Significant changes to the NSW Workers Compensation Scheme came into effect from July 1, 2026 with a major focus on addressing rising costs allegedly due to a surge in psychological injury claims. RMB Partner and Compensation Lawyer ANNE BARLOW explains the impact.
The Compensation Scheme reforms represent a marked tightening of access to entitlements for most injured workers - regardless of whether the injury is physical or psychological.
Single permanent impairment assessment
This is a central feature of the reforms. Previously, workers could be reassessed if their condition deteriorated or where earlier assessments did not fully capture impact of an injury and its consequences. This recognised the reality that many workplace injuries evolve over time.
Under the new framework, further assessments will only be permitted in extremely limited circumstances. The insurer must agree that a worker has had an ‘unexpected and material deterioration’ which has increased their permanent impairment by at least 10% since the last assessment.
This creates several practical concerns:
- Many injuries worsen gradually rather than suddenly, meaning legitimate deterioration is unlikely to meet the new threshold.
- Workers may be effectively locked into an assessment outcome that no longer reflects their true condition.
- Early assessments arranged by the insurer may understate long-term impairment.
In effect, this shifts the risk of deterioration away from the insurer and onto the worker.
Timing never more critical
Given there is now limited scope to revisit impairment, the timing of an assessment has become crucial.
Workers and their advisors must carefully consider whether a condition has reached maximum medical improvement before proceeding. However, this is often easier said than done because injury trajectories can be unpredictable.
The result is a tension within the system: delay an assessment and risk a dispute or proceed too early and risk permanently undervaluing the claim.
Mandatory legal advice – Helpful but not a cure
The introduction of a requirement for injured workers to obtain independent legal advice before a permanent impairment assessment is a welcome safeguard in principle.
However, it does not fully address the underlying issue created by the “one assessment” rule. Even with appropriate advice, workers remain exposed to the consequences of an assessment that may not reflect how their condition develops over time.
Broader impact on entitlements
These changes sit alongside tighter thresholds for accessing certain benefits, particularly for psychological injuries. When combined with restricted reassessment rights, the overall effect is a system that is less flexible and more difficult for injured workers to navigate.
If you or a member of your family have been, or are currently being, affected by these changes to the NSW Workers Compensation Scheme, you can contact us by phone or our 'Ask a Question' tool on our website. Our experienced compensation lawyers can provide advice about how the reforms may affect your rights and entitlements.