New South Wales employers, charities, and community service providers would face lower workers' compensation premium increases than previously projected after the Minns government reached a compromise with Lower House crossbench members of parliament (MPs) on a package of scheme reforms.
The agreement enables the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025 to be considered by the NSW Upper House in February, following negotiations involving business groups, unions, and not-for-profit organisations. Under the deal, average premium rises will be constrained for 18 months through a legislated restriction. This follows earlier projections that some employers with no claims could otherwise face cumulative premium increases of at least 36% over three years.
The compromise also retains Whole Person Impairment (WPI) thresholds advanced by crossbenchers in the Lower House and grants the Treasurer new powers to reduce those thresholds in the public interest. Treasurer Daniel Mookhey said the agreement provides a basis for stabilising the scheme. “This compromise position allows us to stabilise the workers' compensation system and return it to a secure footing. The scheme has been in dire need of modernisation. It has been failing injured workers, employers, the non-profit sector, and taxpayers for too long. Continuing to do nothing was not an option,” Mookhey said.
For insurers, underwriting agencies, brokers, and injury management providers operating in NSW, the package includes several scheme design changes that may affect claims experience and return-to-work strategies. A central element is a new “Return to Work” intensive program, which will provide an additional year of medical benefits and income replacement for eligible workers. The government will also replace the Business Connect program and revise terminology related to the “reasonable management action” defence, which may have consequences for disputes involving psychosocial and management-related injuries.
The broader reform program underway over the past year has included:
Minister for Industrial Relations Sophie Cotsis said the measures are intended to support both workers and scheme funding. “This agreement ensures early support to injured workers, a road to recovery, and return to work. It puts the scheme on the path to sustainability so that it can continue to care for injured workers and be affordable for business to fund,” Cotsis said.
The reform proposals have received support from a range of employer and community organisations, including Business NSW, the Business Council of Australia, the Australian Hotels Association, Clubs NSW, the NSW Council of Social Service (NCOSS), St Vincent de Paul Society, the Mental Health Coordinating Council, National Disability Services, the Royal Australian College of GPs, and the Pharmacy Guild of Australia.
Mookhey noted the role of independent MPs and sector representatives in reaching the compromise. “I want to thank all those members of parliament who have worked collaboratively with the government to help solve this diabolically complex problem, especially Alex Greenwich and the other independent members of the Lower House crossbench. I also want to acknowledge Business NSW, and all of the state’s major business organisations, as well as NCOSS and the state’s leading charities and not-for profits for their strong and relentless advocacy,” he said.
In November, the Minns government has reintroduced its workers compensation bill to parliament and outlined operational steps linked to implementation. The government plans to:
According to the government, these measures are intended to put the NSW scheme “back on a path to stability” and to change how psychological injury, mental health, and complex claims are managed, with implications for insurers’ reserving, pricing, and case management practices.
Minister for Customer Service and Digital Government Jihad Dib said the reforms are designed to provide predictability for scheme participants. “We are providing certainty to ensure workers have the cover they need, and through this sensible reform, they can now get on with the job knowing that a secure safety net is in place. It’s important that we continue to support injured workers and help them recover. To achieve this goal, we are delivering a sustainable workers compensation scheme and we will continue to work with all stakeholders to deliver exactly that,” Dib said.
For the insurance sector, key areas of attention over the next year are likely to include how the premium cap, benefit changes, and psychosocial oversight interact in practice, and how regulators and icare translate the legislative package into scheme rules, pricing guidance, and operational settings.
