Our colleagues at Australian Business Lawyers & Advisors (ABLA) have advised that on 18 March 2025, the New South Wales Government announced in Parliament that it will be seeking to make major amendments to the current Workers Compensation and anti-bullying schemes in NSW.

While no Bill has been presented to Parliament, NSW Treasurer Daniel Mookhey announced the Government will be looking to propose reforms that could substantially reduce the incidence of workers compensation claims and their associated premium impact – if implemented effectively.

The three key changes considered in the announcement include:

1. Establishing a bullying and harassment jurisdiction in the NSW Industrial Relations Commission (NSWIRC) and, critically, making it a requirement for a bullying and harassment claim to be heard there before a claim can be made in the workers compensation system.
2. Introducing an “inclusive” definition of “psychological injury” and a definition of “reasonable management action” (which would not constitute bullying).
3. Adopting some reforms from other states (notably South Australia and Queensland) with changes to the whole person impairment threshold, that triggers a right to claim additional relief through the workers compensation system.

Successful bullying claim a precondition to a workers compensation psych claim?

The most notable of the reforms relates to the Treasurer’s statement that a bullying claim would need to be “heard” by the NSW Industrial Relations Commission before a workers compensation claim can be made.

The Shadow Minister for Industrial Relations (who was briefed on the changes in advance) notably referred to this change as follows: “workers would be required to succeed with an application before the IRC before being able to pursue a workers compensation claim.”

The exact details of this new process remain unclear. However, what is clear is that industrial tribunals have typically required a far more rigorous evidentiary basis to establish bullying than has sometimes been applied by workers compensation insurers in dealing with similar claims.

The additional requirement of a finding of bullying by the NSW Commission could act as a significant deterrence to unmeritorious claims and could provide better avenues for businesses to challenge bullying allegations.

The experience of bullying applications being addressed by the Fair Work Commission in the Federal jurisdiction has broadly been supported by employers who have found the industrial tribunal to be both pragmatic and forensic in differentiating between reasonable performance management and unreasonable bullying behaviour.

‘Inclusive’ definition of psychological injury and definition of reasonable management action

Whether the reforms will succeed in reducing the incidence of claims and workers compensation premiums will depend on how the terms “psychological injury” and “reasonable management action” are ultimately defined.

This in turn focuses attention on the consultation process for these reforms.

Consultation with Business NSW and Unions NSW

The Treasurer has stated that the Government will consult with Business NSW and Unions NSW in formulating these reforms.

ABLA on behalf of Business NSW and Australian Business Industrial (BNSW/ABI) will be involved in these consultations and will seek to ensure that the intention of the reforms (lowering the incidence of injuries, claims and premiums) will be effectively achieved through the draft Bill.

Should you wish to provide any feedback regarding the proposed reforms or the regime to be implemented in order to ensure psychological injury claims can be fairly and pragmatically handled, please feel free to contact ABLA.

Need Help?

If these changes raise concerns or you need a second opinion, the team at ABLA is ready to assist – ASGA Members can call the ASGA Workplace Advice Line any time for further guidance or to discuss your specific circumstances. Simply log in to the Member Area of the ASGA website for full details.