NSW Workers Compensation Reforms Webinar FAQs

The two‑week excess introduced for employers will apply to all claims made under workers’ compensation policies.

• The exact excess amount will be set by regulation, and more information will be provided once available
• The fixed excess is intended to encourage injury prevention and support early recovery at work, including providing suitable duties as soon as possible
• The new rules will apply to all claims made under a policy issued or renewed on or after 4pm, 30 June 2026, regardless of when the broader amendments commence

All existing policies will switch from the old rules to the new rules once they are renewed. 

Are there similar changes in other states?

No. NSW’s 2026 reforms are among the most significant state workers compensation overhauls currently underway in Australia. Whilst other jurisdictions do have updates and reviews happening, none of these are of comparable scale to the NSW modernisation package.

How will provisional liability entitlement be affected?

Trauma-related claims: worker nominates the event and provides evidence meeting the definition; otherwise, the process remains the same (current provisional liability pathway and timelines).

Conduct-based claims (bullying, harassment, excessive work demands):

• Insurer has up to 42 days to decide liability.
• During assessment, the worker is entitled to a non-provisional liability interim entitlement (different from provisional liability).
• If the insurer fails to decide within 42 days, it is deemed they accepted that the injury was caused by bullying, harassment, or excessive work demands.
• Mutual obligations: the worker must clearly identify the event and provide sufficient detail up front; employers must respond quickly (including any reasonable management action evidence) because the assessment window is short.

Post-Decision Entitlements and Reviews (Conduct-based)

If liability is accepted: insurer has 21 days to issue any back payment for weekly payments (up to 95% of pre-injury average weekly earnings) and to pay outstanding medical expenses.

If liability is disputed: insurer provides information on how to seek a review and pays a further 14 days of weekly benefits during the notice period. A review is mandatory before proceeding to the IRC.

I work in an industry that sees ‘psychological’ injuries (trauma on a daily basis and employees come on board knowing the risk). How do you think these changes will manage that aspect?

Workers exposed to a single traumatic incident (for example witnessing suicide, violence, or severe injury) will generally still qualify for compensation if the event is clearly documented.

For most primary psychological injuries:

• Weekly payments will generally stop after 130 weeks (about 2.5 years). Fewer workers will be eligible for payments beyond 130 weeks, (due to the requirement to meet higher impairment thresholds for longer term payments).
• The threshold to pursue work injury damages will also increase progressively:
  • Current threshold – 15% WPI.
  • From 1 July 2026 – 25% WPI.
  • From 1 July 2027 – 27% WPI.
  • From 1 July 2029 – 28% WPI.
• For many workers, this will substantially limit access to common law compensation.

NSW 2026 reforms are designed to place a greater focus on employers’ WHS obligations to manage psychosocial risk. The reforms intentionally align workers compensation with WHS law, placing greater focus on preventing psychosocial hazards. The expectation is that employers:

• Identify psychosocial hazards
• Implement risk controls
• Intervene early when distress occurs.

For your workforce, this means exposure to trauma must be treated like any other workplace hazard, and psychosocial controls should be implemented proactively, monitored regularly, and reviewed in consultation with employees and health and safety representatives to ensure they are effective.

What is the dispute process for ‘conduct claims’?

Updated decision timeframes are being introduced for conduct based claims.

• Insurers will have 42 days to determine liability for conduct-based claims
• If a decision is not made, it may result in deemed acceptance
• Once liability is accepted or deemed, back-payment of weekly benefits and medical expenses will be required within 21 days.

Disputed conduct-based claims will have the conduct determined by the Industrial Relations Commission after an internal review has been undertaken

• If conduct is determined, the insurer has seven days to accept the claim or continue to dispute
• If the IRC finds the conduct occurred, but the insurer continues to dispute the claim, it is referred to the Personal Injury Commission (PIC) for final determination.

These NSW Workers Compensation Reforms FAQs are intended to provide general information based on the latest available information. As the reforms continue to roll out, further clarification may emerge.