What are the workers’ compensation changes in 2026?

Early last year the NSW Parliament had proposed reforms to the Workers Compensation legislation which were set to have significant impacts on injured workers across NSW and especially those who have suffered a psychological injury. The most contentious of the proposed changes was an increase to the Whole Person Impairment threshold required under the legislation for psychological injuries to be raised from the current 15% up to 30%. It was noted by a number of commentators that this was an overly restrictive threshold under the current assessment regime and may have the effect of excluding a number of injured

workers from receiving benefits. This caused extended parliamentary discussions with respect to the proposed reforms, and as a result, the implementation of these reforms was put on hold while they were debated.

In November 2025, it was announced that certain agreements had been reached in Parliament and that these changes would come into effect under the Workers Compensation Legislation Amendment Bill 2025. However, at this time, no changes were agreed upon as to the Whole Person Impairment threshold increase for psychological injuries. Within a few weeks, in early December 2025, it was confirmed that there would be an increase to the Whole Person Impairment threshold and that this would be raised to 25%. It was also noted that the NSW Chief Psychiatrist would be investigating whether other assessments regimes may be more appropriate to determining Whole Person Impairment than the currently implemented regime. Although the 25% Whole Person Threshold is lower than the earlier proposed 30% - this still raises a number of concerns for Workers who have already suffered a

psychological injury under the current Workers Compensation scheme and for persons who may suffer a psychological injury in the future.

Some of the significant changes that are to be incorporated into the current legislation following the implementation of the Workers Compensation Legislation

Amendment Bill 2025 include:

1. Changes to the definitions of key words in legislative instruments in relation to psychological injuries;

2. Referral of certain psychological claims to the Industrial Relations Commission (instead of the Personal Injury Commission);

3. Permeant impairment assessments to be by one medical assessor;

4. Psychological injury weekly payments to be capped at 130 weeks unless a

Worker is found to have a Whole Person Impairment assessment of 21% or

higher; and

5. Changes to the definition of what is required for medical treatment approval

from ‘reasonably necessary’ to ‘reasonable and necessary’.

There is still much uncertainty as how these changes and the proposed increase of

the Whole Person Impairment threshold will impact workers who fall under the

Workers Compensation scheme.

Here at Kells the Lawyers, our Compensation Team is keeping up to date with these

changes are ready to help people with the support and advice they need as these

changes are implemented and begin to have effect.

If you, or somebody you know, have been injured at work and need help or advice

navigating rights and entitlements to Workers Compensation, please reach out – we

are here to help and are only a phone call or online enquiry away.