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Failing to properly consider whether an injured employee could perform modified duties has undermined an employer's defence to her psychological injury claim.

"The [employer] simply did not consult with the [employee] as to the nature of any potential alternate duties that may have been made available and her willingness and ability to perform those duties on a temporary basis," NSW Personal Injury Commission Member John Turner found.

The employee sought compensation for a psychological injury, which she claimed was caused by her employer's decision not to offer her modified duties while she was recovering from a physical injury.

The employer, technology company Inloop, accepted she had sustained a psychological injury, but argued it was the result of its reasonable action in response to her medical circumstances...