NSW Return to Work Is Changing

NSW Return to Work Is Changing

by | Apr 6, 2026 | Breaking News, Claims, Injured Worker, Our team, Reforms, Return To Work, Work Health & Safety

The landscape of workplace injury management in New South Wales is undergoing a significant transformation. For years, return to work (RTW) outcomes have been trending downward, creating challenges not only for injured workers but also for employers, insurers, and the broader community. Recognising the urgency of this issue, the State Insurance Regulatory Authority (SIRA) has released its Return-to-Work Roadmap 2026–28, a comprehensive plan to reverse declining outcomes and embed recovery at work as the cornerstone of the workers' compensation system.

This reform period represents both a challenge and an opportunity for employers. The roadmap signals heightened expectations, closer regulatory oversight, and a shift toward capability?based injury management. Employers who act early, invest in supportive leadership, and embrace person?centred practices will not only reduce claim costs but also foster healthier, more resilient workplaces.



Why Return to Work Is Under the Spotlight

SIRA’s data shows RTW performance in NSW has fallen since 2016–17. At 13 weeks post?injury, RTW rates have dropped from 88% to 79%, equating to more than 45,000 additional people not working who otherwise may have recovered at work.

The Roadmap recognises that poor RTW outcomes are rarely caused by the injury alone. Recovery is shaped by four interconnected domains:

  • Personal factors (beliefs, expectations, psychological distress)

  • Workplace factors (supervisor response, suitable duties, culture)

  • Insurance/system factors (early contact, timely decisions)

  • Health care factors (evidence?based, work?focused treatment)

Crucially, many of these factors are modifiable, especially in the first four weeks following injury.

Early Intervention: The Non?Negotiable Priority

One of the strongest messages in the Roadmap is that early intervention is failing and must improve. Currently, fewer than 25% of claims receive an effective early risk assessment, and opportunities for recovery at work are often missed.

For employers, this reinforces critical obligations:

  • Make early contact with the injured worker

  • Identify suitable duties immediately

  • Begin RTW planning within days, not weeks

Evidence shows that after 45 days away from work, a worker’s chance of returning drops to 50%. Delayed engagement—whether intentional or not leads to higher claim costs, longer absences, and increased risk of job detachment.

Psychological Injury: A Growing Risk

Psychological injury claims account for only 10% of claims but 26% of total claim costs in NSW. RTW outcomes are significantly poorer, with just 40% returning at 13 weeks compared to 85% for physical injuries.

The Roadmap highlights that 70% of psychological injury claims stem from preventable workplace factors, including:

  • Excessive work pressure

  • Poor supervisor behaviour

  • Bullying and harassment

  • Inadequate support after injury notification

For employers, the message is clear: RTW performance is inseparable from workplace culture and leadership capability. Prevention, early support, and psychologically safe work design are now central to managing workers compensation risk.

Small and Medium Employers: The Biggest Challenge

SIRA’s data shows a significant gap in RTW outcomes by employer size. At 13 weeks:

  • Large employers (>200 workers): 82% RTW

  • Medium employers (20–200): 80% RTW

  • Small employers (1–19): just 69% RTW

Small businesses often lack dedicated RTW systems or confidence navigating insurer processes. In response, SIRA will expand employer?focused initiatives, including outbound support and simplified RTW guidelines. However, regulators are clear: lack of experience is no longer an excuse for poor RTW practices.

What Employers Should Do Now

The Roadmap positions employers as a central lever for improving outcomes. Practical steps include:

  1. Train supervisors to respond positively and confidently to injury

  2. Document RTW plans early, even for minor injuries

  3. Offer suitable duties creatively, not restrictively

  4. Stay connected with injured workers, regardless of work capacity

  5. Partner early with rehabilitation providers when risk factors emerge

SIRA will increasingly monitor lead indicators such as early contact, RTW planning, and provision of suitable work—not just end outcomes.

A Shift from Compliance to Capability

The Roadmap signals a decisive shift away from checkbox compliance toward capability?based injury management. Employers who invest in early intervention, leadership confidence, and recovery?at?work practices will be best positioned as regulatory scrutiny intensifies.

At ABILITY GROUP, we see this Roadmap as an opportunity for employers to reduce risk, strengthen workplace culture, and achieve better business outcomes through improved recovery at work.

Further Reading

For more on evidence?based recovery at work principles, see the Australasian Faculty of Occupational & Environmental Medicine – Realising the Health Benefits of Work (Royal Australasian College of Physicians), a widely recognised authority referenced by SIRA.

Further Information

Source: SIRA

Title: New roadmap to help more injured workers return to work

Read time: 5+ mins

NSW Workers Compensation Reform Legislation-Passed

NSW Workers Compensation Reform Legislation-Passed

by | Feb 6, 2026 | Breaking News, Claims, Consulting, Health & Wellbeing, Injured Worker, Reforms, Workers Compensation

NSW has entered a defining new era in workers' compensation with the passage of the Workers Compensation Reform and Modernisation legislation, ushering in the most significant changes to psychological injury claims in more than a decade. As psychological injuries continue to rise and place mounting pressure on the scheme, the government have acted to create clearer definitions, streamline assessments, and improve the pathway to recovery for affected workers.



Most notably, the reforms directly target the rapid rise in psychological injury claims, an area long criticised for complexity, lengthy disputes, inconsistent assessments, and escalating scheme costs. Only 50% of workers with psychological injuries were returning to work within a year, compared with 95% of those with physical injuries, underscoring the need for a more robust early intervention and return to work model.

Government data and parliamentary inquiries also highlighted that unclear definitions, multiple assessments, and protracted disputes were contributing to poor worker outcomes and spiralling scheme liabilities.

Key Threshold Changes

Under current legislation, the WPI threshold for all work injury damage claims sits at 15%. The 2026 Act lifts this
threshold for psychological injury claims through a phased schedule:

  • From 1 July 2026: WPI threshold increases to 25%

  • From 1 July 2027: WPI threshold increases to 26%

  • From 1 July 2029: WPI threshold increases to 28%

The same staged increases will apply to the minimum WPI threshold required for access.

Legislative Changes and Their Impact

1. Clearer and More Objective Definitions of Psychological Injury

The reforms introduce specific, objective criteria for psychological injuries arising from:

  • Bullying

  • Excessive work demands

  • Racial harassment

  • Sexual harassment

A claim will only succeed where employment is the main contributing factor, creating greater certainty and consistency across liability decisions.

2. Dispute Resolution Via the Industrial Relations Commission

This aims to streamline disputes and reduce the need for lengthy appeals.

3. Refined Definition of Reasonable Management Action

Section 11A has been updated to provide clearer guidance on what constitutes reasonable management action, addressing a long-standing source of contention in psychological injury claims.

4. New Medical Expense and Treatment Threshold

The standard for payment of medical and treatment expenses has shifted from “reasonably necessary” to “reasonable and necessary”, establishing a higher threshold and reducing subjective interpretation.

5. Streamlined Whole Person Impairment (WPI) Assessments

This reduces duplication, disputes, and assessment shopping.

6. Caps on Weekly and Medical Benefits for Psychological Injuries

Weekly payments for primary psychological injuries

  • 130 weeks, unless the worker is assessed at 21% WPI or higher

  • Medical expenses for psychological injuries are also time-limited under amendments to Section 59A.

7. Permanent Impairment Threshold Maintained at 15%

The threshold for permanent impairment from 15% to 31% WPI was not passed, following criticism from unions and mental health professionals. The threshold remains at 15%.

Reform Aims

The NSW Workers Compensation Reforms aim to deliver:

  • Greater clarity around what does and does not constitute a compensable psychological injury

  • More consistent medical and impairment assessments

  • Early dispute resolution

  • Clearer pathways to treatment and return to work support

The NSW legislation now places strong emphasis on early recovery, functional rehabilitation, and re-employment, with long-term care reserved for higher-impairment cases.

Need Help?

Given the recency of these NSW Workers Compensation Reforms, time will be required to understand real-world implications. Despite these reforms, our continued focus remains leveraging our expertise, relationships and partner network to help achieve return-to-work outcomes for our clients' injured workers to help minimise workers compensation premium impacts. For assistance, contact us to discuss.

Further information

Source: SIRA
Title: Workers compensation reforms pass parliament - SIRA

Read time: 5+ mins

Source: NSW Government
Title: Workers compensation reforms pass parliament | NSW Government

Read time: 5+mins

Workers Compensation 2025 Changes

Workers Compensation 2025 Changes

by | Feb 2, 2026 | Breaking News, Reforms, Workers Compensation

Significant NSW workers compensation scheme changes came into effect in 2025, reshaping how workplace injuries are managed for both employers and injured workers. These reforms aim to improve sustainability, encourage safer return-to-work outcomes, and clarify entitlements across the life of a claim. For businesses and workers alike, understanding what’s changed and what it means in practice is critical to navigating claims with confidence.



In the context of our recent article, Significant NSW Workers Compensation Reforms, after months of negotiation, the NSW Government has reached a landmark agreement on workers’ compensation reforms, balancing protections for employees with sustainability for businesses. ABILITY GROUP highlights what this means for employers, insurers, and workers.

Background to the Agreement

On 11 December 2025, the NSW Government announced that a breakthrough compromise had been reached on workers compensation reforms. The deal was forged after extensive debate in Parliament and input from crossbench members, ensuring that both workers and businesses benefit from a fairer, more sustainable system.

The reforms build on earlier legislative changes passed in November 2025, which introduced new measures to strengthen the scheme, particularly around psychological injury claims and workplace harassment.

Key Elements of the Reform Agreement

The compromise agreement includes several important measures:

  • Premium Stability - a legislated 18-month restriction on average premium increases, sparing businesses from further premium cost hikes

  • Whole Person Impairment (WPI) Thresholds - retention of the WPI thresholds moved by crossbenchers, ensuring fairer assessments for injured workers

  • Return to Work Program: A new intensive program offering an additional year of medical benefits and income replacement, designed to improve recovery outcomes

  • Psychological Injury Focus - stronger eligibility criteria and prevention measures for psychological injury claims, addressing rising costs and complexities

  • Dedicated Jurisdiction - establishment of a specific jurisdiction within the NSW Industrial Relations Commission to handle bullying and harassment claims

What This Means for Employers

ABILITY GROUP stresses that these reforms are critical for employers:

  • Cost Control - the cap on premium increases provides financial certainty, helping businesses plan ahead

  • Compliance Pressure - employers must ensure accurate reporting and proactive injury management to avoid penalties

  • Workplace Culture - the focus on psychological injury and harassment means businesses need stronger mental health and anti-bullying policies

  • Return to Work Support - extended benefits encourage collaboration between employers and insurers to reintegrate injured workers effectively

Benefits for Workers

For employees, the reforms deliver greater protections and support:

  • Extended Benefits - injured workers gain longer access to medical and income support

  • Fairer Assessments - retained WPI thresholds ensure consistent judgment of claims

  • Mental Health Recognition - stronger focus on psychological injury acknowledges the modern workplace challenges employees face

ABILITY GROUP’s Perspective

ABILITY GROUP welcomes the reforms as a balanced outcome that protects workers while safeguarding business sustainability. We recommend employers:

  • Review insurance coverage and wage reporting practices

  • Strengthen workplace safety and mental health programs

  • Engage with SIRA Inspectors and regulators to ensure compliance

  • Prepare for cultural shifts as psychological injury prevention becomes a priority

Need Help?

The agreement on workers’ compensation reforms marks a turning point for NSW’s compensation system. By stabilising premiums, extending benefits, and addressing psychological injury, the reforms create a fairer, more resilient framework. For ABILITY GROUP, this is an opportunity for employers to embrace compliance, foster safer workplaces, and support genuine recovery for injured workers.

Need help navigating these changes and other workers' compensation, people, health and safety aspects in your business? Contact us!

Further Information

Source: NSW Government

Title: Agreement reached on workers compensation reforms

Read Time: 10 minutes

Source: icare

Title: NSW Workers Compensation Reform

Read Time: 10 minutes

Workers Compensation 2025 Changes

Significant NSW Workers Compensation Reforms

by | Nov 24, 2025 | Breaking News, Claims, Consulting, Injured Worker, Our team, Reforms

NSW has finally enacted significant NSW Workers Compensation Reforms, the most notable in over a decade, with the Workers Compensation Legislation Amendment Bill 2025, which received Royal Assent on 24 November 2025. These reforms introduce tighter definitions and objective tests for psychological injuries, including bullying, excessive work demands, racial and sexual harassment, and establish a clear framework distinguishing between primary and secondary psychological injuries. The reforms also streamline Whole Person Impairment (WPI) assessments to a single principal assessment by an approved medical expert, replacing dual assessments.

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NSW Late Payment Fee Change

NSW Late Payment Fee Change

by | Oct 28, 2025 | Premium, Reforms, Workers Compensation

Important Update: Changes to Late Payment Fee Waiver Process for Workers Compensation Policies. In line with recent regulatory updates, ABILITY GROUP is advising all employers and brokers of a significant change to the process for requesting late payment fee waivers and write-offs for Workers Compensation policies in NSW.

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Workers Compensation 2025 Changes

NSW Workers Compensation Reforms

by | May 27, 2025 | Reforms, Workers Compensation

The NSW Government has introduced significant NSW workers compensation reforms, aiming to modernise protections for employees while ensuring sustainability for businesses. We summarise NSW Government's key workers compensation Protecting Workers Compensation for Future Generations changes and how they will directly impact employers, insurers, and workers across the state. and importantly highlight What It Means for Your Business.

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