On 1 July 2026, a raft of amendments to the NSW workers’ compensation legislation came into effect which have significantly changed the way the system deals with psychological injury claims.
A New Definition: Relevant Events
Under the new provisions, a worker’s primary psychological injury must have been caused by a ‘relevant event’ to be compensable. The newly included definition of relevant event in section 8G of the Workers Compensation Act 1987 (‘the 1987 Act’) lists the following examples as relevant events that may give rise to a compensable psychological injury:
- Acts of violence or threats of violence
- Indictable criminal conduct
- Witnessing a traumatic incident
- Vicarious trauma
- The death of a person in your care
- Bullying
- Sexual harassment
- Racial harassment
- Excessive work demands
The 1987 Act also defines terms such as bullying, excessive work demands, sexual harassment and vicarious trauma.
If there is an argument about the cause of a worker’s psychological injury and whether the psychological injury is compensable, the Industrial Relations Commission has jurisdiction to determine whether the contested workplace conduct constitutes a relevant event. This means that if an employer contests an injured worker’s psychological injury claim, the worker will need to succeed in the Industrial Relations Commission before they can access their workers compensation entitlements.
Greater Impairment Thresholds
Even before the recent amendments, primary psychological injury claims were subject to a higher whole person impairment threshold (15%) for lump sum compensation than physical injury claims (>10%).
The WPI threshold for lump sum compensation for a primary psychological injury is unchanged and remains at 15%.
But since the 1 July 2026 changes, psychological injury claims are facing stricter entitlement thresholds attached to their degree of whole person impairment (‘WPI’). The WPI thresholds for entitlements to weekly payments beyond 130 weeks and work injury damages claims are as follows:
- At least 25% for a primary psychological injury notified or claimed from 1 July 2026
- At least 27% for a primary psychological injury notified or claimed from 1 July 2027
- At least 28% for a primary psychological injury notified or claimed from 1 July 2029
An injured worker with a WPI of at least 21% may be eligible for an additional 52 weeks of weekly payments at a reduced payment rate.
The entitlement to medical, hospital and treatment related expenses is limited to 12 months after the last weekly wage payment is made unless the injured worker has suffered a WPI exceeding 30%.
Conclusion
Overall, the 1 July 2026 changes make it significantly harder for a psychologically injured worker to access their workers compensation benefits and thereafter, confine those benefits to higher impairment thresholds and shorter entitlement periods.
It is extremely important that you seek independent legal advice if you have suffered a psychological injury at work.
