The reforms introduce new definitions, stricter eligibility requirements and a substantially higher impairment threshold for some compensation entitlements. As a result, some patients who may qualify under the current framework may face greater challenges accessing support once the new laws commence.
Understanding these changes may help clinicians recognise when a patient’s workplace circumstances are relevant to their condition, ensure appropriate clinical documentation, and support informed decision-making about available options.
In practical terms, some patients will need to meet stricter requirements to qualify for certain compensation. This includes higher impairment requirements, moving from 15% Whole Person Impairment (WPI) currently to 25% WPI for injuries after 1 July 2026, as well as more defined criteria around the types of workplace events that can give rise to a claim.
The reforms also introduce new statutory definitions for concepts including bullying, excessive work demands, racial harassment, sexual harassment, traumatic incidents and vicarious trauma.
The changes are particularly relevant for patients presenting with workplace-related psychological injuries linked to:
Under the new framework, psychological injuries will generally need to be connected to specific categories of workplace events defined by legislation.
While many patients may still have valid claims, the pathway to compensation may become more restrictive for some workers whose circumstances do not fall within the new definitions.
Clinical documentation is expected to play an increasingly important role under the new framework.
The reforms place greater emphasis on:
General descriptions such as “work stress” may be less helpful without supporting detail about the underlying workplace circumstances.
Where clinically appropriate, documenting the nature of workplace events and the patient’s account of how those events contributed to their condition may assist in establishing a clearer clinical history.
Early medical evidence can be important in establishing a connection between a patient’s work and their psychological injury.
Patients who present early and have clear, consistent clinical records may be better positioned to demonstrate how their condition developed over time.
From a clinical perspective, early assessment also provides an opportunity to identify emerging symptoms, commence appropriate treatment, and consider workplace factors that may be contributing to the patient’s presentation.
The increase in the Whole Person Impairment threshold for certain lump sum compensation entitlements will have substantial practical impact.
In the 2024-25 Accident Year, 1,514 NSW workers with a primary psychological injury were assessed at 15% WPI or higher. Of those workers, only 88 were assessed at 25% WPI or higher.
This means that fewer than 6% of workers who currently qualify for lump sum compensation under the existing scheme would meet the new threshold.
For some patients, the timing of when a claim is notified may therefore affect which legislative framework applies. Patients who notify a claim before 1 July 2026 will generally be assessed under the current rules, while those who notify after that date may be subject to the new requirements. This means some patients who may qualify for compensation under the current scheme may not meet the requirements once the reforms take effect.
No, the reforms primarily affect primary psychological injuries.
Patients who sustain a physical workplace injury and later develop a psychological condition, such as depression, anxiety or adjustment difficulties arising from that physical injury, may be assessed under different provisions.
As a result, not all patients with psychological symptoms related to work will be affected in the same way by the reforms.
Police officers, paramedics and firefighters are classified as exempt workers under the NSW workers compensation scheme and continue to operate under a separate framework.
The higher impairment threshold does not apply to exempt workers, who retain access to their existing entitlements for psychological injury claims.
Some patients may be uncertain whether their psychological condition is connected to work in a way that could give rise to a workers compensation claim.
Patients may benefit from further advice where:
Informing patients of the potential impact of the reforms before 1 July may assist them in making informed decisions about their options.
The upcoming reforms represent one of the most significant changes to psychological injury claims in NSW workers compensation in recent years.
While the role of the GP remains focused on assessment, treatment and recovery, clinicians are often uniquely placed to identify when workplace factors may be contributing to a patient’s psychological health and to ensure that those factors are accurately documented.
As the new framework approaches, awareness of these changes may help clinicians better support patients navigating the intersection of work, mental health and recovery.
Chantille Khoury is a Partner and Work Injury Claims Practice Group Leader at Law Partners Personal Injury Lawyers. Law Partners offers free information and advice to workers seeking to understand how the NSW government reforms may affect their circumstances.
For more on this topic, visit: https://lawpartners.com.au/lp/workers/nsw-workers-compensation-psychological-injury-changes
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