Workers Compensation Update – What Injured Workers in NSW Need to Know About the Changes Applicable From 1 July 2026

The changes which are outlined below will come into effect on 1 July 2026, unless otherwise stated.

The changes (including outlined in this article do not apply to exempt workers emergency services workers, such as police officers, paramedics and firefighters). Coal miners are also exempt workers but not subject to the 2012 amendments.

Changes Affecting All Injured Workers (Physical and psychological injuries)

Medical Expenses

Previously to claim for the costs of medical treatment relating to a workplace injury, the medical treatment needed to be considered reasonably necessary. This test has been changed to reasonable and necessary, which is a higher standard to be met. These changes won’t come into effect until October 2026 for all claims.

We expect that, as a result of this higher threshold, there will be an increased level of disputes issued by insurers, along with delays in approving requested medical treatment. As a part of this dispute process, we anticipate that insurers will increasingly arrange independent medical examinations to test whether the treatment is reasonable and necessary.

For injured workers, if your doctor has referred you to have specific medical treatment and this has been declined by an insurer, we recommend that you contact us as soon as practical to receive timely and appropriate legal advice for your circumstances.

We foresee that increased matters will be referred to the Personal Injury Commission to resolve treatment disputes.

SIRA have indicated that certain treatments and services will not be considered reasonable and necessary, including alternative healthcare fields (aromatherapy, reflexology, crystal therapy, massage other than prescribed by a health practitioner, medical marijuana and general fitness activities unless prescribed by a health practitioner, and services associated with companion animals (not assistance animals).

Commutations

A commutation is an agreement reached between an injured worker and the workers compensation insurer to wrap up all their entitlements under the workers compensation scheme. In the future, the government will issue regulations which define the eligible types of claims which can be subject to a commutation.

When a commutation agreement it is reached, it will be necessary for the parties to seek approval from the Personal Injury Commission President. To be eligible for a commutation, an injured worker’s whole person impairment must exceed 15% and they must have an ongoing entitlement to medical expenses or a claim for medical treatment, which is finalised by the commutation. It will also be necessary for an injured worker to have received independent financial advice, which the insurer will be responsible for the cost of.

Death Benefits

As part of the legislative amendments, the amount of a death benefit has been increased from $750,000 to $955,950.

If there is a dispute between an insurer and the injured worker’s family as to the eligibility of death benefits, it will now be open to the parties to compromise on the amount of the death benefit. Previously the parties couldn’t compromise on the amount of the death benefit.

The impact of these legislative amendments would depend upon the date of the injured person’s injury and/or date of death.

Assessment of Permanent Impairment

Previously when an injured worker was to be assessed for their permanent impairment both the injured worker and the insurer would obtain their own independent assessments of whole person impairment by a medical assessor. These legislative reforms have changed the process so that there is now a single permanent impairment assessment (‘principal assessment’).

It will be necessary for a worker to first obtain independent legal advice and then the parties will liaise to agree on the type of medical assessment and what evidence should be provided to the assessor. If there is a dispute about liability this should be resolved prior to the medical assessment.

Once the preliminary matters have been agreed to, either the injured workers solicitor or the insurer will apply to SIRA for an assessment. It is open to the parties to agree to an assessor, otherwise the assessor will be appointed by SIRA.

Following the assessment, the SIRA approved assessor will issue a principal assessment certificate which sets out the degree of whole person impairment, their reasons and the facts on which they rely. At this time, if the parties agree with the assessment they will enter into a Permanent Impairment Agreement (previously known as a Complying Agreement). The Permanent Impairment Agreement is binding on the parties.

An injured worker will be unable to undergo a further principal assessment unless their injury has deteriorated so much as to be more than 10 percent whole person impairment.

It’s important for injured workers to know if they refuse to attend an examination that all their workers compensation benefits will be suspended (weekly compensation and medical expenses).

A dispute regarding the principal assessment can be referred to the Personal Injury Commission.

PIAWE Disputes

A worker’s pre-injury average weekly earnings (PIAWE) are usually calculated in reference to the average of their earnings in the 52 weeks prior to the date of injury. There may be specific circumstances which change the mechanism by which this is calculated (for example where there are multiple employers in the 52 weeks prior to the injury). Therefore, each injured worker should seek legal advice about their circumstances.

As a result of the legislative amendments, in the future if there is a dispute between an injured worker and the insurer about the calculation of PIAWE, it will be open for injured workers to refer the dispute to the Personal Injury Commission.

A decision in respect to a worker’s PIAWE is also not classified as a work capacity decision, which gives the insurer greater flexibility in adjusting the PIAWE when new documents and information become available in respect of the workers earnings.

Employer Attendance at Medical Treatment

Employers and their representatives, including return to work coordinators, will be prohibited from attending an injured workers medical treatment or medical examination, unless the injured worker consents to their attendance.

Failure to Provide Suitable Employment

In the workers conversation scheme, there is a positive obligation on an employer to provide suitable employment following a workplace injury, where available. There will now be increased penalties for employers who fail to provide suitable employment, unless it is not reasonably practicable to do so, the worker has left the job voluntarily before or after being incapacitated or the employment was terminated for reasons unrelated to the injury.

An employer can also not terminate an injured worker within 6 months if certified unfit to work due to a workplace injury.

Legal Costs

Legal costs can be continued to be paid by the Independent Review Office (IRO), however applications for funding we need to satisfy the following three merit tests: