Workers Compensation Reform FAQs

The NSW Government has made changes to the workers compensation legislation. These changes affect how injuries are assessed, how claims are managed, and the support available to people who have been injured at work.

• On 18 November 2025 the Workers Compensation Legislation Amendment Bill 2025 was passed by NSW Parliament and assented on 24 November 2025.
• On 4 February 2026 the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025 was passed by NSW Parliament and assented on 11 February 2026.

Consultation has been conducted in relation to the draft regulations, guidelines and supporting forms which will operationalise provisions in the Amendment Acts, prescribe transitional arrangements and support implementation.

• Eligibility requirements and amended entitlements for people with psychological injuries.
• A single permanent impairment assessment for all workers, together with a new process and approvals framework.
• New and increased penalties for non and under-insurance.
• Enforceable undertakings.
• Compromised lump sum death benefits.
• Reasonable and necessary test for medical and related treatment.
• Clarifications on the Independent Review Office (IRO) and the Independent Legal Assistance and Review Service (ILARS), IRO and ILARS  functions and approvals.
• Expanded access to commutations.
• New framework for the approval of independent allied health consultants.
• Increased employer excess on claims with weekly payments.
• Period of incapacity for a worker with COVID-19 will be the period specified on their medical certificate.
• Indexation moving to a single annual process from 1 April 2027.
• A decision on pre-injury average weekly earnings (PIAWE) will no longer be a work capacity decision.
• Legal representative to certify reasonable prospects of success when party to a dispute in the Commission.

The Personal Injury Commission can now appoint a tutor to represent and support a person under legal incapacity when proceedings directly or significantly affect them.

This includes children under 18, involuntary or forensic patients, people under guardianship and individuals unable to express or receive instructions due to disability.

The President of the Personal Injury Commission now has the authority to prohibit or restrict publication of certain decision information. This may include names, identifying details, transcripts, documents or recordings relating to any party or witness.

The reforms introduced a two‑year freeze on the Nominal Insurer’s (icare’s) insurance premium target collection rate.

From 30 June 2026 to 30 June 2028, icare must not file premiums with SIRA that exceed the 2025–26 target collection rate.

This freeze applies to the statewide target rate and does not prevent individual employer premiums from changing based on wages, business activity or claims experience.

A primary psychological injury is only compensable if it results from one or more relevant events, the relevant event has a real and direct connection to employment, and employment is the main contributing factor to the injury.

Relevant events include:

• acts or threats of violence
• indictable criminal conduct
• witnessing traumatic incidents
• vicarious trauma
• sexual or racial harassment
• bullying
• excessive work demands.

No.

The new rules for psychological injury do not apply to exempt workers  , coal miners and volunteers.

This includes the following:

• a police officer
• a paramedic
• a firefighter, including firefighters employed by Forestry Corporation if New South Wales, National Parks and Wildlife Service and Transport for NSW.

These 'conduct claims' follow a specific claim pathway:

• Workers must submit a claim form.
• Insurers have 42 days to determine liability.
• Workers receive interim weekly payments (75% PIAWE) while liability is assessed.
• Workers can access up to $7,500 in medical treatment during this period.

If the insurer disputes whether conduct meets the definitions, the matter goes to the Industrial Relations Commission (IRC) if an internal review hasn’t resolved the matter .

Yes.

For primary psychological injuries, workers must meet increased whole person impairment (WPI) thresholds to continue weekly payments beyond 130 weeks.

For workers to meet the increased threshold, their injury must be at least 25%, noting that the threshold will increase to more than 26% for claims made after 1 July 2027 and to more than 28% for claims made after 1 July 2029.

Yes.

A review of the Psychiatric Impairment Rating Scale (PIRS) will be carried out by the Chief Psychiatrist to look at whether it is the right tool to measure whole person impairment in the workers compensation scheme for workers with psychiatric and psychological disorders.

The review will consider how reliable, consistent and robust PIRS is compared to other tools and assess whether the PIRS is an appropriate way to measure permanent impairment.

The Review is currently underway, with a final report due to be delivered in 2027.

Workers with primary psychological injuries will have access to one year of reasonable and necessary medical treatment after weekly benefits cease, except highest needs workers (>30% WPI) who retain lifetime medical access.

Workers with a primary psychological injury and an assessed whole person impairment of:

21 to 24% (from 1 July 2026)

21 to 26% (from 1 July 2027)

21 to 27% (from 1 July 2029) may receive:

• an additional 52 weeks of weekly payments (up to 182 weeks total) after 130 weeks
• a further year of reasonable and necessary medical entitlements
• tailored vocational re‑education and rehabilitation (training, mentoring, coaching, counselling).

A principal assessment means an assessment of the degree of permanent impairment of an injured worker for all relevant injuries. A further principal assessment is only allowed where it appears there is an unexpected and material deterioration (≥10% WPI).

Principal assessments must be made by an assessor or assessors included on SIRA’s register. If the insurer and worker cannot agree on the assessor or assessors, an application may be made to SIRA to appoint one.

A further principal assessment can be made where the worker and insurer agree there has been an unexpected and material deterioration, there were no reasonable grounds at the time of the initial assessment that the condition would deteriorate, and the deterioration results in an increase in permanent impairment of at least a further 10 percentage points.

Yes.

After a principal assessment is conducted, the worker and the employer or insurer may enter into a permanent impairment agreement.  This must be used to establish entitlement for weekly payments, medical expenses, lump sum compensation, commutations, and work injury damages.

Yes.

Large employers who don’t hold a valid workers compensation policy can face:

• Fines of up to 3 times what they should have paid in premiums.
• Up to 1,000 penalty units.
• Possible imprisonment of up to 2 years.

Under-insuring will be an offence with significant penalties.

Yes.

SIRA may accept a written undertaking from an insurer about an actual or alleged breach of the Workers Compensation Acts.

Giving an undertaking does not constitute an admission of guilt by the insurer.

An insurer must comply with the undertaking while it is in force. If it breaches the undertaking, they may face a maximum penalty of 1,000 penalty units.

Breaching an undertaking attracts up to 1,000 penalty units.

A freeze has been placed on premium rate increases for the Nominal Insurer (icare) until 2028. The freeze will apply from the 2025–26 financial year.

Individual employer premiums can change, providing the change is made under the Nominal Insurer’s approved premium‑setting method and has been filed with SIRA.

The test now requires treatment to be reasonable and necessary, ensuring alignment with value-based and evidence-based care.

A decision as to a worker's pre-injury average weekly earnings (PIAWE) are no longer classified as work capacity decisions.

This gives insurers greater flexibility to adjust PIAWE when new earnings information becomes available.

Yes.

An expert panel will commence a review of the scheme’s sustainability and the impact of the reforms as soon as practicable two years after 24 November 2025, followed by a Joint Select Committee review.

The Minister will establish a group comprising injured workers, SIRA, IRO and Unions NSW representatives.

The group will advise on improving support, communication and policy for seriously injured workers.