Premier launches compo crackdown after explosion in ‘bullying’ and ‘stress’ payouts

The state’s workers’ compensation scheme will buckle under 80,000 claims for psychological injury in the next five years unless the system is reformed, so the Minns government wants changes.

An explosion in workers’ compensation claims for psychological injuries such as stress, bullying and burnout is costing billions of dollars and making the system unsustainable,

The state’s workers’ compensation scheme would buckle under 80,000 claims for psychological injury over the next five years unless the system is reformed, Treasurer Daniel Mookhey says.

As revealed by The Daily Telegraph on Tuesday, Mr Mookhey will move to make it harder to make compo claims for bullying, burnout, and stress, following an explosion in psychological injury payouts.

“We want to shift to a prevention culture ahead of a compensation culture,” Mr Mookhey said.

“If nothing changes, we expect 80,000 claims for psychological injury in the next five years,” he said.

“That’s 80,000 injured workers who deserve better, who deserve to work in a safe workplace, and deserve to ensure a system that is about preventing their injuries in the first place, rather than compensating them.”

The Minns government will require bullying and harassment claims to be assessed by the industrial relations umpire before payouts are made under a major overhaul that would make it harder to claim for psychological injury.

The reforms will cover almost four million workers in NSW, including 400,000 public sector employees.

Despite amounting to only eight per cent of covered workers, public sector employees make up almost half of all new psychological injury claims in the state’s compensation system.

Mr Mookhey will on Tuesday outline reforms designed to curb the “rising number of psychological injuries people are experiencing at work”.

Treasurer Daniel Mookhey will tell parliament on Tuesday that workers compensation needs to be overhauled. Picture: NewsWire / Nikki Short

He will say that reforms will free up “billions of dollars” that can be better used elsewhere to drive economic growth.

Payouts for psychological injuries now amount to more than 37 per cent of the total value of workers compensation claims – of the $6.4 billion spent on workers compensation claims annually, $2.4bn is for psychological injuries.

Premier Chris Minns has said young people are driving an increase to payments for “psychological” injuries. Picture: NewsWire / Nikki Short

“The number of psychological injury claims has doubled in six years,” Mr Mookhey is expected to tell parliament.

“By comparison, all other injuries have grown by just 16 per cent during that same period.”

Payouts given for psychological injuries are also increasing, from an average of $146,000 in 2019-20 to $288,542 this financial year.

That is more than five times higher than the average payout for physical injury claims, at $57,616.

Mr Minns says claims for psychological injuries have been growing “exponentially”. Picture: NewsWire / John Appleyard

While 88 per cent of workers who suffer physical injuries are back to work within 13 weeks.

However, “40 per cent of workers with psychological injuries are still languishing in the system after one year off work,” Mr Mookhey will say.

He will warn that without changes to the current system, premium costs – paid by businesses – will skyrocket.

“An employer facing no claims against them, operating a psychologically safe workplace, can expect their premiums to rise by 36% over three years to 2027-208 if we do nothing,” Mr Mookhey is expected to say.

The Telegraph understands that a large number of psychological injury claims are made after a worker undergoes performance management.

Mr Mookhey will tell parliament that ambiguity about what constitutes “psychological injury” and “reasonable management action” is driving the increase of psychological injury claims.

He will also announce that the Industrial Relations Commission will be expanded. Bullying and harassment claims will be required to be heard in the IRC before a workers compensation claim can be made.

The overhaul comes after a review of the insurance scheme governing public sector workers found that the insurance scheme covering public sector workers accounts for 20 per cent of all compensation claims.

Almost half of all psychological injury claims in the system come from the public sector.

Of those, eight in ten come from “preventable” behaviours like “work stress, bullying and harassment,” a review said.

Mr Minns has previously said young people are driving the “unsustainable” increase in psychological injury claims.

“There has been an exponential growth, particularly young people claiming this payout, and as a result premiums for government and business are hugely rising,” he told the Sutherland Shire Business Chamber last month.

Originally published as Premier launches compo crackdown after explosion in ‘bullying’ and ‘stress’ payouts