Have you heard that NSW is overhauling its workers’ compensation system? Keen to know what’s happening but don’t know where to start? Join us as we uncover the changes around claims linked to psychological injuries, stress and bullying. How will the changes impact you and your team? Managing people has never mattered more, and we’re here to help.
Understanding the impact of NSW workers’ compensation reform on psychological injury claims
Worried about how the NSW workers’ compensation changes will affect your team manages and responds to workers compensation claims? We thought it would be helpful to break down what’s coming, discuss the impacts on HR teams and offer some reassurance that you’re not alone in this.
The NSW government is moving from a reactive model to a more proactive one, with a sharper focus on preventing psychological harm before it happens. Think clearer definitions, and stronger protections around bullying and harassment.
The reforms put more onus on employers to actively prevent psychosocial harm. For HR teams, this is an ever so gentle nudge to take a fresh look at how your workplace handles mental health, stress and your overall culture.
This will be HR’s time to shine. From managing workloads to addressing potential psychological injuries early and should a claim arise, it will be your job to guide staff through, what we all hope will be, a more supportive trauma-informed process.
Key highlights of the NSW workers compensation reforms
The proposed reforms have not been without controversy. Of note, is a change to the whole-of-person impairment assessment which currently has a minimum threshold of 15% and would move to 30% under the reforms. ABC have reported there is some fierce opposition to the reforms noting “unions and psychiatrists have claimed the threshold is too high.” This change will have a significant impact for workers making psychological claims under these reforms [KW1] [li2] [KW3].
In addition to changes to the definition on what counts as a compensable psychological injury, there is also a new focus on tackling workplace bullying and harassment early. for . The Industrial Relations Commission has now been given fresh powers to step in before matters escalate.
SafeWork NSW is also getting a boost, gaining extra resources to investigate psychological injuries more effectively.
Small to medium businesses are also winners in the reforms as they will benefit from new mental health support programs through the Black Dog Institute.
The rise of mental health claims in workers compensation
It’s not hard to see why reform is on the table. According to Treasurer Mookhey, psychological injury claims comprise 12% of all claims but constitute 38 per cent of total scheme costs. Over the last six years claims for psychological injuries have doubled, while other workplace injuries have only seen a 16% rise.
Employees on workers compensation with mental health conditions often take over four times longer off work than those who suffered physical injuries. Due to this, the compensation costs are, understandably, significantly higher with the average cost nearly doubling from $146,000 in 2019-20 to over $288,000 in 2024-25.
This data tells a compelling story. And while some claim greater awareness and destigmatisation may be contributing to the rise in claims, it very starkly highlights the real impact of workplace culture and systems on employee wellbeing.
How Workplace Advantage can support you in managing worker’s compensation reforms
The days of simply reacting to claims are well and truly in our rear-view mirror. These changes encourage a more hands-on approach to preventing issues before they arise, especially around psychological injuries like stress and bullying.
Workplace Advantage works closely with HR teams to develop proactive strategies and practical tools that help you stay ahead, offering expert guidance on how you can continue to proactively manage employees whilst a Workers comp claim may be onfoot.
Although eligibility criteria may be refined under the reforms, the importance of creating truly welcoming and psychologically safe workplaces won’t change. From revisiting policies to refining training and early intervention processes, we steer your vision forward and help make sure your workplace is positioned ready to tackle these reforms head on.
Preparing your workplace for effective performance and claim management
The workers compensation system may be evolving, but the need for expert, informed HR support remains constant.
We understand worker’s compensation is a complex beast, but we’re here to help by offering impartial, professional support.
We focus on prevention, open communication, and clear processes that allow you to create a workplace where people feel supported and where claims don’t derail your team’s progress.
Don’t just respond to change, embrace it. Contact us today to build a proactive approach that truly supports your people.