NSW workers compensation laws changed from 1 July 2026, introducing higher penalties and new obligations for employers.

The changes affect insurance cover, wage declarations, psychological injury claims and how workplace injuries are managed. If you employ workers in NSW, it is worth checking that your workers compensation arrangements are up to date.

Make Sure You Have The Right Policy

Employers who are required to hold workers compensation insurance can now face higher penalties if they do not have the correct policy in place.

Penalties can include:

• fines of $11,000 for large employers or $5,500 for other employers
• a fine of up to twice the premium that should have been paid over the previous five years
• higher court penalties for serious breaches.

The key takeaway is to make sure your policy is current and covers the right employees and business activities.

Check The Information You Give Your Insurer

Employers can also face penalties for recklessly providing incorrect information that results in a lower premium. This could include understating wages or incorrectly describing the business activity. Employers should make sure wage and business information given to their insurer is accurate and kept up to date.

Changes To Psychological Injury Claims

The rules around some psychological injury claims have also changed.

A psychological injury may not be covered where its significant cause is reasonable management action, such as:

• performance reviews
• disciplinary action
• misconduct investigations
• transfers or redeployment
• redundancy or dismissal.

Management decisions still need to be handled fairly and reasonably, so good documentation remains important.

There are also new rules affecting who is eligible to make certain psychological injury claims, what support may be available and how claims are managed.

Employers must still notify their insurer within 48 hours of becoming aware of an injury, including a psychological injury.

Other Changes Employers Should Know About

Other changes include:

• icare premium rates being frozen for 2026–27 and 2027–28, although individual premiums can still change
• higher penalties where suitable work is not provided to an injured employee when reasonably practical
• treatment costs needing to be “reasonable and necessary” from 1 October 2026
• restrictions on employers attending a worker’s medical appointment unless requested
• workplaces having to display information about reporting injuries, making claims and identifying the insurer.

What Should Employers Do Now?

For most businesses, the changes are a reminder to check the basics.

Make sure your workers compensation policy is current, wage information is accurate, your insurer understands your business activities and your workplace has clear procedures for reporting and managing injuries.

It is also worth making sure managers keep good records when dealing with performance issues, disciplinary matters and other workplace decisions.