NSW Workers Compensation Reform: What Employers Should Know

The NSW workers’ compensation reform has stalled in the upper house, leaving employers facing rising premiums and ongoing uncertainty. Here’s what you need to know.

Reform Breakdown: What Happened?

The NSW Government’s proposed overhaul of the workers’ compensation scheme has hit a major roadblock. After a 16-hour debate, the upper house rejected a key component of the legislation: raising the whole person impairment (WPI) threshold for psychological injuries from 15% to 31%.

A compromise to raise the threshold to 28% initially gained support but ultimately failed when independent MP Taylor Martin withdrew his backing. As a result, only a scaled-back version of the bill passed, and the most controversial reforms were shelved.

Why It Matters for Employers

The collapse of the reform has several implications for businesses across NSW:

Rising Premiums: Without the full reform, Premier Chris Minns warned that workers’ compensation premiums could increase by up to 36% for some businesses.
Business Viability at Risk: Business NSW has expressed concern that 1 in 5 businesses may be forced to close if premiums spike.
Unchanged Eligibility for Psychological Claims: The failure to raise the WPI threshold means that current criteria for psychological injury claims remain in place, which some argue could lead to higher long-term claim costs.

What’s Next?

The amended legislation now returns to the lower house. The government must decide whether to accept the stripped-down version or attempt to reintroduce the original reforms before the end of the parliamentary year.

This legislative limbo leaves employers in a difficult position, uncertain about future costs and how to manage risk effectively.

ABILITY GROUP’s Perspective

At ABILITY GROUP, we believe that effective reform must balance financial sustainability with fair access to support for injured workers. While cost control is essential, it should not come at the expense of those most vulnerable.

We recommend that employers:

Review your current workers’ compensation policies and prepare for potential premium increases.
Invest in proactive mental health initiatives and early intervention strategies to reduce the incidence and severity of psychological injury claims.
Stay informed about legislative developments and be ready to adapt your risk management strategies accordingly.

How ABILITY GROUP Can Help

Navigating the complexities of the NSW workers’ compensation scheme can be challenging, especially in times of change. Our team offers expert guidance to help you: