There has been a lot of activity in respect of the proposed changes to the NSW Workers Compensation Scheme over the last month.

The original Workers Compensation Legislation Amendment Bill 2025 was referred to the Public Accountability and Works Committee for inquiry and report.

The Committee, chaired by Abigail Boyd (Greens) and consisting of 3 Labor Members, 1 Liberal Party Member, 1 National Party Member and 1 Independent has now held 2 public hearings, the most recent being on 29 July 2025. During the course of the hearings, the Committee heard from a range of stakeholders within the NSW Workers Compensation Scheme, including employers, brokers and insurers.

The Committee has indicated that it will now prepare a report to be tabled in Parliament. The date of the tabling of the report is not known.

In light of there being no firm date provided by the Committee as to when their report will be tabled, on 6 August 2025 the NSW Government introduced a new Bill into the Lower House, being the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025.

Some main aspects of the new Bill include:

• The psychological injury threshold for both permanent impairment compensation and work injury damages increased to 25% WPI initially (however there continues to be a 31% WPI provision, which appears to be a proposed ‘stepped’ change approach).
• The threshold changes do not apply where a WPI claim (and, in the case of a damages claim, a Pre-Filing Statement) is served before 1 July 2026.
• Insurers will have 42 days (6 weeks) to determine liability for psychological injuries.
• Reduction in entitlements for weekly benefits and medical expenses in respect of psychological injuries unless higher thresholds are met.
• An objective test to be applied for psychological injuries caused by conduct.
• ‘Relevant conduct’ is to be determined by the Industrial Relations Commission.

Further, like the first Bill, most of the changes will not apply to exempt workers or coal miners.

The second reading debate will likely be held in mid-September.

We will continue to update our clients as the legislative developments continue. In the interim, if you would like to discuss what the potential changes mean to you, your business or your clients from a workers compensation or employment law perspective, please reach out to any of our Employers Liability Partners.