EML Update: proposed NSW reforms bulletin

The Treasurer on Tuesday, 18 March 2025, outlined the following in the Ministerial Statement delivered in the NSW Legislative Council:

• Most experts agree that neither scheme (Treasury Managed Fund nor Nominal Insurer) has ever dealt well with psychological injury.
• Psychological claims now make up 12% of total workers compensation claims, but 38% of the total cost.
• The number of psychological injuries has doubled in six 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 we do nothing, 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.  While for the TMF, these injuries are increasingly driven by exposure to trauma, occup

This week, the NSW Treasurer announced proposed reforms to the scheme, specifically regarding psychological injury claims. In the Workers Compensation Ministerial Statement, published 18 March 2025, he proposed the following changes:

• Bullying and harassment claims will be required to be heard in the NSW Industrial Relations Commission before a claim can be made through the workers compensation system. It is not yet clear how this will apply to the private sector. 
• “Psychological injury” and “reasonable management action” will be defined clearly in law, with the preference being for an inclusive definition of psychological injury.
• The whole person impairment threshold will be reviewed and considered in light of the thresholds in South Australia and Queensland. Currently, the whole person impairment threshold is 15% in NSW. Whole person impairment outcomes and thresholds impact the entitlement to claim Work Injury Damages, and the entitlement to benefits beyond scheme legislated time limits.
• Adoption of anti-fraud measures recently implemented by the Commonwealth to protect the National Disability Insurance Scheme.
• Implementation of many of the recommendations made by recent legislative reviews, including the review of the Law and Justice Committee.

The intention is to improve interventions in workplaces to prevent psychological injuries in the first place, to better protect workers. The Treasurer has explained that this will be achieved through increased utilisation of workplace health and safety and industrial relations laws.

The Government has said that they will consult with key stakeholders, including Business NSW and Unions NSW, and it will soon present a bill to Parliament.

The Treasurer indicated at the NSW Legislative Council Budget Estimates hearing on 5 March 2025, an intention for these reforms to commence by 1 July, 2025.

While the timeline is short, at EML we are ready to respond to any legislative changes, so that we continue to implement the legislation fairly and accurately.

We will continue to provide updates as more information becomes available.

In the meantime, we remain committed to supporting workers and employers navigate the complexities of psychological injury claims, especially where they are caused by interpersonal conflict in the workplace.

Our industry first Recovery Pathways team focus on delivering mediation to resolve conflict so that workers feel safe and supported to return to the workplace earlier. 

Our Recovery Pathways team are experts in conflict resolution and mediation and deliver support via face-to-face meetings, video conferencing or through phone calls.

Since launching in July 2024, the Recovery Pathways team have supported over 200 employers and their workers, resulting in workers accessing treatment sooner and improvements in return to work rates. 

For more information visit the Pathways program page.

NSW Parliament Legislative Council Law & Justice Committee – 2022 Review of the Workers Compensation Scheme

In 2022, the NSW Legislative Council’s Standing Committee on Law and Justice held two public hearings, as part of the Review of the Workers Compensation Scheme, with a particular focus on the risk in psychological injury claims. The hearing presented evidence from many various stakeholders across unions, industry associations, and regulators regarding the challenges in injury prevention and treatment.

The insights gathered here were intended to inform future reforms aimed at enhancing the system’s efficiency and effectiveness in supporting workers suffering a psychological injury.

1. 11 Feb NSW Parliament Legislative Council Hansard
2. 3 March Minister for Industrial Relation and Minister for Work Health and Safety at NSW Legislative Council Budget Estimates Hearing
3. 5 March AFR article
4. 5 March Treasurer at NSW Legislative Council Budget Estimates Hearing
5. 18 March Ministerial Statement
6. 18 March NSW Parliament Legislative Council Hansard (incl Opposition response)
7. 18 March Unions NSW response
8. 18 March Business NSW response
9. 19 March NSW Parliament Legislative Assembly Question Time
10. 19 March NSW Parliament Legislative Council – Abigail Boyd, Private Member Statement
11. 20 March  ABC Radio Breakfast – Treasurer