Member update: NSW Workers Compensation changes from 1 July 2026

18 June 2026

From 1 July 2026, significant changes to the NSW Workers Compensation scheme will affect how primary psychological injury claims are assessed and what support may be available to injured workers. These reforms are particularly relevant for psychologists who assess, treat or provide reports for clients with workplace-related psychological injuries.

SIRA has also advised that the changes include new eligibility requirements and amended entitlements for psychological injuries, a new permanent impairment assessment framework, changes to medical and related treatment tests, and further obligations for employers and insurers.

What is changing from 1 July 2026?

The most important change for members to note is that some workers with primary psychological injuries will face stricter eligibility and entitlement requirements. In practical terms, claims will need to be connected more clearly to defined workplace events, and some compensation entitlements will require a higher level of assessed Whole Person Impairment (WPI).

• Higher impairment threshold: for injuries after 1 July 2026, the impairment threshold relevant to some ongoing weekly payment entitlements for psychological injury will increase from 15% WPI to 25% WPI, with further staged changes legislated for later years. Note that this change does not apply to exempt workers, coal miners and volunteers (exemption includes police officers, paramedics, firefighters).
• More defined claim pathways: psychological injury claims will be assessed against more specific legislative categories, including bullying, harassment, excessive work demands, traumatic incidents and vicarious trauma.
• Greater emphasis on early evidence: treating practitioners’ records may become even more important in identifying the event or series of events said to have contributed to the injury, the onset and progression of symptoms, and the impact on work capacity.
• Return to work focus: reforms include measures intended to support earlier intervention and improved recovery at work, including new return to work initiatives for workers with psychological injuries.

Why this matters for psychologists

Psychologists may see clients who are distressed, unsure whether they have a compensable injury, or already navigating a claim. While psychologists should not provide legal advice, members can support clients by ensuring clinical records are clear, contemporaneous and clinically grounded.

Under the new framework, general descriptions such as “work stress” or “burnout” may be less useful unless accompanied by clinically relevant detail from the client’s account of workplace circumstances, symptom development, functional impact, and treatment needs.

Clinical documentation practical considerations

When clinically appropriate, members may wish to ensure their notes and reports address the following:

• the client’s presenting symptoms and relevant diagnosis or formulation;
• the client’s account of the relevant workplace event, events or exposure;
• the timing of symptom onset and progression;
• the relationship between symptoms, functioning and work capacity;
• risk issues and protective factors, where relevant;
• treatment provided, treatment goals and progress over time;
• any recommendations about capacity, adjustments or recovery at work, within the psychologist’s scope and based on clinical assessment.