Harsh Proposed Workers Compensation Reforms Spark Local Concern: Foye Legal Urges Greater Scrutiny

Foye Legal’s Special Counsel and Personal Injury Accredited  Specialist Emma has grave concerns over the Minns Government’s proposed reforms to the NSW workers compensation scheme, warning they could devastate decimate access to support for workers with psychological injuries across the Illawarra and South Coast. 

On 9 May 2025 the NSW government released an exposure draft of the Workers Compensation Legislation Amendment Bill 2025 (NSW). The Standing Committee on Law and Justice will undertake a hearing only one week later on 16 May 2025.  

The Explanatory Note attached to the Draft Bill states that the proposed changes are intended ‘to shift …workers compensation laws towards prevention’ however the draft bill in its current form has little to no focus on prevention of injuries, but rather prevention of claims.    

These are not just policy tweaks – they represent a fundamental shift in how injured workers  are treated. The changes would impose near-insurmountable hurdles for legitimate psychological injury claims, stripping workers of the support they need when they are  already at their most vulnerable.

One of the most controversial proposed reforms is the doubling of the impairment threshold for  psychological injuries – jumping from 15% to 30% whole person impairment (WPI) to qualify for lump sum compensation and negligence claims. 

Even reaching 15% WPI under the current legislation is extremely difficult. A 30% WPI threshold would mean only the most severely incapacitated individuals—those who are  housebound or require constant care in an institution—would qualify. It effectively denies recognition and support for thousands of genuine claims for psychiatric injuries.

The reforms would also mandate that claims involving bullying, harassment, or psychological harm first be heard by a new jurisdiction within the NSW Industrial Relations Commission, or another relevant court/tribunal before even making a workers compensation claim. Whilst the worker seeks a factual finding in the tribunal, they will not be entitled to any income support or workers compensation payments.  

On the surface, it might look like a step towards early resolution, however in  practice, this will delay access to care and places the burden of a legal battle on someone already experiencing psychological distress. It’s discouraging, and does not meet the overarching principles of the workers compensation scheme. 

Foye Legal sees this as a critical regional issue, not just a Sydney-centric or metro area one. 

In regional areas like the Illawarra and South Coast, we often see workers in healthcare, 

education, emergency services, and community support roles exposed to repeated trauma. These sectors are lifelines to our communities – yet under these reforms, the very 

workers who support us would struggle to access help themselves.

Foye Legal is urging local media, community leaders, and residents to treat this as a pressing  regional story with potentially devastating local consequences. 

This isn’t just a legal issue. It’s a health issue, a workplace issue, and a social equity issue. If implemented, these reforms will shift the cost of untreated psychological injuries onto families, the public health system, and local community services. That’s not reform – that’s abandonment.

The proposed changes should also be of concern to employers, as they will be required to provide a special entitlement to their employees for medical treatment for “work pressure”, up to 8 weeks, in addition to their workers compensation premiums. 

Foye Legal is calling for evidence-based, balanced reform that addresses system inefficiencies  without punishing the injured workers. 

We agree the system needs change, however any change must be fair, trauma-  informed, and built on clinical realities—not quick fixes or budget targets.