Business NSW is calling for urgent reform to the state’s workers’ compensation scheme, warning that inaction will crush businesses and leave workers without the support they need. 

“We fully support the rights of injured workers to receive care, rehabilitation and fair compensation – that’s why Business NSW helped establish the workers’ compensation scheme more than a century ago,” Business NSW Regional Director Jane Laverty said. 

“But today the system is being misused – and it’s hurting both workers and businesses. 

“Time away from work is a bad outcome for everyone – it is costly and leaves a business under-resourced. The evidence shows, however, that it can be very bad for a worker and their mental health to be disconnected from their workplace.” 

Last year, the scheme ran a $1.8 billion deficit – about $5 million every day.  

Psychological injury claims have risen by 65% since 2021-22 and now exceed 11,000 claims a year, according to the State Insurance Regulatory Authority (SIRA). 

“Many of our members report the scheme being used to escalate workplace grievances and performance issues,” Mrs Laverty said.  

“One business had an employee lodge a psychological claim after a routine performance meeting. That claim was eventually upheld on appeal based solely on the worker’s ‘perception of being overworked’ – despite doing half the workload of colleagues.”  

Three years later, that worker is still not fit to work more than 16 hours a week. The business is paying higher premiums, can’t replace the role, and has lost hundreds of hours in productivity and admin. 

“These stories are becoming all too common. The rules changed to allow provisional payments even when the injury stems from performance management. That’s tipped the balance too far,” Mrs Laverty said. 

Business NSW backs the NSW Government’s push for reform and will keep advocating for a system that distinguishes genuine injuries from workplace disputes. 

“We must restore integrity and fairness to the system before it collapses under its own weight. This isn’t about taking rights away – it’s about making sure the system works for the people it was designed to protect,” Mrs Laverty said.