“Wiping its hands of injured nurses”: Backlash to NSW govt proposed cuts to workers’ comp

Compensation payments for psychological injuries will cut off after two and a half years, unless an injured worker can prove they will be significantly impaired for life, under a bid to overhaul the workers compensation scheme.

Workers and employers were given their first glimpse at the potential changes after the Minns government released its exposure draft for the new Workers Compensation Legislation Amendment Bill on May 9.

A parliamentary inquiry will have until May 23 to give feedback on the draft before the final version is set in stone, which NSW Treasurer Daniel Mookhey previously said would put “prevention ahead of compensation”.

This would include enshrining reasonable management practices in law to better protect employers from unfair blowback when performance managing staff.

According to the exposure draft, payments for psychological injuries also would be cut off after two and a half years unless a worker has an “impairment” threshold greater than 30 per cent.

Unions NSW has warned the state government that frontline workers who witness traumatic deaths and injuries while on the job could be prevented from accessing compensation payments, if it forges ahead with its system overhaul.

“Whether it’s a hospital worker or prison officer with PTSD, a child protection worker who has had to remove a child from an abusive home, or a shop assistant abused at a checkout, these workers deserve support when workplace trauma catches up with them. The Government’s plan rips that away,” Unions NSW secretary Mark Morey said.

“Essential workers in our hospitals, schools and railways deal with trauma, sexual harassment and assault regularly. They risk their mental health for the rest of us. We should support them, not cut them off.”

The peak body has launched an ad campaign opposing the state government’s plan, alongside a five-point plan focusing on prevention, improving return-to-work rates, reducing waste, and creating sustainable funding models without cutting worker benefits.

“Workers who have suffered serious psychological injuries have been supported and helped back to work through the workers compensation system. For many, this support was literally life-saving,” Mr Morey said.

“There are better ways to fix the system than cutting support for injured workers – like cutting waste.

“The Government’s cuts mean when you need help most, it might not be there.”

“The NSW government finally recognised these workers just last month, and now want to strip away their workers compensation to try and fix their leaking budget.”

Similarly, the Law Society of NSW has pushed the parliamentary inquiry committee to recommend a pause to allow time for broader consultation and key changes to the legislation.

President Jennifer Ball said increasing the ‘whole person impairment’ (WPI) threshold to 31 percent will “conceivably exclude nearly all workers with psychological injury from making a claim.”

“To reach 31 percent WPI, a person would need to demonstrate they’re unable to live alone, care for dependants, or to function in society,” she said.

“We believe that changing the WPI threshold to 21 percent would ensure that many workers generally recognised by community standards as being severely impacted by mental ill-health, would be able to make a claim, while easing upward pressure on workers compensation insurance premiums.

“Following the present truncated and inadequate consultation process, the Law Society urges the NSW Government to pause the progression of the Workers Compensation Legislation Amendment Bill 2025 at the conclusion of today’s hearing to permit broader consultation. This will help minimise unintended consequences and ensure the proposed changes are based on strong evidence.”

Health workforce on its knees

Research shows that nurses, midwives and carers make up the largest cohort of workers with psychological injury claims, meaning the proposed changes will disproportionately impact the state‘s predominantly female health workforce.

NSW Nurses and Midwives’ Association (NSWNMA) acting general secretary Michael Whaites has urged the state government not to go down the “path of inflicting cruelty on its essential workers” by “simply wiping its hands of injured nurses, midwives and carers.”

“Over a nine year period there was a staggering 150 per cent increase in the number of psychological injury claims by nurses and midwives,” Mr Whaites said.  

“The government intends to make it harder for nurses and midwives to access support, by excluding work pressure as a cause of psychological trauma. This is extremely alarming as we know excessive workloads and staffing pressures are leading to burnout and poor mental health.

“The health workforce is on its knees, overwhelmed by unprecedented demand, chronic understaffing and 12 years of wage suppression, all off the back of a global pandemic. It’s no coincidence these conditions produce a hostile work environment and breed a culture of bullying. Without fair wages and improved conditions, this workforce will continue to suffer and fall through the cracks.

“Nurses and midwives dedicate their working lives to caring for others; failing to care for them when they are severely impacted at work is not only unjust, but also dangerously negligent.”

In April, the government announced mental health supports would be extended to essential workers who face traumatic incidents in their day-to-day work on road sites and in national parks.

The Australian Workers Union (AWU) has claimed the Minns government’s proposed changes to workers’ compensation would reverse these key mental health benefits.

The proposed bill includes a new test for trauma that would require workers to prove a “real and substantial connection” to the victim they witnessed killed or injured to qualify for compensation.

But AWU NSW secretary Tony Callinan said the vague term could be exploited in the courts to squash claims and rob workers of their payments.

“These changes will make it harder for seriously injured workers to access long-term critical care for their mental health, and it is a betrayal of AWU members who have been campaigning tirelessly for first responder recognition in NSW and the additional mental health support this brings,” he said.

According to the draft bill, a worker will have to prove a “close work connection” to the victim to qualify for compensation or medical benefits, based on a “real substantial connection” or a connection that “arose because of the worker’s employment”.

NSW Premier Chris Minns said the draft bill had been released “so that we could put our cards on the table, hear from unions and hear from the industry”.

“The only thing we’ve said is that change needs to come, because the system as it currently works is unsustainable in the future,” he said.

Grassroots campaign group Australians for Mental Health has also expressed its major concerns about the bill in a submission to the NSW parliamentary inquiry, with executive director Chris Gambian warning the changes will “punch down on vulnerable people”. 

“If the NSW Government wants to ease pressure on the scheme, the answer is to stop people being harmed in the first place, not to push them into emergency departments and community clinics that are already under strain,” Mr Gambian said.

The independent mental health group proposes system reform that meet workers’ wellbeing needs, holds employers accountable and ensures long‑term care is available for those who need it.

The parliamentary inquiry will have until May 23 to give feedback on the draft Workers Compensation Legislation Amendment Bill.