Law Society urges pause on NSW workers comp changes

In response to a NSW parliamentary inquiry into proposed changes to liability and entitlements for psychological injury, the Law Society of NSW has recommended a pause for broader consultations on what it calls “rushed and unbalanced new workers compensation laws” — a compromise has also been put forward by the society regarding proposed changes to the current scheme. While recognising the pressure that the NSW workers compensation system is under and the need for reform, the society said some proposed changes “risk stripping the rights of some of the community’s most vulnerable people, while imposing extra costs on business”.

“There’s no doubt the sustainability of the current scheme needs addressing, but that should not be at the cost of those people who have sustained serious and debilitating psychological injuries on the job,” Law Society of NSW President Jennifer Ball said. “The proposed increase of the ‘whole person impairment’ (WPI) threshold to 31% will conceivably exclude nearly all workers with psychological injury from making a claim. To reach 31% WPI, a person would need to demonstrate they’re unable to live alone, care for dependants, or to function in society.”

The society said it will propose a compromise of changing the WPI threshold to 21%, which it believes would help address concerns over the scheme’s sustainability while “preventing the effective shuttering of the scheme to workers with serious psychological injuries”.

“We believe that changing the WPI threshold to 21% would ensure that many workers generally recognised by community standards as being severely impacted by mental ill-health would be able to make a claim, while easing upward pressure on workers compensation insurance premiums,” Ball said on Friday.

“Following the present truncated and inadequate consultation process, the Law Society urges the NSW Government to pause the progression of the Workers Compensation Legislation Amendment Bill 2025 at the conclusion of today’s hearing to permit broader consultation. This will help minimise unintended consequences and ensure the proposed changes are based on strong evidence.

“Many injured workers could face unacceptable delays and even an insurmountable barrier to compensation if, before being allowed to claim compensation, they are required to prove before a court, tribunal or commission that they have sustained psychological injury through sexual harassment, racial harassment or bullying. This will also create more resourcing pressure on the justice system,” Ball added.

Lawyers from the society’s Injury Compensation and Employment Law Committees contributed to its submission to the inquiry. Ball said that the society is “grateful for the opportunity to appear at the inquiry to reinforce our concerns with the several flaws in the Bill and to help identity how the government can pursue a more sustainable system”.

Image: Jennifer Ball, President of the Law Society of NSW.