Impending Overhaul of Bullying and Workers' Compensation Laws in New South Wales
Sally Dillon • March 25, 2025
Overview
The New South Wales (NSW) Government has recently flagged a major shake-up to the state's workers' compensation and anti-bullying systems. Treasurer Daniel Mookhey announced that the reforms are aimed at reducing the rising number of psychological injury claims and the growing financial pressure on the scheme. While no formal legislation has been tabled yet, the announcement is sending ripples through businesses and legal circles alike.
Let’s break down what’s on the horizon, what it means for businesses, and what steps you can take now to prepare.
Major Proposed Changes:
- New Bullying and Harassment Jurisdiction in the NSWIRC
A standout proposal involves creating a specific bullying and harassment jurisdiction within the NSW Industrial Relations Commission (NSWIRC). Importantly, under this proposal, workers would need to lodge a bullying claim with the NSWIRC before pursuing a psychological injury claim under the workers' compensation system. If this goes ahead, it would raise the bar for evidentiary standards and offer businesses stronger mechanisms to challenge unfounded claims. - Redefined ‘Psychological Injury’ and Management Actions
The Government is looking to introduce an “inclusive” definition of psychological injury, along with a clearer definition of what constitutes “reasonable management action.” The goal? To draw a clearer line between genuine mental health injuries and performance management that’s within reasonable bounds. - Aligning with National Standards
The changes will also look at adopting some elements from Queensland and South Australia—particularly around the whole person impairment (WPI) threshold that determines access to extended benefits. - Adopting Anti-Fraud Practices
Learning from the National Disability Insurance Scheme (NDIS), the NSW Government intends to build stronger anti-fraud safeguards into the workers' compensation system. - SafeWork NSW Reform
Following recommendations from Justice Robert McDougall’s independent review, improvements to SafeWork NSW’s operations are expected to streamline enforcement and regulatory oversight.
Why these changes matter
Psychological injury claims are soaring. They now account for just 12% of all claims but make up a staggering 38% of total scheme costs. The average claim has jumped from $146,000 to nearly $290,000 in just five years. Without meaningful reform, it’s forecast that premiums could spike by 36% by 2027–28, putting extra pressure on employers across all sectors.
This reform package aims to change the focus from reacting to claims to preventing them in the first place. By addressing issues early and constructively, businesses can protect their employees and their bottom line.
Steps Business can take now
If you're a business owner, manager, or part of a HR team, now’s the time to take proactive steps. Here are some practical things you can do to prepare for the coming changes:
- Review Your Workplace Policies
Ensure your policies around bullying, harassment, and psychological safety are not only up to date but actively used. A policy sitting in a drawer isn’t enough - it needs to be understood and enforced across all levels of the organisation. - Train Your Managers
Line managers are often the first responders when it comes to staff issues. Equip them with training to distinguish between appropriate performance management and behaviours that could be perceived as bullying. - Implement Clear Grievance Procedures
Make it easy and safe for employees to raise concerns internally before they escalate externally. Transparent procedures can help resolve issues early and reduce legal exposure. - Document Everything
In a future where claims must first be tested in an industrial commission, maintaining detailed and objective records of workplace decisions, especially around performance management, will be critical. - Foster a Positive Workplace Culture
Prevention is always better than cure. Building a respectful and open culture doesn’t just reduce claims, it boosts morale and productivity too. - Consult with an HR Specialist
If you're unsure how these changes might impact your business, consider speaking with a qualified HR Consultant. They can help audit your current practices, update your policies, and prepare your team for what's to come
Stakeholder engagement underway
The NSW Government has stated it will engage in consultation with Business NSW and Unions NSW as it drafts the formal Bill. Business NSW, represented by Australian Business Lawyers & Advisors (ABLA), will play a central role in these discussions, aiming to strike a balance between protecting workers and ensuring the system remains affordable and fair for businesses.
Final Thoughts
The proposed reforms are a clear signal from the NSW Government that the current model needs to evolve, especially when it comes to the handling of mental health and bullying in the workplace. While the final legislation is still in the works, businesses should take this moment as an opportunity to reassess, refresh, and reinforce their internal systems.
By getting ahead of the changes now, you’ll not only stay compliant but create a workplace that’s more resilient, fair, and productive.
Need more help?
If these changes feel overwhelming or if you’re unsure where to begin, here’s how we can help you:
- Click here to book a FREE 30 minute consultation to discuss your HR challenges.
- Click here to get a HR Health Check to review your policies, procedures and frameworks.
- Click here to join our mailing list to get more free tips, advice and updates on all things HR, WHS and Leadership.
Can ChatGPT Replace HR? The Risks of AI-Generated HR Advice
AI tools like ChatGPT are revolutionizing the workplace, but can they handle complex HR decisions, employee issues, or legal compliance? The short answer—not safely.
Businesses that rely on AI for terminations, pay rates, workplace investigations, or employment contracts risk costly legal mistakes, financial penalties, and reputational damage. HR isn’t just about policies—it’s about human behavior, legal nuance, and ethical decision-making—things AI simply doesn’t understand.
In this article, we explore real-world examples of AI-generated HR blunders and the hidden risks of trusting ChatGPT for critical people management decisions. Plus, we share insights on where AI can help—and where it absolutely shouldn’t.
Read on to protect your business from HR disasters.
Introduction HR is one of the most misunderstood roles in business. Some believe HR exists to protect employees. Others think HR’s sole job is to defend the company. Both are wrong. And this misunderstanding is costing businesses money, trust, and talent. For over two decades, I’ve seen organisations sideline HR - treating them as a policy enforcer or an afterthought. The result? 🚨 Employees don’t trust HR. 🚨 Leaders fail to leverage HR strategically. 🚨 Businesses struggle with culture, retention, and performance. But here’s the truth: HR isn’t about sides. It’s about solutions. Great HR drives business outcomes by balancing people and performance. The question is: Are you using HR to its full potential? HR as a Strategic Powerhouse, Not Just a Policy Enforcer The best businesses don’t just "have" an HR department. They embed HR into leadership decisions. HR isn’t just about hiring, firing, and compliance - it’s about: ✅ Shaping culture and engagement (which directly impacts performance). ✅ Developing leadership capabilities (to create stronger teams). ✅ Driving strategic workforce planning (so you have the right people, in the right roles, at the right time). ✅ Maximising financial impact - because people are both your biggest cost and your greatest asset. If your HR function isn’t influencing leadership, growth, and profitability , you're leaving money on the table. HR as a Key Voice on Your Leadership Team Many leadership teams still treat HR as a support function rather than a core business driver. That’s a mistake. Your Chief People Officer (CPO) or HR Director should have the same level of influence as your CFO, COO, or Head of Sales. Why? Because your people strategy IS your business strategy. 🔹 You wouldn’t make financial decisions without consulting your CFO. 🔹 You wouldn’t make operational changes without your COO’s input. 🔹 So why make leadership and talent decisions without HR at the table ? And yet, in many businesses, HR reports to finance, operations, or admin - departments that have their own agenda when it comes to assessing people needs, budgets, and workforce requirements. HR should report directly to the CEO, or Business Owner to ensure people strategy is aligned with business strategy - not just budget constraints or operational efficiency. Because when HR is filtered through another department’s lens, critical workforce decisions become secondary to financial targets, logistical priorities, or admin processes. If your HR leader doesn’t report directly to the top, you may be unknowingly limiting their ability to drive real business outcomes. Are You Using HR to Its Full Potential? Take a moment and ask yourself: ❓ If you have an in-house HR team, are you using their skills and expertise across all areas of your business? Or are they stuck in admin-heavy tasks, when they could be driving strategic initiatives? ❓ If you’re a small or medium business and don’t have in-house HR, why haven’t you partnered with an external consultant? What’s stopping you from leveraging the expertise that could transform your business? In larger businesses, HR should go beyond just ‘HR.’ Under an expanded People & Culture framework, HR should oversee: ✔ Training & Development – ensuring leaders and employees are constantly upskilling. ✔ Work Health & Safety – making compliance, risk management, and employee wellbeing a priority. ✔ Recruitment & Talent Strategy – not just filling roles but attracting and retaining top performers. ✔ Major Projects & Change Management – ensuring workforce alignment with organisational shifts. In smaller businesses , these functions can be outsourced or strategically managed by an external HR consultant working directly with the business owner. This ensures a strong, aligned people strategy, while certain operational roles (finance, admin, or operations) may take on specific HR tasks - as long as they receive the right training, support, and strategic direction. HR isn’t just a department - it’s an investment in your business’s future. Whether in-house or external, make sure your HR function is working at a strategic level, not just buried in paperwork. HR’s Impact on the Bottom Line People aren’t just a cost centre - they are a profit driver. 📊 Labour is often one of the largest expenses in a business - so managing it strategically impacts profitability. 📊 Engaged employees are 23% more profitable , according to Gallup. 📊 Turnover costs 50-200% of an employee’s salary - losing top talent is expensive. When HR has a strategic voice in leadership , businesses see: ✔ Stronger alignment between business goals and people strategy. ✔ Faster, smarter hiring that supports growth. ✔ Better leadership development , reducing costly turnover. ✔ More effective workforce planning , so salaries, training, and hiring are investments—not wasted costs. Final Thought: HR is Not a Department - It’s a Business Growth Lever If your HR function feels like a compliance department , you’re doing it wrong. HR should be a leadership asset , helping your business make smarter, people-focused decisions. So, here’s my challenge to you: 📌 If you’re a CEO or MD - bring HR into the strategy conversation early and often. 📌 If you’re a leader - use HR as a coaching and development resource, not just a policy checker or problem fixer. 📌 If you’re in HR - push for a strategic role in leadership, not just operational support. Because when HR and leadership align , businesses don’t just succeed. They thrive. Want to Develop Stronger, More Strategic Leaders? If you’re serious about building leadership capability in your business, let’s talk. My Leadership Dynamics Accellerator Program helps CEOs, Business Owners, Leaders and HR teams create high-performing leaders who know how to balance people and performance. 📅 Book a free leadership triage call to see how we can help here . 🚀 Save your spot in our next Leadership Dynamics Accelerator Program here . 📩 Send us an email for more information here . Let’s build something stronger - together.
READY TO GET THINGS DONE?
Revolution Consulting Group is your Dedicated HR Partner
