The NSW Government has announced its intention to introduce reforms that will change how psychological injury claims are defined and managed in the NSW Workers Compensation Scheme. If enacted, these changes will have a direct impact on employers and their workers in NSW.

• Psychological injuries now account for 12% of claims but 38% of total costs.
• The number of psychological injuries has doubled in 6 years.   
• By comparison, all other injuries have grown by just 16% during that same period.
• 88% of workers who suffer from physical injuries on average have returned to work within 13 weeks.
• 40% of workers with psychological injuries are still languishing in the system after one year off work; still separated from their workplace, more likely to be socially isolated.
• An employer facing no claims against them, operating a psychologically safe workplace, can expect their premiums to rise by 36% over three years to 2027-28 if nothing changes, having already faced an 8% increase in premiums for three years running.
• Further, the icare FY24 Annual Report states 70% of the psychological claims reported within the Nominal Insurer are caused by harassment and work pressure.

On Thursday, 5 June 2025, the Legislative Council (upper house) debated, and ultimately agreed to, a motion to refer the Workers Compensation Legislation Amendment Bill 2025 to the Public Accountability and Works Committee for inquiry and report.  Further, the motion provides that the committee will determine its own reporting date. 

What does this mean for employers? Even organisations with clean claims histories and safe practices are likely to feel the impact of rising premiums and more stringent mental health requirements. Employers should begin reviewing their workplace culture, psychological safety policies, and injury prevention strategies now to prepare for what’s ahead.