Reforms to NSW’s workplace injury compensation laws have finally passed parliament after the state government and opposition agreed on compromises made by crossbenchers.

A key measure in the bill passed this week introduces an 18-month freeze on average premium increases in the workers’ compensation scheme.

The whole person impairment threshold at which workers with psychological injuries receive weekly payments beyond 130 weeks will be raised to 25% from July 1, then 27% the following year and 28% from July 1 2029.

The government’s earlier plan to raise the threshold to 31% was one of the major stumbling blocks in securing support for the reforms. The current threshold is 21%.

“Businesses and community sector providers will be spared significant increases to their workers’ compensation premiums as a result, and workers will have a much stronger pathway to recovery,” the government said after the bill passed parliament.

“It is the most significant reform to workers’ compensation in a generation. Without the reform, premiums for employers facing no claims against them were expected to rise by at least 36% over three years.”

Treasurer Daniel Mookhey says the changes “finally allow us to stabilise the workers’ compensation system and return it to a secure footing. The scheme has been failing injured workers, employers, the non-profit sector and taxpayers for too long.”

Peak body Business NSW says the bill’s passage is a boost for employers.

“These landmark reforms are an important first step in repairing a scheme which has too often failed both business owners and genuinely injured workers,” CEO Daniel Hunter told insuranceNEWS.com.au.

“This is a win businesses fought hard for and will deliver the certainty they need. Without reforms, businesses faced a projected 36% increase in premiums over the next three years. One in five members said these increases would close their businesses.”

Law Society of NSW president Ronan MacSweeney says “concerns and suggestions raised” have not been addressed in the final version of the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025.

“From a rule of law perspective, we also raised our concerns at the significant deficiencies in the consultation process,” he said. “Legislation not subject to comprehensive consultation from the outset is more likely to result in unintended consequences.”

He says the society will “monitor the practical effect and operation of the legislation, as it is implemented, in order to assist the government with observations around provisions that are resulting in adverse outcomes”.