NSW workers compensation changes: what they mean for business
NSW Parliament has approved major reforms to workers compensation legislation that will change how businesses manage claims and support injured workers.
From new rules for psychological injury claims to changes in dispute resolution and benefit limits, the Workers Compensation Legislation Amendment Bill 2025 is designed to make the system clearer and more sustainable.
What’s changed to workers compensation NSW?
NSW Parliament passed key legislative changes on 18 November 2025. They include:
- Clearer definitions for psychological injuries
Psychological injuries now include bullying, excessive work demands, racial harassment and sexual harassment. A claim can only succeed if employment is the main contributing factor. These updates aim to make psychological injury liability decisions more consistent and objective. - Dispute resolution process for bullying claims
If a claim is disputed, it will go to the Industrial Relations Commission for a decision. - Reasonable management action
Section 11A now provides clearer definitions of what counts as a reasonable management action in psychological injury claims. - Permanent impairment assessments
Injured workers can only have one main Whole Person Impairment (WPI) assessment by an approved medical assessor. A second assessment is allowed only if impairment is likely to have increased by 10% or more. - Weekly payments for primary psychological injuries
Weekly payments are capped at 130 weeks (2.5 years) unless WPI is 21% or higher. - Medical expenses
The test for medical and treatment costs changes from ‘reasonably necessary’ to ‘reasonable and necessary’. Section 59A also reduces the time you can claim medical expenses for psychological injuries. - Death benefits
Lump sum death benefits can now be negotiated if there’s a legitimate dispute about liability. - Threshold for permanent impairment
The proposed increase from 15% WPI to 31% WPI for psychological injuries was not passed – the threshold stays at 15%.
What happens next?
The Bill has passed Parliament, and now needs formal approval by the Governor of NSW and supporting regulations, before the changes take effect.
Once that’s complete, the State Insurance Regulatory Authority (SIRA) will release detailed guidelines and timelines. Staying informed now will help businesses prepare for changes ahead.
Why this matters for NSW businesses and brokers
According to the SIRA, psychological injury claims have risen.1 These system reforms aim to address that trend and create more certainty for employers.
Supporting you through change
At QBE, we know legislative change can be complex. We’re here to make it easier to navigate.
Our team will provide:
- Practical guidance and resources
- Education and training for businesses and brokers
- Support to help businesses manage the change.
If you have questions about how these changes affect your business or your clients, reach out to your QBE representative today. We’re here to provide clarity, practical advice and tailored solutions to keep you ahead of these changes.
Save the date for our webinar
We’re hosting a webinar to unpack what these reforms mean for you.
Date: Friday 28 November 2025
Time: 11.00am to 11.30am AEDT
We’ll send registration details directly to our customers and brokers.
1 Source: State Insurance Regulatory Authority (NSW), accessed on 24 November 2025