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If your employer’s negligence caused a serious workplace injury, you may be entitled to pursue a lump sum Work Injury Damages claim in addition to your standard workers compensation entitlements. For physical injuries you will need at least 15% whole person impairment. For primary psychological injuries, recent law reform in New South Wales has changed the threshold, and understanding how the new rules apply to your situation is now more important than ever.
Stephen Young Lawyers assist injured workers across Sydney and throughout NSW on a No Win No Fee basis for eligible matters. Below we explain how a Work Injury Damages claim works, who qualifies, and how the 2026 psychological injury reforms affect your rights.
A Work Injury Damages (WID) claim is a negligence based claim made against your employer under the NSW workers compensation scheme. SIRA describes it as modified common law damages. Unlike standard workers compensation, which operates on a no fault basis, a WID claim requires you to prove that your employer’s negligence directly caused your injury.
The claim compensates you for economic loss only, including your past loss of earnings from the date of injury and your future loss of earning capacity. It is not an ongoing benefit, and settling a WID claim has important consequences for your existing entitlements.
Key facts at a glance:
In late 2025 and early 2026 the NSW Parliament passed two significant pieces of reform legislation that change how psychological injuries are assessed and compensated. These are the Workers Compensation Legislation Amendment Act 2025 and the Workers Compensation Legislation Amendment (Reform and Modernisation) Act 2026. The reforms represent one of the most substantial shifts to the scheme in many years, and they have particular consequences for anyone considering a Work Injury Damages claim based on a psychological injury.
How the threshold has changedFor a Work Injury Damages claim, the long standing requirement was a minimum 15% whole person impairment for all injuries. Following the reforms, that position now differs depending on whether your injury is physical or a primary psychological injury.
For physical injuries, the 15% WPI threshold under section 151H continues to apply.
For primary psychological injuries, the WPI threshold required to access common law damages, including a Work Injury Damages claim, is increasing on a phased basis. The 15% threshold continues to apply to primary psychological injuries notified before the new provisions commence. For injuries notified on or after commencement, the higher thresholds below apply.
| Date injury is notified | WPI threshold for a Work Injury Damages claim (primary psychological injury) |
| Before commencement of the reforms | At least 15% (the previous threshold continues to apply) |
| On or after 1 July 2026 | At least 25% |
| On or after 1 July 2027 | At least 26% |
| On or after 1 July 2029 | At least 28% |
Because commencement and transitional arrangements are still being finalised by the NSW Government, the date your injury was notified is critical in deciding which rules apply to you.
A narrower definition of compensable psychological injuryThe reforms also change what counts as a compensable primary psychological injury. A primary psychological injury is now only compensable where it results from a defined relevant event, there is a real and substantial connection between that event and your employment, and employment is the main contributing factor to the injury.
Relevant events include acts or threats of violence, indictable criminal conduct, witnessing a traumatic incident, vicarious trauma within a defined meaning, sexual or racial harassment, bullying, and excessive work demands. The reforms also broaden the reasonable management action defence available to employers, which means injuries arising from genuine and reasonable performance management, counselling, discipline or investigation may not be compensable.
Primary and secondary psychological injuriesThe higher thresholds apply to primary psychological injuries. A secondary psychological injury, meaning a psychological condition that develops as a consequence of a physical workplace injury, is assessed differently and continues to be treated under separate rules.
Related changes worth knowingAlongside the threshold changes, the reforms cap weekly payments for primary psychological injuries at 130 weeks unless a worker meets an increased WPI threshold, introduce an intensive return to work program with additional benefits for workers in certain impairment ranges, and require a review of the Psychiatric Impairment Rating Scale (PIRS) by the NSW Chief Psychiatrist. These changes do not alter the negligence based nature of a Work Injury Damages claim, but they do affect the wider entitlements that sit alongside it.
Four key requirements must be satisfied before a Work Injury Damages claim can proceed in NSW:
Your WPI assessment must be completed by an appropriately qualified permanent impairment assessor and accepted by the insurer. If the assessment is disputed, the matter may be determined by the Personal Injury Commission. A dispute about your WPI rating does not necessarily prevent you from making a claim. Our team can guide you through the dispute process and help protect your rights at every stage.
Both relate to workplace injuries, but they operate under different legal frameworks with very different outcomes.
| Feature | Workers Compensation | Work Injury Damages |
|---|---|---|
| Basis of claim | No fault statutory entitlement | Employer negligence must be proven |
| Type of benefit | Ongoing weekly payments + medical/rehab | Lump sum focused on economic loss |
| What it covers | Income replacement, treatment, rehabilitation | Past lost earnings + future loss of earning capacity + super |
| Impairment threshold | No minimum WPI required | Minimum 15% WPI required (s.151H) |
| Fault required? | No | Yes — employer negligence must be established |
| Effect of settlement | Benefits continue while eligible | Settlement extinguishes further workers comp entitlements |
Establishing negligence is the foundation of a Work Injury Damages claim. To succeed, you must prove all four of the following elements:
Duty of care: Your employer owed you a duty of care. In NSW, employers are required to take reasonable steps to protect the health and safety of their employees. This element is rarely disputed.
Breach of duty: Your employer failed to take reasonable precautions that a prudent employer would have taken, such as providing a safe system of work, appropriate training, suitable equipment or addressing a known workplace hazard.
Causation: Your employer’s breach of duty must have directly caused your injury. It is not enough to show that the employer was generally negligent.
Foreseeable risk: A reasonable employer would have recognised the risk of injury and taken appropriate steps to prevent it.
Evidence that can support a negligence claim includes incident reports, near miss reports, workplace safety complaints, training and induction records, safe work method statements, supervision records, witness statements, photographs, equipment maintenance records and independent expert opinions. For psychological injury claims, evidence about the workplace conduct, complaints made, how they were handled, and the connection to your employment is especially important. Our team will help you identify, obtain and preserve this evidence from the earliest stages of your claim.
Work Injury Damages in NSW are limited to economic loss. The main components are:
Work Injury Damages does not cover pain and suffering, future treatment costs or ongoing workers compensation benefits. These must be addressed separately before any settlement.
The Work Injury Damages process requires all evidence to be gathered and disclosed before any hearing takes place. Our team manages the entire process on your behalf.
Most claims resolve before reaching court. We advise you on the best strategy at each stage, and every matter depends on its individual circumstances.
Can I still make a Work Injury Damages claim for a psychological injury?
Yes, psychological injuries can still support a Work Injury Damages claim. What has changed is the whole person impairment threshold for primary psychological injuries, which is increasing on a phased basis for injuries notified on or after commencement of the reforms. Because the applicable threshold depends on when your injury was notified and how it is classified, it is important to obtain advice tailored to your situation.
What is the WPI threshold for a work injury damages claim now?
For physical injuries, the threshold remains at least 15% whole person impairment. For primary psychological injuries, the threshold rises to at least 25% for injuries notified on or after 1 July 2026, at least 26% from 1 July 2027, and at least 28% from 1 July 2029. The previous 15% threshold continues to apply to primary psychological injuries notified before the reforms commence.
Do the reforms affect injuries that happened before they commenced?
Transitional arrangements are central to how the reforms apply. In general, the date your injury was notified determines which rules apply. If you were injured or lodged your claim before the new provisions commence, the previous rules may still apply to you. This is exactly the kind of question that benefits from early legal advice.
How long do I have to make a claim?
Claims must generally be brought within three years of the date of injury. Limited exceptions apply, so seek advice promptly if you are concerned about timing.
Will my weekly payments stop if I settle?
Yes. Settling a WID claim cancels all further workers compensation entitlements for that injury, including weekly payments, medical and rehabilitation expenses. Ensure you have received all statutory entitlements, including any section 66 lump sum, before settling.
What if the insurer disputes liability?
This is standard practice and should not discourage you. The process allows for negotiation, mediation and, if necessary, determination by the Personal Injury Commission or the courts.
Is Work Injury Damages available under No Win No Fee?
Yes. We handle WID claims on a No Win No Fee basis for eligible matters. We explain the costs arrangement fully at our first consultation.
If you have suffered a serious workplace injury caused by your employer’s negligence, early legal advice can make a significant difference to your claim. This is more true than ever for psychological injury matters, where the recent reforms have changed the threshold and the way claims are assessed. Getting the right advice early helps ensure your injury is properly classified, assessed and pursued under the correct rules.
Stephen Young Lawyers assist injured workers across Sydney and throughout NSW on a No Win No Fee basis for eligible matters. Contact our team today to discuss your Work Injury Damages claim and understand your options.
Contact our team today to discuss your Work Injury Damages claim and understand your options.