, and where the two collide, s 109 of the Constitution dictates that the federal Act prevails. The NSW state scheme restrictions simply do not apply to a Fair Work Act claim. 

Contrary to what would be the normal procedure in a Work Injury Damages claim, Leggett kept her workers compensation payments. The payments she had received were deducted from the award so there was no double dipping, though she did not have to pay any of the weeklies back.

Damages Awarded: $1.77 million beyond the NSW caps

At 19% impairment, a rating that today would get a worker nothing beyond 130 weeks of payments, she recovered $1,770,510; her full past and future lost income with super and interest, plus $200,000 (with interest) for pain and suffering, less credit for the compensation already paid. She was also awarded $24,233 for breach of contract and $160,650 in penalties paid to her, with $300,000 in agreed costs. 

Why the Fair Work avenue matters after 1 July 2026

Run the same worker through today's rules: below the 25% threshold, cut off at 130 weeks, no work injury damages claim and only a s.66 lump sum claim. Leggett’s Fair Work recovery would be identical, because none of the new state scheme thresholds, definitions or defences can touch a federal claim. The same logic protects other federal claims with their own compensation powers, including sexual harassment claims under the Fair Work Act and, following the High Court’s decision in Elisha v Vision Australia [2024] HCA 50, claims for psychiatric injury caused by an employer breaching the employment contract. 

What Leggett means for practitioners in 2026

From where we sit in personal injury, the broader point is that a worker below the threshold is not necessarily without options. Where someone complained, raised a safety issue, took leave or lodged a workers compensation claim, and was then treated worse, the circumstances may sit outside the state scheme altogether.  

In Leggett, the compensation attached to the employer's specific unlawful conduct rather than to workplace stress generally, which is why the link between the medical evidence and that conduct proved so significant.  

The procedural doors also differ, and this is where early specialist employment advice can really matter. What gets decided in the workers compensation claim or the IRC first can also shape a later court case, as findings made there may bind the parties, for better or worse. The costs position differs from what personal injury practitioners are used to: in Fair Work cases each side usually pays its own legal costs even if they win, but the award is uncapped, pain and suffering is on the table, penalties can be paid to the client, and the workers compensation already received isn't wasted. 

How the new IRC conduct claims can help a federal case

Under the new pathway, bullying, harassment, and excessive workload claims are "conduct claims". The insurer has 42 days to decide liability, with interim payments and up to $7,500 of treatment in the meantime. If it disputes that the conduct meets the definitions, in other words whether a "relevant event" happened at all, the dispute goes to the Industrial Relations Commission. 

For a worker who may also have a Fair Work claim, that hearing can be an asset as well as a hurdle. An IRC finding that the bullying or harassment occurred is a formal determination made on tested evidence, and Leggett itself shows how findings from the state scheme travel into the Federal Court, potentially binding the parties on the facts essential to them. Even where no strict estoppel arises, the IRC record of statements, documents and the questioning of witnesses, could arrive in a federal case as evidence already assembled, and as an early credibility test.  

The IRC establishes that the conduct happened; the Fair Work Act reverse onus then does much of the remaining work on why. The edge cuts both ways, though. It is another point where early specialist employment advice can matter. 

The limits of this avenue

This route requires an actual breach of the Fair Work Act, since harsh treatment on its own is not enough. It does not cover NSW government employees, who sit outside the federal system. An employer can still defend a claim by showing a genuine reason for its decisions, and Leggett is a decision of a single judge, one that is reported, widely followed, and yet to be overturned. Although the former may still be the case, and this may be the new pathway practitioners take, it could be a matter of time before it is brought before the Full Court and tested on the new circumstances.  

Practical takeaways

• Screen every psychological injury intake for a federal angle: ask what the worker did (complained, raised a safety concern, took leave, lodged a claim) and what followed.

• Diarise the dual clocks: the insurer's 42-day liability decision on conduct claims, and the time limits on any Fair Work application.

• Treat an IRC conduct-claim hearing as evidence-building: findings, documents and tested witness accounts may travel into a federal case.

• Get specialist employment advice early: the reverse onus is powerful, but an employer can still prove a genuine reason.

• Remember the exclusions: NSW government employees, and cases with no actual Fair Work breach, stay within the state scheme.

Frequently asked questions

Can a worker still claim damages for a psychological injury in NSW after the 1 July 2026 reforms?

Only in limited cases. Under the NSW scheme a worker now needs a whole person impairment rating of at least 25% to sue for work injury damages, and weekly payments for most psychological injuries stop at 130 weeks. Workers assessed between 15% and 24% are generally limited to a lump sum claim under s 66.

What is a general protections claim under the Fair Work Act?

It is a federal claim alleging that an employer took adverse action against a worker because the worker exercised a workplace right, such as making a complaint or taking sick leave. Under s 361 of the Fair Work Act 2009 (Cth), the employer must then prove the action was not taken for that prohibited reason.

Does receiving workers compensation stop a worker from bringing a Fair Work claim?

No. In Leggett v Hawkesbury Race Club, the Federal Court awarded compensation under the Fair Work Act even though the worker had an accepted workers compensation claim. Amounts already received were credited to prevent double recovery.

Who cannot use the federal avenue?

Workers whose employment sits outside the federal system, including NSW government employees. The route also requires an actual breach of the Fair Work Act; harsh treatment alone is not enough.