Proposed Changes to Psychological Injury Claims NSW: What Employers Need to Know

Psychological injuries in the workplace have become an increasingly common issue for businesses across NSW and Australia. With workers’ compensation claims related to mental health on the rise, employers face new challenges – and new responsibilities – in supporting their teams and protecting their businesses.

Recently, Insurance and Care NSW (icare) provided a detailed submission to the NSW Parliament, highlighting the need to modernise workers’ compensation laws to better address psychological injury claims. This blog breaks down what that means for employers and offers practical steps to help you stay ahead.

Why Psychological Injury Claims Matter More Than Ever

In recent years, the number of workers making psychological injury claims has grown significantly. Stress, anxiety, depression, and trauma related to work can lead to long-term absence and impact overall workplace productivity.

icare’s submission stresses that the current workers’ compensation system needs to adapt to better support for workers experiencing psychological injury. This means more than just processing claims – it involves preventing injury in the first place and helping injured workers return to safe and meaningful work as soon as possible.

What Employers Should Take Away from icare’s Submission

1. Mental Health Support is Critical

Employers must prioritise mental health in the workplace. This includes creating an environment where employees feel safe to speak up, offering access to mental health resources and support, and prioritising wellbeing in everyday operations.

2. Review and Adapt Return-to-Work (RTW) Programs

Supporting employees recovering from psychological injuries requires flexible and tailored RTW plans. By maintaining open communication and assigning suitable duties, employers can support a smooth and lasting transition back to work.

3. Stay Informed About Legislative Changes

The workers’ compensation landscape in New South Wales is undergoing significant changes, particularly concerning psychological injury claims. Employers must stay informed about these developments to ensure compliance and mitigate risks.

How Employers Can Protect Themselves

• Implement proactive mental health initiatives: Training for managers, offering support and resources such as employee assistance programs (EAP),  providing access to mental health support, and promoting a culture of openness can reduce the risk of injury claims.

• Review and update RTW policies: Ensure your RTW policies specifically address psychological injuries, including flexible work arrangements and gradual return-to-work plans.

• Document everything: Keep detailed records of workplace incidents, mental health support provided, and communications with employees during their recovery.

• Engage early: Reach out to injured workers quickly to offer support and plan their RTW, while keeping the lines of communication open throughout their recovery. Maintaining regular, open dialogue helps address concerns early, builds trust, and can reduce claim duration and improve outcomes.

The Bottom Line

Psychological injury claims are complex but manageable. By understanding the evolving regulatory environment and implementing practical mental health and RTW strategies, employers can protect their workforce and their bottom line.

If you want to dive deeper, read the full icare submission here: icare Submission to NSW Parliament.

Contact us today to discuss how we can help you build a safer, more resilient workplace that meets your legal obligations and supports employee wellbeing.

Image: Treasurer Daniel Mookhey (ABC News: Keana Naughton)