Case review | When perceived sexual harassment is enough for a psychological injury claim despite an investigation clearing the conduct

SIM v Randstad Pty Ltd [2026] NSWPIC 423; (21 July 2026)

KEY TAKEAWAYS:

A recent successful workers compensation claim in the NSW Personal Injury Commission confirmed perceived sexual harassment can be enough: a finding that conduct does not constitute sexual harassment will not necessarily defeat a workers compensation claim. A worker’s perception of real workplace events may still materially contribute to a compensable psychological injury.

Overview

The applicant, a labour hire worker placed with a Council host employer, succeeded in a workers compensation claim in the NSW Personal Injury Commission for aggravation of a pre-existing psychological condition following perceived sexual harassment and dissatisfaction with the subsequent grievance process. The labour hire company’s defence failed on two independent grounds and weekly compensation was awarded for a defined period.

The case

The applicant, a temporary community engagement officer placed by a labour hire company, alleged her Council host supervisor engaged in conduct she perceived as sexually harassing within her first two days, including comments on her appearance and repeated hovering near her workstation. She had a pre-existing history of complex PTSD, anxiety and depression, but was assessed as fit for work at commencement in July 2025.

The investigation

The Council conducted a formal grievance investigation and found the supervisor’s conduct did not constitute sexual harassment, characterising it as collegial rapport-building. Protective measures were nonetheless implemented, including a change of reporting line, alternative workstation, and restriction of interactions to work-related matters only.

The applicant was deeply dissatisfied with the outcome. She considered the investigation unfair and relied on an internal Council email stating that a formal investigation was recommended to ‘support any efforts to decline a w/comp claim which is almost inevitable at this stage’. The applicant argued that this communication demonstrated apparent prejudgment of the issues under investigation. On 21 July 2025, the same day as receiving the grievance outcome, the applicant attended her GP who certified her unfit for work and diagnosed an acute adjustment disorder. Notably, the Commission found she attended the GP before receiving the outcome letter.

The applicant lodged a workers compensation claim, and on 24 July 2025 the labour hire company issued a s 78 notice denying the claim and separately emailed the Council instructing it to ‘ignore the emails from this individual’.

Commission findings

The claim succeeded as an aggravation of disease under s 4(b)(ii) of the Workers Compensation Act 1987. The Commission found the applicant’s reaction to the supervisor’s perceived sexual harassment aggravated her existing psychological injury.

Consistent with the ‘eggshell psyche’ principle recognised in psychological injury cases, the Commission accepted that a worker’s psychological vulnerability does not prevent compensation where real workplace events materially contribute to an injury.

The labour hire company’s s 11A defence failed on two independent grounds:

the Council’s investigation was conducted independently of the labour hire company and was not established to be action undertaken on behalf of the labour hire employer
the labour hire company did not establish that the investigation process and grievance outcome were the whole or predominant cause of the applicant’s psychological injury. The Commission was not satisfied that the injury arose predominantly from the investigation process as opposed to the broader workplace events relied upon by the applicant.

Commission decision

Weekly compensation was awarded from 16 July 2025 to 30 January 2026. However, the Commission was not satisfied that incapacity continued beyond that date. The applicant’s own evidence, including daily café attendance, acting classes, painting, active socialising and self-represented litigation, supported a finding that ongoing incapacity had not been established.

Other key learnings for investigators and employers

Host employer investigations do not automatically support a s 11A defence: An investigation by a host into its own employee will not be treated as action taken on behalf of a labour hire employer without documented agency or delegation arrangements.
Psychological injury arising from an investigation may still be compensable: Psychological injury arising from a grievance process, investigation or complaint outcome may itself be compensable. For a s 11A defence to succeed, an employer must establish not only that the relevant management action was reasonable, but also that the management action was the whole or predominant cause of the injury. Where the injury also arises from the underlying workplace events, that may be difficult to establish.
A fair investigation requires impartiality and no prejudgment: Internal communications may become discoverable during litigation. Emails that suggest a complaint process is being conducted for reasons other than genuine fact-finding may be scrutinised when assessing the credibility of the process and the availability of statutory defences.
Interim protective measures should be prompt and genuine: Prompt and appropriate protective measures may assist in reducing psychological harm and demonstrating that concerns have been taken seriously. Document actions taken in response to a complaint.

More information
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