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.
Workers Compensation Legislation Amendment Act 2025
It introduces significant changes across multiple Acts to improve the effectiveness, fairness, and sustainability of the workers compensation scheme.
Key Amendments to Psychological Injury Claims
- Objective Definitions
- New Dispute Route
- Clarified “Reasonable Management Action
Amendments to Impairment Assessments & Lump-Sum Thresholds
- Single WPI Assessment: A single Whole Person Impairment (WPI) evaluation by an approved assessor is now mandated, reducing duplication. A second assessment is permitted only if deterioration by 10% or more is anticipated
- Threshold Retained at 15% WPI: The proposed increase from 15% to 31% for psychological injuries failed. The threshold remains at 15%, maintaining broader access to lump-sum benefits
Changes to Weekly Payment Periods
Primary psychological injury payments stop after 130 weeks unless WPI reaches at least 21%. The Medical Entitlement Test now requires treatment to be ‘reasonable and necessary.’ Section 59A shortens medical benefit periods for psychological injuries.
Enhancements to Dispute Requirements & Employer Contributions
- Legal Certification Requirement
- Employer Excess Introduced
Governance & Oversight Reforms
- Ministerial Advisory Group Created
- Stronger Definitions & Compliance
Supporters’ Objectives & Scheme Rationale
- Addressing Employment Outcomes
- Financial Sustainability
- Scheme Modernisation: The changes reflect recommendations from the 2023 Standing Committee on Law and Justice, reinforcing fairness and efficiency
Implications for Employers & Workers
Employers should note the new two?week excess, capped weekly payments, and stricter legal obligations, increasing financial and compliance demands.
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Further Information
Source: NSW Government
Title: Workers Compensation Legislation Amendment Bill 2025
Read Time: 30+ minutes
Source: QBE
Link: Workers compensation NSW changes are here
Read time: 5 mins