If you run a franchise in Queensland and someone on your team develops a psychological condition they link to work, you are dealing with two things at once. You have a duty to prevent harm. They have a right to claim once it happens. Most of the coverage in this magazine looks at the prevention side. This piece looks at the claim side, because the test that decides whether a worker can claim is the same test that tells you which of your own decisions carry legal exposure.
Work-related stress is the second most common compensated illness or injury in Australia, and franchises are not exempt. Rostering pressure, understaffing, difficult customers, the gap between what head office expects and what a single site can actually deliver: all of it sits close to the causes of psychological injury. Understanding how a claim works lets you manage that risk instead of only reacting once the damage is done.
What counts as a compensable psychological injury
A psychological injury is a disorder or illness that affects a person's mood, thoughts, feelings or behaviour. Post-traumatic stress disorder, anxiety, depression and adjustment disorders are the common presentations. For workers' compensation purposes in Queensland, though, the label matters less than the cause. The condition has to be a diagnosed disorder, not ordinary stress or unhappiness, and it has to connect to the job.
The legal threshold is that employment was a significant contributing factor to the injury. That phrase does real work. Employment does not have to be the only cause. It does not even have to be the main cause. But it has to be significant rather than incidental. A worker with a pre-existing condition can still claim if the workplace materially contributed. A worker whose distress comes mostly from events outside work will struggle to meet the test.
The overlap with prevention shows up right here. Sustained excessive workload, exposure to traumatic incidents, unresolved bullying: the same factors your duty of care asks you to control are the factors most likely to make employment a significant contributing factor if a claim is later lodged.
The reasonable management action exclusion
Not every psychological injury that arises at work is compensable, and this is the part franchise owners most need to understand. Queensland law excludes injuries that arise out of reasonable management action taken in a reasonable way.
That covers the ordinary business of running a site: transferring a worker, declining a promotion, managing underperformance, making a role redundant. If those decisions are legitimate and carried out reasonably, a psychological injury that follows from them generally will not be compensable, even if the worker is genuinely unwell.
The exclusion is narrower than it first sounds. It protects the decision, not the way a poor manager might handle it. A redundancy is reasonable management action. Humiliating someone in front of the team while making them redundant may not be. Performance management is reasonable. A pattern of singling one person out under the cover of performance management may cross into conduct that is neither reasonable nor excluded. The action and the manner both have to hold up.
What happens after an injury
In Queensland, a psychological condition is compensable through WorkCover only where employment was a significant contributing factor, and claims arising from reasonable management action such as a transfer or demotion are generally excluded, with retrenchment treated the same way. The worker on the other side of your duty of care has entitlements worth understanding too. Smith's Lawyers sets out how a Queensland worker can claim for a psychological workplace injury, including the point at which a stress or bullying claim can proceed and where reasonable management action rules it out.
A worker who believes their condition is work-related lodges a claim with WorkCover Queensland, supported by a medical certificate. WorkCover then investigates. That usually means gathering the worker's account, the employer's account and the medical evidence, before deciding whether to accept or reject. Acceptance opens access to weekly compensation and medical treatment costs, and in some cases a lump sum.
The rejection rate tells you how hard these claims are to run. In the most recent reporting, psychological injury decisions made up 5.9% of more than 73,600 claim decisions. Of 3,741 psychological injury decisions, 45.6% were admitted and 54.4% were rejected. Accepted claims took around 21 days to decide on average; rejected ones took closer to 41. Part of that failure rate comes from claims that do not survive the reasonable management action test. Part of it comes from the simple fact that a causal link to work is harder to establish for a psychological condition than for a broken wrist.
Why evidence decides these claims
You cannot see the cause of a psychological injury, so the evidence has to carry the argument. A worker needs an assessment from a psychologist or psychiatrist, not just a general practitioner's note, documenting the diagnosis and connecting it to the workplace. Records showing when symptoms began, and how the condition affects daily life at home and physically, matter far more here than in a straightforward physical injury.
For an employer, the same principle runs in reverse. Contemporaneous records of a management decision, the reasons behind it and the way it was communicated to the worker are what stand between a defensible reasonable management action and a claim that succeeds because the business could not explain itself. Documenting a difficult conversation is not paperwork for its own sake. It is the evidence that decides which side of the line an action falls on.
PTSD and first responders
One category works differently. Since 20 May 2021, eligible first responders and certain other workers diagnosed with PTSD have presumptive coverage in Queensland. The claim is deemed to be work-caused unless the employer proves otherwise, which reverses the usual burden. Most franchises will not employ workers in these roles. But operators in sectors that overlap with emergency response, security work or other high-trauma environments should know the presumption exists and changes how a PTSD claim proceeds.
Why this matters for how you run a site
Understanding claims sharpens prevention. Once you know that employment being a significant contributing factor is the threshold, you pay closer attention to the workplace factors within your control. Once you know that reasonable management action is excluded only when both the decision and its execution hold up, you train managers to handle transfers, discipline and redundancies with care, so they make the right call and make it the right way.
Employers and managers are obliged to take appropriate steps to eliminate and minimise health and safety risks, and psychological risk now sits squarely inside that duty. For the franchise operator, the takeaway is a practical one. Good management practice and low claims exposure come from the same habits: reasonable decisions, carried out reasonably, and written down while the reasons are still fresh.
