NSW workers compensation reforms: latest legislation updates
The NSW Government reached an agreement to reform the workers compensation scheme on 11 December 2025.
What are the key changes to workers compensation?
Premium stability
The NSW Government has announced there will be a legislated 18-month cap on average premium increases. This means premiums will be frozen at their current rates, avoiding a forecasted 36% increase over the next three years, providing businesses with greater certainty for budgeting and planning.
Impairment thresholds
From July 2026, the Whole Person Impairment (WPI) threshold for psychological injury claims will rise to 25%, with further increases to 28–29% by 2029.
A new mechanism for psychological assessment in workers compensation claims
A new assessment tool for psychological injuries will be developed by the NSW Chief Psychiatrist, aiming to deliver more consistent and equitable outcomes for workers and employers.
Return-to-work support
Increased funding will also be provided for return-to-work programs, including retraining, mentoring and specialist case managers.
Eligibility
Reforms will clarify which psychological injuries are eligible under the workers compensation scheme, aiming to provide greater certainty for businesses where reasonable management actions have been undertaken.
What this means for NSW businesses and brokers
- Budget certainty: With premiums locked for 18 months, businesses and brokers can avoid sudden cost hikes relating to workers compensation.
- Scheme sustainability: Reforms aim to balance claimants’ needs and support a sustainable, modernised scheme.
- Clearer definitions: Reasonable management action more clearly defined providing businesses greater clarity on how management decisions are assessed.
QBE: Your trusted partner in navigating change
At QBE, we know legislative change can be complex. We’re committed to helping guide you through these changes. Our expert team is ready to:
- Provide clear, timely updates as new details emerge
- Help you understand how the reforms may impact your policies and claims
- Support you with practical advice tailored to your business needs.
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.