"Resilience" cultures and perpetrator "intent" flagged for major workers' comp reforms

The controversial workers' compensation Bill in the NSW Upper House could be amended to require the promotion of a "culture of workplace resilience", and explicitly block claims involving "persistent and expected levels of worry" linked to pressures inherent to work.

Meanwhile, NSW Treasurer Daniel Mookhey delivered the 2025-26 State budget yesterday, and claimed it was "hit by $2.6 billion in additional workers' compensation liabilities" because of the Bill's delayed progress through the Legislative Council.

Policies aimed at speeding up construction projects and improving workforce skills "will be undermined if 340,000 small businesses have to pay 36 per cent more in workers' compensation premiums because the Parliament has refused to reform a workers' compensation system that is failing injured workers, failing small business, and failing the taxpayers too", Mookhey said in his budget speech.



The Treasurer was referring to the fact that earlier this month, the Legislative Council – where Labor Government members hold just 15 of the 42 seats – voted to refer the Workers Compensation Legislation Amendment Bill 2025 to a Public Accountability and Works Committee inquiry, instead of passing it quickly for the planned commencement day of 1 July.

As reported by OHS Alert, the controversial Bill seeks to limit workers' compensation for psychological injuries to injuries arising from a small number of "relevant events", including being subjected to violence, criminal conduct, bullying, harassment, traumatic events, or excessive work demands that are "repeated or persistent" and "not reasonable in all the circumstances" (see related article).

The Bill also: blocks compensation for injuries arising from work stress or interpersonal conflict that does not involve bullying, harassment or excessive work demands; introduces a high whole-person-impairment (WPI) threshold for psychologically injured workers to be eligible for indefinite benefits or to pursue damages; and caps the weekly payments for psychologically injured workers with impairments under the threshold at 130 weeks, instead of 260 weeks.

At the start of June, the Bill passed the Lower House with amendments providing compensation to workers psychologically injured by "repeated and serious" WHS contraventions (see related article).

On 16 June, the Public Accountability and Works Committee held a public hearing on the Bill. Two days later, it decided to conduct a longer-than-planned inquiry into the reforms and hold another hearing in July.

"The first hearing gave the committee the chance to examine the financial assumptions underpinning the reforms to workers' compensation in this Bill. It is clear from this hearing that there is more for us consider," committee chair Greens MLC Abigail Boyd said.

"The community is understandably concerned about this legislation. We welcome the opportunity to hear from affected people and organisations about what these reforms will mean for them," she said.

Yesterday, NSW Shadow Treasurer Damien Tudehope and Independent MLC Mark Latham, who are both members of the committee, published proposed amendments to the Government Bill. These include:

• overhauling the objects of the NSW Workers Compensation Act 1987 to, among other things, ensuring injured workers have access to appropriate compensation payments, occupational rehabilitation and early return-to-work opportunities, ensuring compensation costs are contained to minimise the burden on businesses, ensuring the "traditional role of workers' compensation for physically injured workers is not jeopardised", and promoting "a culture of workplace resilience to minimise the number and cost of psychological injuries";

• reducing the high WPI thresholds for psychological injuries of 25 and 31 per cent to 21 per cent, but blocking indefinite benefits to workers with a WPI of 21 per cent or more in circumstances where they have a capacity to work at least 20 hours per week and earn a specified amount;

• defining "psychological injury" as "an injury that is a mental or psychiatric disorder, diagnosed by a medical practitioner in accordance with the latest version of the Diagnostic and Statistical Manual of Mental Disorders, that causes significant behavioural, cognitive or psychological dysfunction";

• explicitly blocking anxiety disorder claims "where the responsibilities, pressures or safety concerns of the relevant workplace are reasonably regarded as inherent to that employment, causing workers persistent and expected levels of worry";

• extending the list of reasonable management actions to include "changes to work hours and responsibilities to maintain the financial viability of the enterprise", "resolution of interpersonal disagreements and disputes", and "resolution of personal matters not related to workplace duties"; and

• stipulating that the "knowledge and intent" of a perpetrator of sexual harassment, racial harassment or bullying "is the primary factor in determining whether a relevant event has occurred".

This article has been reproduced with permission from OHS Alert, and the original version appears at www.ohsalert.com.au.