New laws affecting Victoria's workplace injury compensation system are due to take effect on March 31.

The Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Act 2024 has received Royal Assent and will enact significant changes to compensation entitlements.

The changes include greater limitations on eligibility for mental injury claims and the ability of workers to claim weekly payments beyond the second entitlement period.

Mental Injury

Under the changes, workers who suffer mental injury on or after 31 March 2024 will be required to meet new criteria to be entitled to compensation under the Workplace Injury Rehabilitation and Compensation Act 2013 (Act).

Workers will now need to meet a new definition of 'mental injury' under section 3 of the Act requiring that the injury:

• causes significant behavioural, cognitive or psychological dysfunction; and
• is diagnosed by a medical practitioner in accordance with the most recent version of the Diagnostic Statistical Manual of Mental Disorders (DSM).

In addition, workers will only be entitled to compensation if their mental injury 'predominantly' arises out of or in the course of their employment (section 39(1A)). Similarly, where a worker suffers a recurrence, aggravation or similar of a pre-existing mental injury, employment must be the 'predominant' cause, replacing the 'significant contributing factor' requirement (section 40(2A)).

While 'predominantly' is not defined in the Act, the Explanatory Memorandum indicates this is intended to take its ordinary meaning, referring to the strongest or largest contributing factor relative to all other factors.

In addition, the word 'predominantly' has previously been interpreted by the Courts in the context of the 'reasonable management action' exclusion to refer to a cause that must "exceed the other or all other causes combined in power and influence" (Pulling v Yarra Ranges Shire Council [2018] VSC 248).  

In the most significant change to mental injury eligibility, workers will now be unable to claim compensation if they suffer a mental injury predominantly caused by 'work-related stress or burnout' that has arisen from events that may be considered usual or typical and reasonably expected to occur in the course of their duties (section 40(1A)).

Words such as stress, burnout and usual or typical duties are not defined, but the Explanatory Memorandum indicates usual or typical work activities may include typical job demands, workload pressures and interpersonal interactions. However, injuries caused by bullying and harassment are still intended to be covered according to the Explanatory Memorandum. It remains to be seen how the Courts will interpret the new provisions.  

Importantly, workers whose usual or typical duties involve exposure to traumatic events will still be entitled to compensation if they suffer mental injury predominantly caused by such events (section 39(2A)). The Explanatory Memorandum gives examples of occupations including emergency service personnel and other front-line workers.

The Act does not change the existing 'reasonable management action' exclusion, which will continue to apply.

Workers who lodge a claim for mental injury will still be eligible to claim provisional payments covering the reasonable costs of treatment for a total of 13 weeks regardless of whether their claim is ultimately accepted or rejected (section 263AA). The new definition of 'mental injury' does not apply for the purpose of provisional payments.

Weekly Payments

Workers who reach 130 weeks of weekly payments on their claim on or after 31 March 2024 will need to meet an additional requirement in order to remain entitled to weekly payments.  However, workers who have already received more than 130 weeks of payments before that date will not be affected.

In addition to the existing requirement of 'no current work capacity' which is likely to continue indefinitely, workers will now be required to have a whole person impairment of more than 20% in order to remain entitled to weekly payments beyond 130 weeks (section 163(1)).

While the assessment of a worker's impairment for this purpose is to be determined having regard to, among other matters, any assessment of impairment of the worker under Division 4 of Part 2 of the Act, WorkSafe Victoria and self-insurers are not bound by such an assessment (section 167A(5)).

A worker's degree of impairment is the greater of either their impairment resulting from one or more compensable physical injuries and their impairment resulting from one or more compensable psychiatric/psychological injuries. As such, physical and psychiatric impairments are not combined together.

WorkSafe Victoria or a self-insurer may determine it is not necessary or practicable to assess a worker's impairment in some circumstances, including where there is no reasonable prospect of the worker having an impairment of more than 20% (section 167C).

In addition, WorkSafe Victoria or a self-insurer can make an interim determination a worker is or is not eligible to receive weekly payments beyond 130 weeks in some cases, including where the worker's injury has not stabilised or the information required to make the impairment determination is not available for any reason (section 167D(1)).

However, in order to make an interim determination that a worker is not eligible to weekly payments after 130 weeks, WorkSafe Victoria or a self-insurer must be satisfied that the worker's impairment is not likely to be permanent, that the worker's impairment, if assessed, would likely be 20 per cent or less, or that the worker has a current work capacity (section 167D(4)).

Where a worker disputes a determination of their ongoing eligibility to weekly payments beyond 130 weeks and the only issue is the degree of impairment, the dispute must be referred to a Medical Panel (section 167H).

Other changes

In addition to the changes to entitlements for mental injury and weekly payments, the amending legislation makes a number of other changes.

A new Return to Work Advisory Subcommittee will be established to advise on ways to promote the occupational rehabilitation and early return to work of injured workers, occupational rehabilitation services, vocational re-education facilities and return to work programs.

In addition, certain kinds of dispute will now be ineligible for arbitration, including disputes as to whether a claimant is a 'worker', whether they have suffered an 'injury', including a mental injury, and whether their injury is compensable (section 301C(2A)).

Conclusion

These amendments will significantly impact the future claims liabilities of employers and self-insurers and require careful consideration going forward, particularly those relating to the diagnosis of mental injuries and the application of the new thresholds in respect to such injuries.

Should you require any guidance in respect to the amendment, please contact the TG Legal + Technology team.

Authors

Bruce Crosthwaite | Principal Lawyer | +61 3 9641 8618 | bcrosthwaite@tglegaltech.com.au

Scott Newlan | Special Counsel | +61 3 8080 3771 | snewlan@tglegaltech.com.au