The NSW workers compensation system changed significantly in 2026, with a number of important reforms taking effect from 1 July 2026.
For businesses employing workers in New South Wales, these changes may affect workers compensation insurance, wage declarations, premium calculations, workplace injury reporting, return-to-work responsibilities and penalties for non-compliance.
Employers should review their current workers compensation arrangements rather than waiting until their next policy renewal or workplace injury.
This guide outlines the key NSW workers compensation reforms for 2026 and the practical steps employers should consider taking.
Important: This article provides general information only. Employers should contact SIRA, icare, their workers compensation insurer or an appropriate adviser for advice relating to their circumstances.
Key NSW Workers Compensation Changes From 1 July 2026
The reforms affect several areas of employer compliance, including:
- Workers compensation insurance requirements
- Wage and remuneration declarations
- Workers compensation premiums
- Penalties for failing to maintain required insurance
- Under-insurance and incorrect premium information
- Workplace injury reporting
- Suitable work and return-to-work obligations
- Psychological injury claims
- Employer excess payments
- Recordkeeping requirements
Some additional reforms are also scheduled to commence later in 2026 and during 2027, making it important for employers to continue monitoring official updates.
1. Check Your Workers Compensation Insurance Policy
Businesses required to hold workers compensation insurance must ensure appropriate coverage remains in place.
Employers should confirm that:
- Their policy is current
- Relevant workers are appropriately covered
- Business activities are correctly recorded
- Wage information supplied to the insurer is accurate
- Policy renewals have been completed when required
- Changes to business structure or operations have been communicated to the insurer
Maintaining continuous workers compensation insurance where required is an important employer obligation.
The consequences of failing to maintain required insurance have also increased.
For some employers, the maximum court-imposed penalty can reach $55,000 and/or six months’ imprisonment.
For large employers, penalties may be the greater of three times the premium that should have been paid or $110,000, together with potential imprisonment of up to two years.
2. Accurate Wage Declarations Are Essential
Workers compensation premiums are influenced by the wages and remuneration businesses pay to workers.
Accurate payroll records are therefore important not only for accounting and payroll purposes, but also for workers compensation compliance.
Employers generally need to provide an estimate of wages for the applicable insurance period when taking out or renewing a policy, followed by a complete declaration of actual wages after the insurance period ends.
For most employers, estimated wages are generally required as soon as practicable and no later than two months after applying for or renewing a policy. Actual wage declarations are generally required within four months following the end of the insurance period.
Employers should pay particular attention where there have been changes involving:
- Staff numbers
- Payroll expenditure
- Casual employees
- Contractors
- Business activities
- Trading structures
- New locations
- Significant workforce changes
Your payroll, accounting records and information supplied to your insurer should remain consistent.
3. Under-Insurance Can Lead to Significant Penalties
One of the important 2026 changes relates to employers recklessly failing to provide information relevant to workers compensation premium calculations.
Providing incorrect wage, payroll or other information may result in an employer being under-insured.
For large employers, the maximum penalty may be the greater of three times the avoided premium or $110,000, together with potential imprisonment of up to two years.
For other employers, penalties may reach $55,000 and/or six months’ imprisonment.
Businesses should therefore avoid relying on unsupported estimates when making workers compensation declarations.
Payroll and wage information should be supported by accurate accounting records.
4. Your Workers Compensation Premium May Still Change
Employers should also understand that a freeze in premium rates does not necessarily mean their individual workers compensation premium will remain unchanged.
Premium rates for the Nominal Insurer, icare, are frozen at 2025–26 levels for the 2026–27 and 2027–28 policy years.
However, an employer’s actual premium can still be affected by factors such as:
- Changes in wages
- Changes in business activities
- Industry classification
- Claims experience
- Discounts or incentives
- Other premium adjustments
If your premium changes, it is worth reviewing the calculation and discussing the reasons with your insurer.
5. Workers Compensation Excess Arrangements Have Changed
Changes have also been introduced to employer excess payments for some workers compensation claims.
For certain claims involving weekly compensation, employers insured with the Nominal Insurer or a specialised insurer may need to pay an excess.
For policies issued or renewed on or after 4:00 pm on 30 June 2026, the excess may be based on weekly compensation payments for the worker’s first two weeks of entitlement.
Exceptions can apply, so employers should confirm their individual arrangements with their insurer.
6. Workplace Injuries Should Be Reported Promptly
Employers have important obligations when workplace injuries occur.
Under current guidance, employers are required to notify their workers compensation insurer of a workplace injury within 48 hours of becoming aware of it.
Businesses should have a clear internal injury reporting process identifying:
- Who receives workplace injury reports
- Who contacts the insurer
- How incidents are recorded
- When the insurer must be notified
- Who communicates with the injured employee
- Who manages the return-to-work process
Even an injury that initially appears minor should be handled through the business’s established reporting process.
7. Employers Must Support Injured Workers
Workers compensation responsibilities continue after an injury has been reported.
Where reasonably practicable, employers are required to provide suitable work to injured workers.
This may involve considering:
- Current work capacity
- Modified duties
- Alternative duties
- Reduced or changed working hours
- Workplace adjustments
- Appropriate available tasks
- Medical or rehabilitation recommendations
Employers should regularly review the worker’s capacity and suitable duties as recovery progresses.
The maximum penalty for failing to provide suitable work has increased from 50 to 100 penalty units, with the source article identifying a current maximum of $11,000.
8. Psychological Injury Claims Have Changed
The 2026 reforms also introduced new requirements relating to certain psychological injury claims first notified from 1 July 2026.
Relevant workplace conduct may include matters such as:
- Bullying
- Sexual harassment
- Racial harassment
- Excessive work demands
Other circumstances can include workplace violence, serious criminal conduct, witnessing traumatic events, death in care and vicarious trauma.
Employers should maintain appropriate procedures for managing workplace psychological health concerns and ensure reported injuries are handled promptly.
9. Keep Accurate Workers Compensation Records
Good recordkeeping can make workers compensation compliance considerably easier.
Businesses should maintain records relating to:
- Employees and workers
- Payroll and remuneration
- Workers compensation policies
- Policy renewals
- Wage declarations
- Workplace injuries
- Injury notifications
- Return-to-work arrangements
- Insurer correspondence
- Changes in business activities
Accurate bookkeeping and payroll information can also assist when preparing wage declarations or reviewing insurance premiums.
NSW Workers Compensation Compliance Checklist for Employers
NSW employers should consider reviewing the following areas now:
✓ Is your workers compensation policy current?
✓ Are your business activities accurately recorded?
✓ Are payroll and wage records complete and accurate?
✓ Have correct wage declarations been provided to your insurer?
✓ Have employee numbers, payroll or business activities changed?
✓ Are workplace injuries reported within the required timeframe?
✓ Does your business have an appropriate return-to-work process?
✓ Are workers compensation documents and records properly maintained?
How Your Accountant or Bookkeeper Can Help
Workers compensation insurance remains the employer’s responsibility, and insurance-specific questions should generally be discussed with your insurer, icare or SIRA.
However, accurate accounting and payroll records are an important part of maintaining compliance.
An accountant or bookkeeper may assist with:
- Payroll processing and reconciliation
- Wage reporting
- Reviewing payroll records
- Identifying significant payroll changes
- Bookkeeping and recordkeeping
- BAS and GST accounting
- Month-end bookkeeping
- Financial reporting
- General accounting compliance support
Need Help Reviewing Your Payroll and Accounting Records?
The NSW workers compensation reforms for 2026 are already in effect.
Businesses should review their workers compensation insurance, payroll records, wage declarations and workplace injury procedures now rather than waiting until their next renewal or claim.
If you need assistance with bookkeeping, payroll reconciliation, wage reporting, financial reporting or maintaining accurate business records, contact our team today to discuss your accounting and bookkeeping requirements.
