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The Victorian government’s push to overhaul its failing workers’ compensation scheme has hit a snag, while a separate plan to increase employer responsibility for staff stress and burnout is more than a year overdue.

The Greens have decided to oppose new WorkCover legislation in parliament, putting the future of the bill in the hands of the state opposition.

Rising mental health claims have put pressure on WorkCover.Credit: Thinkstock

The Allan government has put forward laws it says are vital to make the state’s workers compensation scheme sustainable and avoid annual billion-dollar deficits. The changes reduce access to payments for stress and burnout and introduce tougher requirements for those lodging claims after 2½ years.

Victoria’s union movement and mental health advocates have condemned the changes, but the government has maintained they are needed to prevent another rise to insurance premiums which increased by 42 per cent on average this year.

As negotiations over the bill continue, a separate plan to strengthen workplace laws related to mental health is more than a year overdue. Changes to the state’s occupational health and safety regulations were announced in 2021 and were expected to be implemented by mid-2022.

Under the changes, employers would have a stronger obligation to identify and prevent psychological harm. New definitions of bullying, high job demand, sexual harassment and mental health concerns would be introduced to the state’s health and safety code.

Employers would also be required to create prevention strategies and a reporting scheme would be set up to force larger workplaces to record and notify WorkSafe about incidents. The rules were announced after multiple reviews called for improvements and to better spell out the responsibility of employers.

At the time, the government said the changes would clarify that “hazards that pose a risk to psychological health are as harmful to workers’ safety and wellbeing as physical hazards” – but they are yet to be introduced following public consultation.

A regulatory impact statement estimated the reforms would cost businesses and WorkSafe $2.38 billion over their life, while bringing in economic benefits of $2.52 billion.

Melbourne Law School postdoctoral fellow Dr Kay Wilson said it was nonsensical for the government to cut stress and burnout claims for WorkCover while failing to act on regulations that prevented such problems.

A plan to strengthen workplace laws related to mental health is more than a year overdue.Credit: Louise Kennerley

“Work isn’t actually supposed to destroy a person,” she said. “Cutting claims protects WorkCover and employers from liability, but it really doesn’t do anything to incentivise employers to actually take steps to reduce the problem.

“If you’re not putting in the regulations to say, ‘these are things that employers have to do to actually start taking this seriously’ and you’re just cutting claims … what happens? It doesn’t just go away.”

Wilson said too many employees worked excessive overtime because they couldn’t argue against it or in the hope of later getting a promotion. “Restricting mental health claims for excessive workloads and burnout is discriminatory,” she said.

“It implies that those claims aren’t genuine, they’re problematic or less worthy than work stress due to other causes, which I think is quite stigmatising.”

The WorkCover bill is in danger of being defeated in Victoria’s upper house after the Greens on Wednesday decided not to support it. It means Labor will need the support of the opposition to pass the legislation.

The Greens’ industrial relations spokesperson, Sam Hibbins, said the changes proposed by the government would only make things worse.

“The Greens won’t be supporting a bill that screws workers over,” he said.

“The Victorian Labor government is acting like a heartless insurance company instead of a good government that helps people injured in the workplace, and prevents it in the first place.”

Greens MP Sam Hibbins.

The opposition will decide its position on the legislation at a meeting of shadow cabinet. “We are concerned that the government is rushing through amendments that have not been fully thought through,” said Cindy McLeish, the shadow minister for WorkCover.

A government spokesperson said employers were already required to provide a safe workplace, including risks to psychological health. She said Victoria was already delivering the biggest reforms to mental health in Australia’s history.

Mental health consultant Simon Katterl said the government’s WorkCover changes would damage the mental health workforce at a time when it was already stretched.

“Ironically, these reforms will increase demand on the mental health system because people will have no supports elsewhere,” he said.

“The Royal Commission into Mental Health spoke of a system in crisis. This is crisis-based policymaking.

Trades Hall secretary Luke Hilakari says public servants account for many WorkSafe claims.Credit: Simon Schluter

Victorian Trades Hall secretary Luke Hilakari said prevention was fundamental to making the WorkCover scheme sustainable and improving employee health.

“We’ve spent a long time as a community trying to de stigmatise people sticking their hand up when they’ve got a mental health problem, and this seems to fly in the face of that,” he said.

Hilakari said some of the biggest workplaces for claims were in the public service including health services, Victoria Police and the Department of Education.

He said when workplaces weren’t safe private employers had to pay higher premiums, but there wasn’t enough accountability in the public sector because department heads eventually passed these costs back to the government.

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