Proposed Reforms to the NSW Workers’ Compensation System

NSW Treasurer Daniel Mookhey has called for urgent reforms to the system — with a particular focus on how psychological injuries in the workplace are managed.

These proposed changes represent a significant shift and are widely viewed as a much-needed improvement to the current framework. 

For clubs, the proposed reforms promise more clarity, better protections and potentially reduced costs in dealing with complex psychological claims.

Why are these reforms necessary?

Treasurer Mookhey has flagged a concerning trend in the state’s workers’ compensation scheme:

• If the current trajectory continues, an estimated 80,000 new psychological injury claims are expected over the next five years.
• The scheme’s financial sustainability is under pressure, with only 85 cents held in assets for every dollar required to support psychological injury claims.
• Without reform, business premiums are forecast to rise by 36 per cent across the board — regardless of a club's individual claim history — by 2027–28.

These figures emphasise the urgent need for a more sustainable and targeted approach to managing workplace psychological injuries.

What are the proposed reforms?

To address these challenges, Treasurer Mookhey has announced a structured consultation process, which will include key stakeholders such as ClubsNSW. The proposed reforms include:

1. Expanding the NSW Industrial Relations Commission’s jurisdiction

A new bullying and harassment jurisdiction will be created, requiring these issues to be addressed by the Industrial Relations Commission before a worker’s compensation claim can be lodged. This aims to resolve issues early and reduce the psychological toll on all parties.

2. Clarifying definitions

The reforms will introduce clearer definitions for ‘psychological injury’ and ‘reasonable management action’, helping to reduce confusion and limit the potential for litigation. Claims must be directly tied to workplace incidents, not general stress or interpersonal issues.

3. Strengthening employer protections

To safeguard fair performance management practices, psychological claims made during disciplinary actions or performance reviews will be deemed invalid unless proven otherwise. This allows clubs to manage staff without the constant fear of unjustified claims.

4. Standardising impairment thresholds

NSW will align with South Australia and Queensland in adopting higher whole-person impairment thresholds for psychological injuries than for physical ones — helping to ensure that compensation is provided only in serious cases.

5. Implementing anti-fraud measures

Inspired by federal measures used in the National Disability Insurance Scheme (NDIS), the reforms will include enhanced fraud prevention protocols to protect the system from misuse.

6. Acting on expert recommendations

Reforms will incorporate key findings from the independent review of SafeWork NSW conducted by retired Supreme Court Justice Robert McDougall.

How you can help

ClubsNSW will be making formal submissions during the consultation process and needs your input. If your club has faced challenges under the current system — especially related to psychological injury claims — we want to hear from you.

We’ll be distributing a survey to all members soon, but in the meantime please reach out to the ClubsNSW Workplace Relations Team via ClubASSIST on 1300 730 001 with any relevant case studies or feedback.