NSW Workers Compensation Legislative Update - November 2025

On 18 November, NSW Parliament passed the Workers Compensation Legislation Amendment Bill 2025, introducing key reforms to strengthen the scheme. The final Bill reflects crossbench compromises and includes measures to improve psychiatric assessments. These changes follow blocked broader reforms, leaving employers to absorb higher costs unfortunately. The Government warns of steep premium increases with an indication of 17% for 2026-2027 and potentially beyond.

Key Changes at a Glance

• Psychological Injury Claims: New eligibility criteria now apply for primary psychological injury claims.
• Bullying & Harassment: A dedicated jurisdiction has been established within the NSW Industrial Relations Commission to handle these matters.
• Medical Entitlements: The test for medical benefits will shift to a “reasonable and necessary” standard, replacing the previous “reasonably necessary” approach.
• Impairment Assessments: A streamlined, single assessment process will now determine whole person impairment (WPI), reducing duplication.
• Litigation Requirements: Legal representatives for workers and insurers must certify that claims have reasonable prospects of success before proceeding.
• Reduced Benefits for Lower WPI: For psychological claims assessed below 21% WPI, entitlement periods for weekly and medical benefits will be shortened.
• Employer Excess: Employers will be responsible for up to two weeks of weekly entitlements as a claims excess.
• Indexation Changes: Entitlements will now be indexed annually instead of twice a year.

Impact on Employer Premiums

These reforms will strengthen the ability to manage and assess psychological injury claims. However, the NSW Government has confirmed that employer premiums will rise for the 2026-2027 policy period. The nominal insurer, icare, is reviewing the impact of these changes, and we will keep you updated as further details become available.

What’s Next?

The Government will advise commencement dates for these changes and develop supporting regulations through SIRA. We expect further updates in the coming months.

How Can We Help?

These legislative changes may have significant implications for your business, including cost impacts and compliance requirements. As industry leading workers compensation brokers, the Gow-Gates Workers Compensation Team can assist and support you through this transition.

We encourage you to reach out to us to arrange a meeting to discuss what these reforms mean for your business and how we can help you prepare. We will continue to keep you informed as new information becomes available.