Further update on NSW Workers Compensation changes (Copy)
Further update on Workers Compensation changes
As expected, the NSW Parliament has now passed the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025, with the legislation clearing both Houses on 3 February 2026 after securing bipartisan support.
This Bill—together with the earlier reforms introduced in November 2025—marks one of the most significant overhauls to the state’s approach to psychological injury claims in many years. The overarching aim is to stabilise the financial pressures on the scheme while ensuring injured workers and employers continue to receive the support they need.
Key Changes Affecting NSW Workers Compensation Claims
1. Adjusted Entitlements for Psychological Injury Claims
Workers who lodge a primary psychological injury claim will be eligible for 130 weeks of weekly benefits, with potential extensions depending on impairment levels:
WPI between 21% and 25%
Eligible workers may receive an additional 12 months of weekly payments at either:60% of their Pre‑Injury Average Weekly Earnings (PIAWE), or
the statutory maximum rate (whichever is lower).
WPI above 25%
Access to benefits may extend beyond the 130‑week period.
The WPI thresholds will progressively rise:
26% from 1 July 2027
28% from 1 July 2029
2. New Thresholds for Work Injury Damages
To make a work injury damages claim, workers will now be required to meet the updated WPI thresholds outlined in the reforms.
3. Temporary Freeze on Premium Rate Increases
The Nominal Insurer is prohibited from increasing premium rate settings until 30 June 2028. Individual premiums may still fluctuate due to wage adjustments or claims experience, but industry-wide rates and related factors will remain fixed during this period.
4. Review of the Psychiatric Impairment Rating Scale (PIRS)
A detailed evaluation of the PIRS will be carried out to determine whether the assessment tool remains accurate and fit for purpose when measuring psychological impairment.
What’s Next?
Although the Bills have been passed, the Government is yet to confirm when the amendments will officially commence. Employers should expect further details shortly as implementation timelines are finalised.
