Workers in Victoria are facing increased challenges in obtaining mental health compensation, with claims being rejected at nearly double the rate compared to prior reforms. This surge in rejections follows the state government’s tightening of eligibility criteria aimed at stabilizing the struggling WorkCover scheme. Recent figures from WorkSafe reveal a stark contrast in the approval rates for mental health claims before and after the introduction of new legislation.
Between July 2022 and June 2023, the old compensation framework approved approximately 70 percent of mental health injury claims, with 3,695 claims approved and 1,565 rejected. In stark contrast, from April 2024 to April 2025, under the new rules, only 33 percent of 5,201 claims were accepted, while a staggering 61 percent faced rejection.
The new regulations, which came into effect on March 31, 2024, significantly altered the landscape for mental health claims. The government amended the definition of mental injury, stipulating that it must now cause “significant behavioural, cognitive or psychological dysfunction” or be diagnosed by a medical professional. A crucial change excludes compensation for claims primarily linked to stress or burnout from typical workplace events.
Victorian workers can still access 13 weeks of provisional payments for support and treatment, a transition measure available to all employees filing mental health claims. Despite these provisions, the overall landscape for mental health claims has shifted dramatically. Previously, mental health claims constituted only 2 percent of all claims in the WorkCover scheme; this figure has surged to 16 percent, with projections suggesting it could rise to a third of all claims before the reforms.
The reforms also imposed stricter criteria for “long tail” claims, which extend beyond 130 weeks. Workers in this category must now demonstrate a permanent impairment of over 20 percent to continue receiving benefits. Following the implementation of these changes, WorkSafe reported that from March 31, 2024 to April 30, 2025, out of 3,949 claimants who reached the review stage, 71 percent saw their claims terminated—a significant increase from the 46 percent cut-off rate under the previous system.
Luke Hilakari, secretary of the Victorian Trades Hall Council, criticized the government’s approach, stating that the changes were designed to cut support for injured workers. “Many of these injured workers will lose their house and will not qualify for any unemployment benefits,” he remarked, attributing their plight to what he described as a “lack of leadership and empathy.”
In response to the growing crisis within the WorkCover scheme, the Victorian government allocated $50 million to establish Return to Work Victoria, an agency aimed at enhancing the rate of injured workers returning to employment. A spokesperson for the Allan government noted that prolonged absence from work can lead to deteriorating health outcomes and increased unemployment, reinforcing the necessity of the new reforms.
An independent review of the WorkCover changes is scheduled for 2027 to evaluate their effectiveness. WorkSafe has indicated that while early signs suggest the reforms are addressing the strain on the compensation scheme, more time is required to fully assess their long-term impacts.
In the last financial year, WorkSafe provided approximately $3.77 billion in support to over 109,000 workers. A spokesperson emphasized the need to consider the gradual emergence of legal precedents and behavioural changes in interpreting the data.
Despite the ongoing adjustments to the WorkCover scheme, the average premium rate for employers will remain at 1.8 percent for the current financial year. Opposition finance spokeswoman Bridget Vallence has called for assurances that premiums will not rise further. “Victorian businesses are now paying over $5 billion in premiums, making it the most expensive scheme in the country,” she stated, emphasizing the financial burden on employers due to the recent increases.
As the situation continues to evolve, the implications of these reforms on the well-being of injured workers and the viability of the WorkCover scheme remain to be seen.
