Significant changes are coming to the workers compensation system in New South Wales.
The Workers Compensation Legislation Amendment Bill 2025 introduces sweeping reforms to how psychological workplace injuries are defined, assessed, and compensated. From insurance premiums to on-site workforce management, these changes will reshape how employers manage risk, responsibility, and regulatory compliance.
On 16 May 2025, CCF NSW attended a parliamentary inquiry into the proposed legislation to hear firsthand the potential impacts. The inquiry followed the release of a Draft Exposure Bill by the NSW Government on 9 May 2025.
During the hearing, the Government stated that the current workers compensation scheme is financially unsustainable, and that urgent legislative reform is required to ensure its long-term viability. However, a number of stakeholders raised serious concerns about the potential negative consequences of the proposed changes — including harm to injured workers, delays in claim processing, and the rushed nature of the legislative process.
The Government proposed an amended version of the Bill before parliament on 3 June 2025.
Key Proposed Changes
The reforms seek to narrow the scope of compensable psychological injuries, refine eligibility criteria, and adjust thresholds for compensation. Notable changes include:
- Introduction of a statutory definition for “reasonable management action”
- Harassment and bullying claims to require a finding by a tribunal, commission, or court
- Work pressure claims excluded from compensation (with limited medical support)
- Introduction of a 31% Whole Person Impairment (WPI) threshold for:
- Ongoing weekly benefits
- Permanent impairment compensation
- Shift to a “reasonable and necessary” test for medical expenses
- Establishment of a joint medico-legal process for WPI assessments
- Annual indexation of Pre-Injury Average Weekly Earnings (PIAWE)
- Introduction of a prescribed employer excess on claims
Next Steps
The Bill has now passed the lower house and is before the upper house for approval. The Bill has an anticipated start date of 1 July 2025. CCF NSW will continue to keep a watching brief and advise members once the Bill has passed.