Amendment to Workers Compensation Legislation
On Wednesday 4 February 2026, parliament endorsed the Workers Compensation Legislation Amendment (Reform and Modernisation) which was then assented on Wednesday 11 February 2026.
This amendment was made to implement reforms to and modernise the operation of the NSW workers compensation scheme.
The amendments include:
- Ensuring there is an 18-month restriction on average premium increases;
- Incorporating revised whole person impairment (WPI) thresholds as moved by lower house crossbenchers;
- Introducing an intensive return to work program that provides an extra year of medical benefits and income replacement; and
- Empowering Treasurer Daniel Mookhey to lower the WPI threshold, if in the public interest
The Minns Government claim that this is the “most significant” reform to the State’s workers compensation scheme in a generation, which attempts to counteract the projected 36% increase to employer premiums by raising the threshold for psychological injury claims.
Treasurer Mookhey advised that the previous State scheme was failing injured workers, their employers, the non-profit sector, and taxpayers and that these amendments will see this come to an end.
It is the hopes of the NSW IR Minister Sophie Cotsis that the legislation will provide more support to injured workers for their road to recovery and return to work, and will put the scheme on the path towards sustainability.
Bill to regulate Digital Work
Moreover, the Work Health and Safety Amendment (Digital Work Systems) Bill 2025 passed the NSW Legislative Council in February 2026, with amendments from crossbenchers, aiming to protect the “safety and dignity of workers in the digital age”.
This Bill requires employers to ensure that no Company digital work system risks worker’s health and safety, including any algorithm, artificial intelligence, automation, or online platform.
The Bill also acts to empower WHS entry permit holders to demand employers assist them with accessing and inspecting digital work systems which may be relevant to any suspected contravention. Such permit holders must provide the Company 48 hours’ notice of their intent to exercise the new power.
In 12 months’ time, a statutory review of the Bill will commence, with a report to follow within 18 months of this review.
Despite its good intent, there are concerns from within parliament about this Bill, with the Opposition and National Leaders claiming that there are significant risks that come with regulating digital systems. There are concerns regarding the kind of access Unions would have to confidential information such as internal emails, payroll information and HR files.
However, Unions NSW has provided reassurance, outlining that even when an algorithm has influence over aspects such as hours, pay, or pace of work, there will be clear rules and real human oversight.
Unions NSW secretary, Mark Morey, states that the legislation is “based on a very reasonable principle: technology should serve the workforce rather than exploiting it”.
If you require assistance managing workers’ compensation within your business, or further understanding the Digital Work Bill, please contact us via the link below.