Changes to Workers’ Compensation claims in NSW

Defining “psychological injury” and eligibility

The new laws outline the definition of psychological injury and what events can trigger a psychological injury. This can include one or more of the following:

• bullying

• harassment

• an act of violence or threat of violence

• serious criminal conduct (an indictable offence)

• vicarious trauma

• excessive work demands

• witnessing a traumatic incident/accident in the workplace.

An injured worker must also prove that the relevant event has a real and direct connection to employment, and that employment is the “main contributing factor” to the injury. This means that psychological injuries now have a higher burden of proof in comparison to physical injuries.

For example, you witnessed a traumatic event on the weekend and it’s impacting your ability to work. Even though you sustained a psychological injury, because it was not directly connected to work, you wouldn’t be eligible to make a claim based on this new definition.

New dispute commission

If your psychological injury is disputed based on the relevant event, it will be assessed by the Industrial Relations Commission (IRC) first before you can file a WorkCover claim. This additional step may increase the time it takes to process and determine your claim.

Increased Whole Person Impairment (WPI) thresholds

To claim negligence against an employer, claimants will need to meet a new threshold of 25% WPI for work injury damages.  If a worker with a psychological injury has less than 25% WPI, they will only be able to receive weekly benefits for up to 130 weeks (that is 2.5 years). This will apply to new injuries and claims made or notified on or after 1 July 2026.  The minimum impairment threshold is set to increase even further to 28% WPI from 1 July 2029.

Decrease of weekly benefit entitlements for incapacity for work

Benefits will be decreased to 130 weeks maximum, down from the previous maximum of 260 weeks, unless an injured worker is assessed to have at least 25% WPI. It does not matter whether the injured worker has recovered well enough to be able to return to work or not.

Changes to medical treatment expenses

Medical treatment expenses will only be funded by the insurer if a doctor certifies that the treatment is “reasonable and necessary”. This is a higher threshold than the previous requirement of “reasonably necessary”.

Who is not impacted by these changes?

There is a list of exempt workers who won’t be impacted by the NSW WorkCover changes. This includes:

• coal miners

• police officers

• ambulance workers

• firefighters

• other volunteer emergency services personnel.