The federal avenue NSW's psych injury reforms haven't touched: Leggett v Hawkesbury Race Club (No 4) [2022] FCA 622

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%. The threshold rises 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", and employers have a wider "reasonable management action" defence. 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 worked in sponsorship and marketing at Hawkesbury Race Club since 1991. In 2016, a new CEO commenced employment at the Club and, over a period of months, engaged in conduct that the Federal Court later found amounted to bullying and undermining of Ms Leggett.

On 9 October 2016, Ms Leggett made a written complaint and requested that it be referred to the Board. The following morning, the CEO called her into a meeting concerning her performance. Ms Leggett became distressed, went on sick leave and did not return to work. The Club also withheld commissions she had already earned.

Her workers compensation claim was accepted. She received weekly payments and lump-sum compensation based on a 19% WPI assessment.

However, Ms Leggett also commenced proceedings in the Federal Court under the general protections provisions of the Fair Work Act 2009 (Cth). She alleged that the Club had taken adverse action against her because she had exercised workplace rights, including making a complaint about her employment and taking sick leave.

That distinction proved critical.

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

Rares J found that conduct by the Club and its CEO constituted unlawful adverse action and that the conduct caused Ms Leggett’s major depressive disorder, leaving her permanently unable to work.

General protections proceedings are particularly significant because of the statutory presumption in s 361 of the Fair Work Act. Where it is alleged that adverse action was taken for a prohibited reason, the action is presumed to have been taken for that reason unless the person who took the action proves otherwise.

In Leggett, the Club was unable to discharge that burden. The Club also argued that restrictions in the Workers Compensation Act 1987 (NSW), including those affecting the recovery of damages for workplace injuries, should limit the compensation available under the Fair Work Act.

Rares J rejected that argument. The Court held that NSW legislation could not restrict remedies available for contraventions of Commonwealth law. To the extent of any inconsistency, Commonwealth law prevailed by operation of s 109 of the Constitution. The practical result was that the statutory limitations applying to NSW work injury damages did not confine the compensation available for the Fair Work Act contraventions.

Damages Awarded: $1.77 million beyond the NSW caps

Ms Leggett had been assessed at 19% WPI. Under the current NSW framework, a primary psychological injury at that level would not meet the threshold for a work injury damages claim and, subject to the applicable requirements, weekly payments would generally cease at 130 weeks.

In the Federal Court proceedings, however, Ms Leggett was awarded approximately $1.77 million in compensation, including substantial amounts for past and future economic loss and non-economic loss, after allowing credit for workers compensation payments already received. She was also awarded damages for breach of contract and penalties arising from the Fair Work Act contraventions, together with agreed costs.

Importantly, the existence of her workers compensation entitlements did not prevent the Federal Court from awarding compensation under Commonwealth law. Amounts already received could be accounted for to prevent double recovery without importing the NSW damages restrictions into the federal claim.

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

The significance of Leggett is not that every worker who falls below the new NSW impairment thresholds has an alternative federal claim. Rather, it demonstrates that the workers compensation scheme is not necessarily the end of the inquiry. Where the conduct causing or contributing to a worker’s psychiatric injury also constitutes an independent breach of Commonwealth workplace law, a separate cause of action may arise with remedies that are not governed by the NSW work injury damages thresholds. For example, where a worker has made a complaint, raised a safety concern, exercised an entitlement to leave or lodged a workers compensation claim, and detrimental action follows, the circumstances may warrant consideration through a broader employment law lens.

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.  

Running one matter across two systems

For the practitioner, the real challenge in a Leggett-style matter is administrative as much as legal: a conduct claim moving through the insurer and the IRC on one clock, and a potential Fair Work claim on another, with the same witnesses, documents and chronology feeding both. LEAP Legal Software keeps that in one place. A single matter record holds the complaint history, medical evidence and IRC materials a federal claim will later rely on, critical dates track the 42-day liability decision and federal filing deadlines side by side, and up-to-date court forms and precedents cover both jurisdictions. When the IRC record becomes the evidence base for the Federal Court, nothing has to be reassembled.

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.