18 Sept

Freeze on NSW Workers Compensation Premium Rates:

The Impact on Your Cash Flow

NSW workers compensation premium rates have been frozen at scheme level for 2026–27 and 2027–28. What does this mean for your employment costs and cash flow?

Workers compensation premium rates have been frozen

Under the Workers Compensation Legislation Amendment (Reform and Modernisation) Act 2026, a temporary freeze on workers compensation premium rates has been introduced in NSW.

For employers insured through icare, the freeze applies to the statewide target collection rate, which will be held at the 2025–26 level for the 2026–27 and 2027–28 policy years.

Importantly, this does not mean that every employer’s workers compensation premium will remain unchanged.

What is the workers compensation scheme?

Workers compensation in New South Wales is a compulsory statutory insurance scheme designed to support workers who suffer a work-related injury or illness.

The scheme is governed primarily by the Workers Compensation Act 1987 (NSW) and regulated by the NSW State Insurance Regulatory Authority (SIRA).

For employers, workers compensation premiums form part of the broader cost of employing staff, together with wages, superannuation and other employment-related costs.

How will the premium freeze affect your cash flow?

The freeze should provide greater certainty around one component of employment costs for the 2026–27 and 2027–28 policy years.

However, an individual employer’s premium may still change from year to year. Factors that can affect the amount payable include:

changes in wages or remuneration;
changes in business activities or industry classification;
claims experience; and
applicable discounts, incentives or other premium adjustments.

Businesses should therefore continue to allow for potential movements in workers compensation premiums when preparing budgets and cash flow forecasts.

Three ways the freeze may affect your employment costs

Greater certainty around scheme-level rates

Holding the statewide target rate at its 2025–26 level reduces the risk of additional premium increases arising solely from a higher scheme-level rate during the two-year period.

Individual premiums may still change depending on the circumstances of the business.

More predictable employment cost planning

Workers compensation is one component of the total cost of employing staff.

Greater stability in the underlying premium rate may make it easier to prepare budgets for future wages, staffing levels and other employment costs.

Businesses should still review these costs as part of their broader accounting and financial reporting.

Improved cash flow visibility

More certainty around the underlying premium environment can assist businesses when forecasting working capital requirements and regular operating expenses.

The actual cash flow impact will depend on factors including payroll levels, claims experience and the employer’s individual premium calculation.

Helping you manage your employment costs

Understanding workers compensation costs is one part of managing your overall employment expenses and working capital.

We can assist businesses with budgeting, cash flow forecasting and reviewing employment costs as part of their broader accounting and business planning.

If you would like assistance reviewing the potential impact on your business, please contact us.