Victorian employers on average experienced a whopping 42% rise in their WorkCover Premiums in 2023/24 increasing from 1.27% to 1.8%. At the time the Victorian government which was looking to fund a $1B funding black hole, referred to the Victorian workers compensation scheme as “fundamentally broken – no longer meeting the modern needs of those it was designed to assist more than 30 years ago.”
WorkSafe have now advised that the 2024/25 average premium rate will remain at 1.8%. Individual businesses will experience differing levels of premium rate change based on specific claims management experience in their industry. As a safeguard most employers experiencing a significant increase in their industry rate coupled with worsening claims experience, could find their premiums increasing by up to 30% in 2024/25. This year-on-year rate cap was increased to 75% last year, up from 30% previously.
In order for the Victorian scheme to be able to operate effectively based on this 1.8% average premium rate, claims liability savings need to be made either through improving the efficiency of the scheme, or through reducing claim benefits, or both.
It is certainly much easier for the Victorian government to find instant scheme cost savings through legislative change. As a result the Victorian government has just passed legislation that will come into effect from 31 March 2024 which it describes as ”scheme modernisation.”
Mental Injury Eligibility
Since the inception of the Victorian WorkCover scheme in 1985, the cost and number of mental injury claims has skyrocketed. It is now expected that by 2030 a third of all claims will be for mental injuries. These claims experience poorer return to work outcomes with injured workers remaining off work for longer periods than physical injuries and as such are much more expensive.
In order for WorkSafe to be able to more effectively manage this liability pool, changes in eligibility requirements will apply for any mental injuries sustained on or after 31 March 2024. From this date in order for a mental injury claim to be eligible for compensation, work must be the strongest or largest contributing cause and not just a significant contributing factor behind the mental injury. At the same time a worker will not be eligible to receive compensation for a mental injury if the mental injury has been caused by work-related stress or burnout caused by events:
- that are considered usual or typical; and
- are reasonably expected to occur in the course of their duties.
For example, a worker lodging a mental injury claim will not be eligible to receive compensation where it involves an interpersonal conflict with co-workers that is not considered bullying or harassment, or due to workload pressures or the working of additional hours. There is an exception to this rule where traumatic events are part of a worker’s normal work such as ambulance or fire officers exposed to traumatic events as part of their normal duties.
130 Week – Additional Whole Person Impairment Requirements
Injured workers that are approaching 130 weeks of paid weekly compensation normally have their claims reviewed to determine if they should continue to receive weekly compensation past 130 weeks. This review has traditionally resulted in the termination of a high proportion of claims at 130 weeks; however in the last few years the number and costs associated with these claims that continue to receive weekly compensation in this latter period has increased markedly.
In order for WorkSafe to be able to more effectively manage this liability pool there is now an additional requirement for workers to continue to receive weekly payments after the second entitlement period of 130 weeks. This only applies to claims that reach 130 weeks on or after 31 March 2024. From this date for weekly compensation to continue to be paid post 130 weeks it must additionally be determined by an independent medical examiner that a worker has a whole person impairment as a result of their injury or injuries from the same event of 21% or more.
Whilst this is a welcome, if long-awaited start which will hopefully adjust the trajectory of scheme liabilities for a few years, claims liability savings need to also be made through improving the efficiency of the scheme. This Victorian WorkCover scheme might be a little more modern as a result of these changes, but this alone will not fix a scheme which at its core unfortunately remains broken.
Ongoing proactive management of your organisation’s WorkCover programme, working towards the risk mitigation of injuries and claims, and their impact on your annual premium is the primary focus of our Adroit workers compensation team, ”ReWork”.
Contact the team at ReWork, for a free no obligation review of your WorkCover policy and claims to help you navigate these change, and ensure your business is best placed to face the challenges and costs of workplace injuries moving forward.
Call ReWork today on 1300 471 234
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