29/05/2025

Lawyers who represent injured workers remain seriously concerned about the proposed changes to how psychological injuries are compensated within the NSW workers compensation scheme, despite some alterations being made to the Workers Compensation Legislation Amendment Bill 2025 following consultation on the Exposure Draft.

“We welcome some of the clarifications the government has made since the Exposure Draft, but the Workers Compensation Legislation Amendment Bill 2025 will still strip away valued rights for most workers who suffer from psychological injuries sustained in NSW workplaces,” said Shane Butcher, spokesperson for the Australian Lawyers Alliance (ALA).

The threshold to receive weekly payments beyond five years is being raised from 21% whole person impairment to 25% from October 2025 and greater than 30% from 1 July 2026. Lump sum compensation will not be paid for permanent psychological injuries unless the worker is assessed at more than 30% whole person impairment.

Experienced psychiatrists and legal practitioners who represent injured workers told the recent parliamentary inquiry that almost no-one will be able to meet these criteria.

“The government seems determined to make lump sum compensation, longer term weekly compensation and payment of medical treatment for those who have suffered psychological injuries in the workplace virtually impossible,” said Mr Butcher.

“The government seemingly took no notice of the plethora of evidence given in written and oral submissions to the inquiry that a threshold of 31% WPI would render all but a handful of workers ineligible to claim.”

Applying the Permanent Impairment Rating Scale (PIRS) that is used to assess WPI for psychological injuries in NSW, a worker will need to have an extreme level of impairment in order to exceed 30% WPI, including being unable to live alone and needing supervised care as they pose a risk to themselves if unsupervised; never leaving their place of residence; unable to form or sustain long term relationships with pre-existing relationships ending and being unable to care for dependants; being only able to read a few lines before losing concentration; difficulties following simple instructions and an inability to work in any meaningful capacity.

The improved legislation definitions, as proposed in this Bill, are of little utility if the threshold to access longer term compensation is unachievable at 31% WPI.

The ALA is pleased to see that the Bill differs from the Exposure Draft by no longer requiring a finding from the Industrial Relations Commission to be made before a worker can lodge a harassment or bullying claim. Instead, workers who suffer psychological injuries from bullying, harassment or excessive work hours will likely receive early access to weekly payments but will initially only receive 75% of their pre-injury average weekly earnings during an expedited claims process that could last eight weeks.

The Bill proposes changes and reductions to legal costs. The ALA strongly refutes any suggestion that lawyers are progressing unnecessary claims and charging the scheme for work on those claims. Currently, access to legal funding to represent an injured worker is only obtained through justifying to the Independent Review Office that the claim has merit. At present, the funding to lawyers is stage based and very low.

“Lowering the payment of legal costs will only result in injured workers finding it harder to access much needed representation and shift the balance even further in favour of insurers who readily have access to legal representation,” said Mr Butcher.

“As far as the ALA is aware there has been no recommendation made by any stakeholder that a worker’s access to legal representation should be hindered by a reduction in the already meagre legal fees paid to workers’ approved legal representatives.”