The NSW government has warned workers’ compensation premiums must rise after parliament passed modified reforms that do not include doubling the impairment threshold for psychological injury payouts.

The government wanted the threshold lifted to a 31% whole person impairment under moves to reduce scheme costs, but groups including unions and lawyers argued it would unfairly hit mental health claimants and the proposal was blocked by the state’s upper house. 

Premier Chris Minns has flagged “double-digit increases” in premiums in coming years.  

In parliament this week he was asked about the “biggest threat to small business” in the state. 

“The answer to that question is a 17% compound interest increase in premiums for 340,000 businesses in NSW as a result of the Coalition's refusal to pass a compromise position pushed forward by the crossbench in relation to workers’ compensation reform in this state,” he said. 

Workers’ compensation claims manager EML Group says reforms that have passed still represent the biggest changes to the NSW scheme in more than a decade. 

“The reforms will have huge ramifications for employers – not only through an increase in premiums but via a potential increase in operating costs as new workplace policies, procedures and processes will be needed to be compliant with the reforms,” EML Solutions CEO Angus McCullagh said. 

Changes include new eligibility requirements for primary psychological injury claims, a bullying and harassment jurisdiction in the Industrial Relations Commission and a single assessment process to determine whole person impairment, as opposed to potentially requiring a worker to be assessed on three occasions. For primary psychological injury claims where the impairment is assessed at less than 21%, there is a reduction in entitlement periods for both weekly and medical benefits. 

The government is yet to provide start dates, with some changes needing associated regulations. 

NSW Business says workers’ compensation cost increases are forcing companies to cut staff and halt expansion plans. It says data shows rising premiums are expected to force 46% to scale back operations.