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Workers’ mental health compo claims being rejected at twice the rate
Workers’ claims for mental health compensation are being rejected at double the rate they were before the state government tightened eligibility to rescue the troubled WorkCover scheme from financial strife.
WorkSafe figures mapping out the changes to Victoria’s compensation scheme since new legislation was introduced detail a significant jump in the number of mental health claims being knocked back during the initial assessment phase.
Rules on claims for stress and burnout have been tightened.Credit: Getty Images
Between July 2022 and June 2023, when Victoria’s previous compensation laws were in place, 3695 mental health injury claims were approved and 1565 rejected, meaning 70 per cent of claims were accepted.
But from April 2024 to April 2025, the first 13 months since the government’s reforms took effect, these numbers were effectively reversed. Out of 5201 mental health injury claims assessed under the new rules, 33 per cent were accepted and 61 per cent rejected, with 7 per cent pending.
This period included some crossover with the old rules because decisions are typically made within 28 days of a claim being reported.
Out of 1565 claims lodged before the laws came into effect on March 31, 2024, assessed as “pre-reform”, 58 per cent were rejected.
Since 2020, Victoria has spent $1.3 billion on payouts to WorkCover to keep it afloat, and in 2023, the government declared the scheme fundamentally broken.
To address this, the average premium on employers was increased by 42 per cent and new laws passed to restrict some claims after protracted negotiations with the opposition and a backlash from unions.
These changes included a new definition of mental injury to one that “causes significant behavioural, cognitive or psychological dysfunction” or one diagnosed by a medical practitioner.
But the most significant change was the decision to exclude compensation for people whose primary mental injury has been “mainly caused by stress or burnout as a result of events that are considered usual or typical and are reasonably expected to occur in the course of their duties”.
People affected by these can instead seek 13 weeks of provisional payments for support and treatment, which every Victorian worker who submits a mental health claim is eligible for.
Mental health claims once made up 2 per cent of all injuries in the scheme but have risen to 16 per cent and were expected to eventually reach as much as a third of all claims before the laws were passed.
Another major rule change limited benefits for workers in the “long tail” of claims stretching past 130 weeks, requiring these people to prove permanent impairment of more than 20 per cent.
WorkSafe’s figures also show a significant increase in the number of Victorians who ceased weekly benefits after this change was introduced.
Between March 31, 2024, and April 30 this year, there were 3949 people receiving weekly payments who reached the 130-week mark at which their claim was subject to a review conducted under the new rules.
Of these, 71 per cent, or 2814 claims, were terminated. In the 2022-23 financial year, when the old system was used, the cut-off rate was 46 per cent.
This data excludes those who no longer received weekly benefits for other reasons, such as returning to work full-time or retirement.
Victorian Trades Hall Council secretary Luke Hilakari said the changes had done exactly what was intended when they were implemented by then-WorkSafe minister Danny Pearson: “To cut injured workers from the support they needed to get back to work”.
Victorian Trades Hall Council secretary Luke Hilakari.Credit: Simon Schluter
“Many of these injured workers will lose their house and will not qualify for any unemployment benefits,” Hilakari said. “Their misery is due to his embarrassing lack of leadership and empathy.”
When the changes were legislated, the government provided $50 million to a new agency, Return to Work Victoria, tasked with improving the rate of injured Victorians returning to employment.
“Health outcomes for workers get worse the longer they remain on WorkCover and can lead to prolonged injury and unemployment – the longer a person is away from work, the less likely they are to ever return,” an Allan government spokesperson said.
“That’s why our changes to the scheme established Return to Work, to help injured Victorians recover and get back to work safely.”
An independent review will be held into the WorkCover changes in 2027 to assess if they are working as intended.
A spokesperson for WorkSafe said the agency had provided $3.77 billion in support to more than 109,000 workers last financial year.
“While there are early indications the reforms are working as intended to address pressure on the scheme from a decade of rising claim numbers, more time is needed to assess the long-term impacts,” they said.
WorkSafe expects the total impact of the changes to take years to fully materialise and has cautioned to consider this when interpreting their data. Legal precedents and changes in behaviour are expected to become clearer over time.
In May, WorkSafe Minister Ben Carroll announced the average premium rate would remain at 1.8 per cent this financial year. The average charge has not changed since 2023-24. However, individual rates can change for specific businesses and industries.
Opposition finance spokeswoman Bridget Vallence said the government needed to provide certainty that premiums would not be increased further.
“As a result of the Allan Labor government’s massive increases to WorkCover premiums, Victorian businesses are now paying over $5 billion in premiums, making it the most expensive scheme in the country,” she said.
“Victorian businesses already paid a monumental price for Labor’s mismanagement of the WorkCover scheme, with the recent premium hikes being another tax on jobs.”
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