Reforms to workers compensation laws will consider psychological injury more seriously. Here’s what HR professionals need to know
The Minns Government has passed reforms to the Workers Compensation Legislation Amendment Bill 2025, which will provide better protections for psychological injury in the workplace.
While a start date for the reforms is yet to be set by the government, personal injury claims management specialist EML said there are a variety of changes that employers should be aware of, including:
- new eligibility requirements for primary psychological injury claims
- the establishment of a new workers compensation bullying and harassment jurisdiction in the NSW Industrial Relations Commission
- weekly payments for psychological injury claims will be capped at 130 weeks (down from 260 weeks)
- a 42-day (six week) liability determination period for psychological injuries has also been introduced
- reasonable and necessary test as the basis for medical entitlements, as opposed to the current reasonably necessary
- a single assessment process to determine whole person impairment (WPI), as opposed to the current approach which may require a worker to be assessed on three occasions
- the application of a merit-based test, requiring legal representatives for both workers and insurers to certify reasonable prospects of success for litigation
- for primary psychological claims where the WPI is assessed at less than 21%, a reduction in the entitlement periods for both weekly and medical benefits
- an employer claims excess for up to two weeks of weekly entitlements
- annual indexation of entitlements, as opposed to the current biannual indexation
EML Solutions CEO Angus McCullagh noted that major scheme reform isn’t unusual and employers must adopt processes to navigate the changes.
“Businesses leaders and HR professionals need to understand these impacts and be prepared to adjust internal policies, processes and procedures to be compliant,” McCullagh said.
According to the Labor Government, the Liberals, Greens, and Nationals blocking of the reforms led to a rise in workers compensation premiums.
“Businesses and charities will be slugged with the worst premiums in the country,” said NSW Treasurer Daniel Mookhey.
“This situation could have been avoided if the Liberal Party had spent more time working towards a solution and less time playing politics on an issue.”
NSW Premier Chris Minns said premiums are expected to rise by over 17% due to the stall.
What’s next for HR leaders?
The changes are expected to shift how HR professionals engage with workers compensation, while also creating more room for claims.
According to EML, there is potential for a rise in psychological injury claims as workers understand their entitlements better.
McCullagh noted there has already been an increase in psychological injury claims since the reforms were first announced in March 2025.
EML urged HR professionals to review mediation and conflict resolution processes, as incidents could rise.
This includes reviewing WHS practices and policies to ensure psychosocial risk is managed effectively to avoid breaches.
EML said understanding the new legislation is imperative for all HR leaders.
