NSW workers’ compensation reform robs workers on their knees

The NSW government’s recently floated workers’ compensation reforms do not support injured workers and, instead, fail those who need government support the most, writes Sarah Hunt.

Proposed reforms to workers’ compensation in NSW were introduced last week, aiming to address rising costs, particularly related to psychological claims, by establishing a new bullying and harassment jurisdiction with the NSW Industrial Relations Commission. The reforms will establish statutory definitions of “psychological injury” and “reasonable management action” to enhance legal certainty rather than allowing the definitions to remain the subject of litigation.

However, I am concerned that the changes do not support injured workers and, instead, fail those who need government support the most.

The NSW government has announced its intention to introduce reforms to the Workers’ Compensation Scheme focusing on psychological injuries.

The proposed amendments have been announced under a ministerial release entitled “Workers compensation reform to address psychological safety”. Let’s be clear: what follows in that release is not a list of proposed changes that in any way address the psychological safety of NSW workers. It is a list of changes that makes their access to support and, ultimately, justice more limited.

The proposed changes include requiring those with psychological injuries to participate in a compulsory process through the Industrial Relations Committee before they can seek support from the compensation scheme. It is suggested that this will create a culture of prevention. There is, however, a vast difference between a culture of prevention of injuries in the first place and prevention of claims. It is apparent what these reforms are aimed at preventing, and it isn’t necessarily injuries.

In his statement, Treasurer Daniel Mookhey said: “The average cost of a psychological injury claim has increased from $146,000 in 2019–20 to $288,542 in 2024–25. Why? Because the system is not returning workers to their health and then to work effectively.”

A successful compensation scheme focused on supporting a return to work is an ecosystem of insurers, employers and injured workers working together. It is important that any reforms proposed to address this issue examine the role that ineffective case management processes and employers play in poor return-to-work statistics and the ongoing economic burden of the system instead of simply curtailing the rights of injured workers to fix the downfalls of the scheme.

I would invite the government to speak with injured workers of NSW to discuss how effective they have felt insurance company case managers have been in assisting their return to work, how impactful the rehabilitation providers have been, or how welcoming their employers have been in finding suitable duties for them to return to, before deciding that the only way to improve the scheme is to create higher thresholds.

It would be foolish to stick one’s head in the sand and ignore the economic realities of the impact of the scheme on NSW and businesses. Reform is needed, and I look forward to the opportunity to consult with the government. Hopefully, that consultation is genuine and varied.

It is important that we don’t forget that behind all this talk of dollars and impacts on businesses are human beings. These are everyday Australians. It is your mum, your dad, your wife or your husband suffering from debilitating and life-changing psychological injury. It’s teachers, police officers, admin workers, middle managers and high-flying executives. It is disproportionately women. They are not just a dollar figure.

Sarah Hunt is a special counsel at national plaintiff law firm Shine Lawyers.