NSW workers compensation: proposed reforms explained

We’re keeping a watching brief on NSW Parliament to see if proposed NSW workers compensation reforms will be debated during the November 2025 sitting period.

If passed, proposed changes could affect how businesses manage claims, support injured workers and meet their obligations.

To help NSW businesses and brokers stay informed, QBE partnered with icare legal panel provider, Turks Legal to host a 15-minute snapshot webinar on 10 November 2025.

Here’s an overview of what was discussed.

What did the webinar cover?

The webinar featured:

•  Mark Rooney, QBE’s Head of Nominal Insurer
• Adele Fletcher, Partner and Practice Group Head of Employers Liability, Turks Legal
• Miriam Browne, Managing Partner Newcastle, Turks Legal.

Together, they unpacked the current status of the legislative proposals, and what it could mean for NSW employers, injured workers, insurers and brokers. They also recapped the May 2025 draft legislation and the 6 August amendments to the Bill.

What are the proposed NSW workers compensation changes?

Some of the most significant proposed changes include:

• Workers would need a separate tribunal to confirm harassment or bullying has taken place before making a claim for sexual harassment, racial harassment or bullying
• The threshold for psychological injury claims would increase from 15% to 31% Whole Person Impairment (WPI)
• Clearer definition of ‘reasonable management action’
• Limits on weekly benefits and medical expenses for psychological injuries under 31% WPI
• Introducing a single ‘principal assessment’ of WPI to replace the current system where workers and insurers can seek separate assessments.

What’s the status of these proposed changes?

Here’s a quick timeline of key activity:

• May – August 2025: draft legislation released, debated and referred to inquiry
• 3 November 2025: inquiry report published, recommending major changes to the bills and that the first bill return to the Legislative Council for debate
• 11 November 2025: the next sitting date for both Houses of NSW Parliament where the draft legislation and the findings of the inquiry may be listed for debate.

What role does an inquiry play and what was recommended?

The inquiry report is a set of recommendations to government on the proposed legislation. These will guide the next stage of the Bill when government formally responds and Parliament debates any proposed changes. ln its inquiry report, the Public Accountability and Works Committee made 14 recommendations, including:

• Remove the proposed 31% WPI proposed impairment threshold for psychological injuries
• Remove the proposed single principal assessment of WPI model
• Exclude psychological injury claims caused by ‘reasonable management action’
• Review current claims management practices, with stakeholder input
• Allow unions to challenge return-to-work decisions at the NSW Industrial Relations Commission
• Explore icare managing claims directly, instead of outsourcing
• Cap insurer investigation and legal costs at 50% of the value of a claim
• Set KPIs for insurers to provide psychological treatment within two weeks of a claim
• Review why some insurers have better psychological injury return-to-work rates
• Update premium rules to reward safe workplaces, while making sure under-reporting isn’t taking place.

What this means for NSW businesses and brokers

If the reforms pass – in full or in part – they could:

• Change how psychological injuries are assessed and compensated
• Increase the need for early intervention and mental health support at work
• Shift more responsibility onto employers to manage psychological risks
• Affect how premiums are calculated and claims are handled.

Supporting you through change

There’s no action needed right now, but staying informed is key.

We’ll help you navigate the changes with confidence through:

• More webinars, together with Turks Legal, to explain what’s changing
• Updates as the legislation progresses
• Expert guidance to help you understand what the changes mean for you.

Thanks to Turks Legal, an icare legal panel provider, for partnering with us on this important update.