David Nicholls, who along with wife Donna taught at Dubbo North Public School, said he and his wife "lived for" their jobs at the school, which their four children attended.

But he says both he and his wife were subjected to a prolonged campaign against them by staff that ultimately led to both teachers being forced to leave the school in March 2003.

A determination by the Workers Compensation Commission, settling pay entitlements for the teacher, stated that the bulk of "expert opinion" found Mr Nicholls "suffered a psychological injury" and that his job at the school was a major cause.

The commission's arbitrator also condemned the conduct of the principal, saying she "turned a blind eye" to the crisis.

"It is my view that in her capacity as principal, Ms (Heather) Borneman ... was remiss in failing to intervene as conflict between the applicant and other staff members escalated," arbitrator Craig Tanner found.

"She effectively permitted staff of the respondent to mobilise against the applicant and his wife and to ostracise them."

Mr and Mrs Nicholls allege they were both victims of a campaign to "destroy our credibility and reputation" after the pair made a complaint that one of their children had been treated unfairly.

Mr Nicholls said he worked harmoniously at the school for 10 years before the trouble started - this incident the first in a spiralling series of conflicts.

Antagonism flared up for a second time when Mr Nicholls took over the Aboriginal Fund at the school.

He said he found money was being misspent on activities not involving Aboriginal students.

After making a complaint, Mr Nicholls said a number of incidents followed that involved "increasing harassment".

On September 17 2002, 20 members of staff signed a letter addressed to Mr and Mrs Nicholls.

The letter said that as "united members of Dubbo North Public School staff" they were "disappointed and upset about the disloyalty you have shown", which was "unprofessional" and "demoralising to staff unity".

After this "petition against them", they said they became isolated from staff and no longer went into the school staff room.

Mr Nicholls received a letter from a Department of Education and Training investigator on March 26 2003 saying he would be transferred to another school.

"Getting rid of us was not a way to fix a problem," Mrs Nicholls said.

"In the process of all of this we've lost a lot of our friends and by removing us there was a perception that we were the ones who were kicked out - who were bad."

The teachers, who are both Aboriginal, said they did not want the dispute to become overshadowed by issues of race.

"For us it's not about black or white, it's about the lack of respect we were shown as people," Mr Nicholls said.

He said he believed they were treated with hostility because they "asked too many questions" and "rocked the boat".

"I think part of it was jealousy, too," he said.

"When I played the guitar in the school yard I'd get 100 kids around listening, I trained State athletics champions - we were both very popular teachers."

The pair said they simply wanted a chance to "leave the school on our own terms".

"We want a chance to talk to them, to face them, because we were never given one. We haven't done a thing wrong and we can't think of anything the department can tell us we've done wrong."

The department released a brief statement in response to the decision.

It said it would "abide by the decision" but emphasised that the commission "operates on an informal basis without enforcement of the rules of evidence".

It said "resolution of leave entitlements by the commission is not an admission of inappropriate conduct by staff".

The statement said that under a recent announcement by the education minister, occupational health and safety staff would form teams to support principals in issues such as "return-to-work programs, staff welfare, conflict resolution and mediation".