Publications

The recent release of the Public Accountability and Works Committee’s (PAWC) Report No 5: Workers Compensation Legislation Amendment Bill 2025 and Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025 (the Report) marks an important milestone in the ongoing discussions about the future of the workers compensation system in New South Wales.

The Committee’s examination of the Workers Compensation Legislation Amendment Bill 2025 and the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025 is detailed and rigorous. It highlights significant areas of concern about the Government’s proposed approach and questions whether the scale and nature of the proposed reforms are justified on the evidence currently available.

A clear red line on psychologically injured workers

A key finding of the Report is its unanimous call for the Government to withdraw the proposal to lift the permanent impairment threshold to 31 per cent. The Committee concluded that this measure would unfairly exclude workers with psychological injuries assessed between 21 and 30 per cent impairment from ongoing support and benefits.

Committee Chair Abigail Boyd MLC described the proposal as indefensible, warning that leaving seriously injured workers without financial or treatment support “carries a risk of self-harm and death by suicide.” The Committee’s position is clear, the sustainability of the workers compensation system cannot be achieved by withdrawing protection from those who need it most.

Recognising the voice of injured workers

The Report gives meaningful weight to the lived experience of injured workers and reflects the perspectives of those who have navigated the scheme’s processes, often feeling marginalised or unheard.

Having contributed to the inquiry myself, I observed first-hand that the PAWC’s process provided a structured opportunity for key stakeholders to contribute. This alignment of procedural fairness with substantive consideration is significant. It signals that the Committee views injured workers not merely as claimants, but as stakeholders in the ongoing design and operation of the scheme.

Balancing sustainability and fairness

The PAWC acknowledges that the NSW scheme faces pressures, including an increase in psychological injury claims over recent years. However, it cautions against reforms that would shift the burden of financial sustainability onto injured workers.

Some stakeholders have expressed reservations about the Government’s financial justification for reform, suggesting that the extent of the scheme’s reported deficit may warrant further scrutiny before major changes are pursued.

The Law Society of New South Wales and others also raised concern about the limited consultation undertaken. The Report therefore calls for reforms to be based on robust evidence, transparency and engagement with all affected groups.

Key recommendations

While the full Report makes 14 recommendations and 19 findings, several stand out for their potential to reshape the workers compensation system.

The Committee recommends the establishment of an Injured Workers Advisory Committee, a formal advisory body through which injured workers can provide input to insurers (icare) and the regulator (State Insurance Regulatory Authority, or SIRA) on the operation and reform of the scheme. The Report also calls on the Government to withdraw the proposal to raise the permanent impairment threshold to 31 per cent, highlighting concerns about its legitimacy and the potential impact on vulnerable workers.

Another key focus is improving insurer accountability and culture. The Committee highlights an adversarial approach to claims management and recommends a shift toward rehabilitation, early treatment, and safe return to work, rather than an emphasis on litigation and the termination of benefits.

Finally, the PAWC emphasises the importance of strengthening consultation and the evidence base for reform. This includes accurate cost modelling, broader engagement with stakeholders such as legal and mental health experts, and thorough evaluation of proposed changes before implementation.

A practitioner’s perspective and next steps

From the standpoint of someone who appeared before the inquiry and works daily with injured workers, the Report is a significant contribution to the policy debate. It underscores that changes to the system, should prioritise fairness, transparency and practical outcomes for workers and employers alike.

The Government must respond publicly to the PAWC’s recommendations and will likely need to amend the bills or withdraw the most controversial provisions, particularly the threshold proposal, to secure sufficient support. At the same time, insurers, regulators, and unions have gained greater legitimacy to advocate for cultural change and more genuinely consultative reform. Practitioners, including lawyers, medical assessors, and rehabilitation providers, should prepare for new governance structures, such as the proposed advisory committee, and an increased focus on early treatment and sustainable return to work.

For injured workers, the Report provides reassurance that their perspectives have been recorded. The true test, however, will lie in implementation, whether the reforms deliver fairness as well as financial sustainability. Beyond New South Wales, the Report offers a broader lesson for compensation schemes everywhere, that financial sustainability is important, but legitimacy is essential. Without the confidence of workers and the public, any system will struggle to operate effectively. Trust, fairness, and transparency are not merely ethical ideals; they are practical necessities. A compensation system that fails to treat people with dignity carries human and economic costs of its own.

Ultimately the Report provides a roadmap for any reform grounded in fairness, stakeholder engagement, and human dignity. It challenges the Government to move beyond a mindset focused on cost cutting and threshold changes toward one centred on inclusion, justice, and shared accountability. For those of us who contributed to the inquiry, and for injured workers navigating the system, this shift matters deeply. If the next phase of reform places genuine focus on the experiences of injured workers rather than purely on financial outcomes, it could mark an important moment for workers compensation in New South Wales. The PAWC has reminded policymakers that enduring improvements must rest on fairness, respect and justice not on cost management alone.

This article was published on 12 November by Carroll & O’Dea Lawyers and is based on the relevant state of the law (legislation, regulations and case law) at that date for the jurisdiction in which it is published. Please note this article does not constitute legal advice. If you ever need legal advice or want to discuss a legal problem, please contact us to see if we can help. You can reach us on 1800 059 278 or via the Contact us page on our website. If you or a loved one has been injured, use our Personal Injury Claim Check now.