PSYCHOLOGICAL INURIES AT WORK – WHAT IS CHANGING FROM 1 JULY 2026?

Some changes to Workers Compensation for primary psychological injuries in New South Wales will commence from 1 July 2026. These changs will not apply to exempt workers including first responders and coal miners.

1.      Psychological injury must be caused by a “relevant event”

Where an employer first receives notification of a primary psychological injury on or after 1 July 2026, no compensation is payable unless the injury was caused by a “relevant event”.

Relevant events are:

• being subjected to an act of violence or a threat of violence

• being subjected to indictable criminal conduct

• witnessing a traumatic incident happen, or a dead or seriously injured person at the scene of a traumatic incident

• experiencing vicarious trauma

• being subjected to sexual harassment

• being subjected to racial harassment

• being subjected to bullying

• being subjected to excessive work demands

• death of a person in your care as a result of a traumatic incident

Each relevant event has definitions in the legislation which must be satisfied before compensation is payable.

2.      More onerous provisions and reduced provisional liability payments for injuries caused by sexual harassment, racial harassment, excessive work demands or bullying (relevant conduct).

Primary psychological injuries caused by sexual harassment, racial harassment, excessive work demands or bullying will be subject to more onerous requirements including:

• Additional particulars required to validly make a claim before interim payments can commence.

• Disputes about whether the conduct was “relevant conduct” must be determined by the Industrial Relations Commission (IRC) before any other issue can be referred to the Personal Injury Commission (PIC).

Interim weekly payments while liability is being determined are limited to 75% of the worker’s pre-injury average (PIAWE) weekly earnings and only for up to 52 days. However, if the insurer does accept liability, the worker can receive back pay to make up the full PIAWE rate to the date the claim was validly made.

3.      No weekly payments after 130 weeks for workers with less than 25% WPI*

For primary psychological injuries notified after 1 July 2026, no weekly payments are payable after 130 weeks unless a worker has been assessed with at least 25% WPI. 

Payments after 130 weeks will only recommence from the date the worker receives a binding assessment of 25% WPI or more.

4.      One extra year of reduced weekly payments for some workers with 21% to 25% WPI

Workers with between 21% and 25% WPI who are either totally unfit for work, or who have returned to work for at least 15 hours a week, may be eligible for:

• a reduced weekly payment of up to 60% of their PIAWE for an additional 52 weeks after the expiry of the first 130 weeks; and

• intensive vocational re-education and retraining while in receipt of weekly payments in this period.

  
  

5.     Compensation for medical and related treatment expenses ceases 1 year after weekly payments cease

Workers will cease to be entitled to compensation for medical and related treatment:

• 1 year from the date of the claim if no weekly payments are made; or

• 1 year from the date weekly payments cease.

This does not apply to a worker with 31% WPI or more.

6.      No work injury damages for workers with less than 25% whole person impairment*

For primary psychological injuries notified on or after 1 July 2026, the threshold for claiming work injury damages is increasing to 25% WPI.*

Legal advice

As these matters become increasingly complex it is essential workers get early legal advice.

The Independent Review Office will continue to provide grants for legal costs to Approved Lawyers to provide early advice and deal with disputes. 

IRO have also issued updated funding guidelines covering the new “relevant event” disputes in the Industrial Relations Commission.

*Historically only 3% of all injured workers with permanent psychological injuries have been assessed with 25% WPI or more

We help injured workers get the compensation they deserve. For more information book an obligation free appointment with a Personal Injury Accredited Specialist.

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We are Independent Review Office (IRO) Approved Legal Service Providers. ILARS funding is available to cover the costs of obtaining preliminary legal advice, to challenge an insurer's decision and to pursue a claim for workers compensation benefits.

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DISCLAIMER: This post is made available by Mortimer Fox Lawyers to give you general information and a general understanding of the law, not to provide specific legal advice. Unless otherwise stated, all information provided pertains to injuries sustained in or in connection with New South Wales. By using this post you understand that there is no solicitor client relationship between you and Mortimer Fox Lawyers. This post should not be used as a substitute for legal advice. If you require legal advice please contact us for an appointment. Liability Limited by a scheme approved under Professional Standards Legislation.