From 31 March 2024, amendments to the Victorian workers’ compensation scheme took effect arising from the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Act 2024.

The significant amendments operate to update Victoria’s workers’ compensation scheme by:

• inserting a definition of ‘mental injury’ into the legislation
• further providing for the circumstances in which benefits are paid for all claims, including mental health claims
  
• amending an impairment threshold for assessing eligibility for payment benefits beyond 130 weeks
• permitting information sharing between the workers compensation and OHS regulator arms of WorkSafe.

The changes have the practical effect of making it harder for workers to have a claim accepted for mental injuries and to continue receiving weekly benefits after 130 weeks.

What are the eligibility changes for mental health claims?

Definition of ‘mental injury’

Under the previous legislation there was no definition of ‘mental injury’. A new definition has now been included in this amendment. An employee must have a mental injury which falls within the purview of this new, stricter definition to be eligible for compensation.

Compensation for mental injuries

Compensation is now only available for mental injuries that significantly interfere with a worker’s life, and must:

• cause significant behavioural, cognitive or physiological dysfunction; and
• be diagnosed by a medical practitioner (not including a psychologist) in accordance with the Diagnostic Statistical Manual of Mental Disorders.

Limitations

The changes acknowledge that most employment involves a certain level of reasonable work-related stress. The changes limit the availability of workers’ compensation for mental health injuries by precluding workers suffering a mental injury from being able to access weekly payments if the mental injury is mainly caused by stress or burnout from events that are considered typical and reasonably expected to occur in the course of their duties. These may include workload pressures, additional hours, or interpersonal conflict with colleagues that is not deemed bullying or harassment.

These limitations do not apply to workers whose regular duties expose them to traumatic events, such as emergency and other ‘front-line’ workers. Workers remain eligible for compensation where their mental injury has been predominantly caused by stress or burnout resulting from traumatic events that are considered usual or typical and reasonably expected to occur as part of their work.

Further, the ‘significant contributing factor’ test no longer applies, and to be considered eligible for benefits, the mental injury must have predominantly arisen out of or in the course of employment. If a worker has a pre-existing mental injury that has recurred or has been aggravated, it must have done so predominantly because of their employment.

Application

The amendments will only apply to new mental injuries that occur on, or after, 31 March 2024. There will be no repercussion for claims already in existence.

What happens now with claims surpassing 130 weeks?

Entitlements under the previous scheme

Previously, a worker was entitled to 130 weeks of weekly payments if

1. they lacked work capacity for their pre-injury duties
2. their incapacity was likely to continue indefinitely, and
3. they could provide their employer with certificates of capacity to attest to this.

Under the previous scheme, workers in receipt of weekly payments had their case reviewed before the 130-week threshold, termed the second entitlement period review.

Entitlements under the new scheme

This entitlement review will continue, but the eligibility requirements for weekly payments beyond 130 weeks have been altered. Workers must now demonstrate that they have a ‘whole person impairment (WPI)’ of more than 20% for injuries arising from the same workplace injury, or multiple injuries arising from the same event or circumstance, and no current work capacity that is likely to be indefinite. This WPI Assessment will be conducted by a qualified independent impairment assessor prior to 130 weeks and will be arranged by WorkSafe and self-insurers. The capacity review must occur at least every two years, except for in circumstances where

• the worker is clearly above or below the 20% threshold
• the worker resides overseas, or
• it is not reasonable or practicable for the worker to attend the assessment.

Relatedly, a WPI Assessment may not be required if a worker’s injury has not stabilised, or if they have a progressive disease. In these circumstances, an interim decision can be made to conclude or continue weekly payments without a WPI Assessment. Interim decisions stay in force until an ongoing eligibility determination is made.

Application

The WPI requirement will only apply to claims that reach 130 weeks on, or after 31 March 2024.

Disputes

A worker can dispute the percentage of assessed impairment. In such circumstances, the matter must be referred to the Medical Panel for a binding assessment.

What do the information sharing amendments mean?

Changes have also been made regarding WorkSafe’s ability to share information across business units. The changes confer WorkSafe the power to use any information collected in accordance with the legislation for the purposes of performing its functions and powers under any act administered by the Authority, including the Occupational Health and Safety Act 2004 (Vic).

This may be important in relation to occupational health and safety investigations.

What are the changes to dispute resolution and statutory review?

Dispute resolution

Disputes regarding whether a worker is entitled to compensation can no longer be referred to arbitration after a conciliation has occurred, and must be referred to Court.

Statutory review

There will be an independent review of the impact and operation of the reforms. This will be conducted in 2027 by a panel of experts with experience in medicine, law, finance, and occupational health and safety. The review will further test the effectiveness of the changes and will identify possible areas for improvement under the scheme.

What should employers do in light of these changes?

If in doubt about consistency between your policies and procedures to process claims, and the amendments, we recommend you consult with your insurer. The changes to the mental injury definition and particularly the comments about intrapersonal conflict and workplace pressures mean employers will need very good records to demonstrate why a worker’s claim may not fall within the definition of a mental injury. Employers should continue to act promptly once a claim is brought to their attention, including acting on conflict or workload issues, and providing full details to their WorkCover agent.