Major changes to the NSW workers compensation scheme have now come into effect, following the Workers Compensation Legislation Amendment Bill 2025 receiving Royal Assent on 24 November 2025. These reforms represent the most significant overhaul in more than a decade and introduce new rules that substantially change how psychological injury claims are assessed.
Tighter Thresholds for Psychological Injury Claims
The reforms introduce tighter thresholds for primary psychological injuries. These now cover conditions arising from bullying, excessive work demands, racial harassment, and sexual harassment.
To succeed, a worker must show that their employment was the main contributing factor to the injury — a higher bar than the previous test, requiring stronger evidence of workplace causation.
New 42-Day Assessment Period
A 42-day timeframe has been introduced for liability decisions involving psychological injury claims linked to bullying, harassment, or excessive work demands. During this assessment period, workers may receive provisional payments.
Disputed claims involving this type of conduct will now be determined by the Industrial Relations Commission, creating a specialised pathway for these matters.
Changes to Whole Person Impairment Assessments
Whole Person Impairment (WPI) assessments will now be conducted as a single principal assessment by an approved medical specialist, replacing the former dual-assessment system.
This change affects all injured workers seeking WPI evaluations and may influence lump sum entitlements and eligibility for ongoing benefits.
Supplementary Reforms — February 2026
A supplementary Reform and Modernisation Bill passed in February 2026 introduced additional adjustments to WPI thresholds for psychological injuries:
- 21–25% WPI: workers gain access to an additional year of weekly benefits.
- Over 25% WPI: workers receive extended benefit entitlements.
What This Means for Injured Workers
These reforms significantly increase the complexity of psychological injury claims and introduce new procedural and evidentiary challenges. Injured workers may face uncertainty in navigating the new rules — particularly around causation requirements and impairment entitlements.
Our experienced team is here to guide workers through these changes and help them understand their rights under the new workers compensation framework.