Big changes are coming to Workers Comp in Victoria 2025
Author: Dr David Brentnall
From premiums to psychosocial risk changes, we look ahead to four changes kicking in this year and how they could impact you.
In 2025, WorkSafe Victoria has implemented significant changes to the state’s WorkCover scheme, focusing on modernizing the system to ensure its sustainability and effectiveness. Key themes and changes include:
1. Revised Eligibility for Mental Injury Claims
New Definition: A mental injury is now defined as one that causes significant behavioral, cognitive, or psychological dysfunction, diagnosed by a medical practitioner in accordance with the Diagnostic and Statistical Manual of Mental Disorders.
Predominant Cause Requirement: For a mental injury claim to be compensable, employment must be the strongest contributing factor.
Exclusion for Typical Work-Related Stress: Claims primarily caused by stress or burnout from usual or typical work events are excluded from compensation. However, exceptions exist for cases involving repeated unreasonable conflict (bullying and harassment) or traumatic events inherent to certain professions.
2. Additional Criteria for Extended Weekly Payments
Whole Person Impairment (WPI) Requirement: To continue receiving weekly payments beyond 130 weeks, workers must now have a WPI of 21% or more, in addition to meeting existing capacity tests.
3. Establishment of Return to Work Victoria
New Support Body: The government has established Return to Work Victoria, dedicated to assisting injured workers, particularly those with mental health concerns, in returning to work or training pathways.
4. WorkCover Premium Rate Freeze
Premium Stability: The average premium rate has been frozen at 1.8% for the 2024-25 financial year, providing employers with more predictable costs during this period.
These reforms aim to create a more sustainable WorkCover scheme while enhancing support for injured workers in Victoria. However, the recent changes to WorkCover in Victoria introduced in 2025 bring potential downsides for employers, particularly in terms of costs, compliance, and administrative burdens.
Here are the key challenges employers might face. Implications for Employers in Victoria:
1. Stricter Criteria for WorkCover Claims
While changes to the eligibility criteria for mental injury claims aim to limit unwarranted claims, they place added pressure on employers to document and justify workplace actions (e.g., management decisions or performance processes) to avoid liability.
Risk: Claims could be denied, but disputes or appeals may still require employers to engage in lengthy and costly legal processes.
2. Increased Administrative Burden
Employers are required to:
o Provide more detailed documentation for claims.
o Engage with Return to Work Victoria to develop individualized return-to-work plans for injured workers, especially those with mental health issues.
Risk: Small and medium-sized businesses (SMEs) may struggle to allocate resources for these added responsibilities, potentially requiring external consultants or HR expertise.
3. Impact of Whole Person Impairment (WPI) Threshold
Workers seeking extended weekly payments beyond 130 weeks must now meet a 21% Whole Person Impairment threshold.
Risk: If workers with less severe injuries cannot access payments, employers may face pushback or reputational damage from employees, unions, and advocacy groups.
Worried how these changes will effect your business? Get in touch today: enquiries@helloaxis.com.au