NSW workers’ compensation reforms diminish real experience of employees

19 March 2025  

Peak body for psychologists, the Australian Association of Psychologists (AAPi), says the NSW government's approach to workers’ compensation reforms diminishes the real experiences of employees who have been psychologically injured at work.  

AAPi Director, Dr Katrina Norris, said the proposed reforms seem purely about cost cutting.  

“We know prevention is absolutely key to reducing psychological injury claims. But it takes time for preventative measures to be implemented and to take effect - as evidenced in other states that have adopted a strong prevention approach.   

“Prevention, however, will not reduce claims already in progress or resolve injuries from unsafe work practices. It also requires significant cultural change within organisations and rebuilding of trust with employees who have already been affected by unsafe work practices and unhealthy cultures.” 

Dr Norris said while psychological or psycho-social injury claims incurred higher costs and durations than physical injury claims, with the number of claims increasing in recent years, there were reasons for this.  

“The increase in claims comes from an increased awareness around psychosocial safety in the workplace and an improved understanding by employees of factors, processes, or behaviours that are unsafe or unhealthy,” she said.  

“People no longer want to work in environments that cause them to be unwell and are expecting their employers to take accountability when the workplace has caused them mental harm.”   

Dr Norris said claim durations and costs are often higher because of:  

• prolonged exposure to causational factors resulting in gradual onset of psychological injury;  
• prolonged experience of symptoms and injury before obtaining support;  
• delays in commencing treatment, often relating to issues with accessibility, affordability, and delays in claim approvals;  
  complex psychosocial factors that extend symptoms, including strained relationships with a workplace, loss of support associated with work, and loss of direction or confidence if unable to return to their substantive workplace. 

“Many of these factors can be managed more effectively through the claims process to help reduce costs and duration. 

“We encourage all governments to consider improving how psychological claims are managed, instead of looking to reduce claims through changing injury definitions or denying certain injury types.”  

Dr Norris said early intervention of psychological injury has been shown in other states to be effective in improving outcomes for injured workers. 

“The education of claims managers regarding psychological injury and how to utilise trauma-informed care models in their interactions with workers will improve relationships with injured workers and increase engagement in the rehabilitation and recovery process.  

“We hope the NSW government will seek guidance from psychologists who work in the occupational health space to inform its decisions on any proposed changes made to their workers' compensation model.  

"We urge this in the interests of improved outcomes for everyone involved, not just in the interests of reduced premiums for employers.”  

About AAPi 

AAPi is a not-for-profit peak body for psychologists that aims to preserve the rich diversity of psychological practice in Australia. Formed in 2010 by a group of passionate grassroots psychologists, AAPi’s primary goal is to address inequality in the profession and represent all psychologists and their clients equally to government and funding bodies. Its primary mission is to lobby for equitable access for the Australian public to professional psychological services such as Medicare Better Access Scheme and the National Disability Insurance Scheme.  

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