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17 Apr 2024

The macro-economic impact of work-related injuries and illnesses

The macro-economic impact of work-related injuries and illnesses

Managers and leaders play a crucial role in building a physically and psychologically safe environment. The benefits are clear: increased engagement and productivity, reductions in absenteeism, compensation claims and negative impacts on insurance premiums.

But how do you empower and educate leaders to make a difference? Join the expert team from the Victorian Chamber of Commerce and Industry to explore this topic and pick up some simple tips and tricks to move toward a proactive early engagement model.

By taking proactive steps as an employer, you can keep your workplace safer, healthier and more productive.

A workforce that minimises injury and illness benefits both employees and employers. In the following we consider the current context for Victorian employers and the opportunities for leadership, particularly in preventing and managing mental health injuries. We also outline the most recent changes in Victorian in respect of WorkCover and what it means for employers.


The macro-economic impact of work-related injuries and illnesses

Findings from Safe Work Australia’s (SWA’s) research, Safer, healthier, wealthier (2022), show that an absence of work-related injuries and illnesses would improve Australia’s economy by $28.6 billion and create 185,500 additional full-time equivalent jobs, with workers across all occupations and skill levels benefiting from an average 1.3 per cent wage rise.

The latest SWA Key Work and Safety Statistics 2023 report identifies work-related mental health conditions accounting for 9.2 per cent (or 11,700) of all serious claims. Claims for mental health conditions are historically one of the costliest forms of workplace injury, leading to significantly more time off work and higher compensation paid compared with physical injuries and diseases. The latest reporting also revealed that: 

  • Mental health conditions saw a 36.9 per cent increase since 2017–18 compared to an increase of 18.3 per cent for all serious claims over the period. 
  • The median compensation paid for mental health conditions in 2020-21 was $58,615 per serious claim, more than three times the median of $15,743 for physical injuries and illnesses.  
  • The median time lost for mental health conditions was also greater, coming in at over 34 weeks per serious claim, compared to eight weeks for other conditions.  
  • The report also found that workers with claims for mental health conditions experienced poorer return to work outcomes and were more likely to experience stigma from colleagues and their employers. 
  • Women make up 57 per cent of claimants, and workers aged 25-34 and over 65 are also more likely to be at risk. 


The Victorian WorkCover context

Businesses were relieved to know their WorkCover premiums will be frozen for the 2024-25 financial year, with the Victorian Parliament passing the changes in early March. The Victorian Chamber has been instrumental in the WorkCover negotiations with all sides of politics and welcomes the developments.

The deal to cap the insurance payments at 1.8 per cent came following months of consultation and an independent Parliamentary Inquiry to review the Workplace Injury Rehabilitation and Compensation Amendment – or WorkCover Scheme Modernisation Bill 2023.

The Workplace Injury Rehabilitation and Compensation (WIRC) Amendment (WorkCover Scheme Modernisation) Act 2023 (Scheme Modernisation Act) made a range of amendments to Workers Compensation, including limitations on what can be accepted as a mental health injury for claims in respect of injuries after 31 March 2024.

The legislation now requires that a mental injury must meet all the following to be eligible for compensation:

  1. causes significant behavioural, cognitive or psychological dysfunction,
  2. has been diagnosed by a medical practitioner in accordance with the Diagnostic Statistical Manual of Mental Disorder - only a general practitioner or psychiatrist (not a psychologist) can provide a diagnosis of a mental injury for the purposes of the WIRC Act.
  3. For primary mental injury claims, employment must be the strongest or largest contributing cause of a worker's mental injury. The requirement to demonstrate that employment was the predominant cause of the mental injury also applies to claims for compensation relating to mental injuries that arise from of any pre-existing injury or disease.

Workers will not be eligible for compensation where a primary mental injury has been mainly caused by stress or burnout because of events that are considered usual or typical and are reasonably expected to occur in the course of their duties.

Notwithstanding the above, workers may remain eligible for compensation in some situations, including:

  • repeated and unreasonable conflict with people, which is considered bullying and harassment
  • where a worker's duties are usually or typically traumatic, mental injuries predominantly caused by work-related stress or burnout because of traumatic events

There is now also an additional requirement to continue to receive weekly payments after the 130-week second entitlement period. This requirement will only apply to claims that reached 130 weeks on or after 31 March 2024.

To continue receiving weekly payments after 130 weeks, workers must:

  • have a whole person impairment (WPI) of 21 per cent or more, and
  • meet the existing capacity test requirement

The broader Victorian Work Health and Safety context

While Victoria waits for the State Government to make an announcement on the timing of introduction of proposed Psychological Health Regulations, employers are still required to take steps to prevent and respond to work-related stress.

Under the Occupational Health and Safety Act 2004 (OHS Act), employers must provide and maintain a working environment for their employees, including contractors, that is safe and without risks to health so far as reasonably practicable. In Section 5 of the OHS Act, health includes psychological health.

While introductions of the draft regulations may add additional requirements and definitions around psychological hazards, for example around bullying, the requirement for a safe workplace from both a physical and mental perspective is already in place. Our view is that employers who are proactive in considering the entirety of their risks will be best placed when the regulations launch.

Prevention and the role of leadership

Leaders are one of the most powerful influences of business culture and are best placed to embed people strategies and interventions into everyday actions.  

Employees that feel valued and engaged with the workplace will be more likely to demonstrate positive behaviours that have a knock-on effect.

To prevent work-related mental injuries, recommendations for employers include:

  • Promote a positive workplace culture that encourages trust, productivity, respectful behaviours and quality communication.
  • Implement policies and procedures for reporting and responding to psychosocial hazards such as workplace trauma, bullying, interpersonal conflict, violence, and aggression; and reviewing and updating risk controls following any incidents. Consult with employees when identifying and assessing any risks to their psychological health and determining the appropriate control measures.
  • Engage in “Care Conversations” and regularly ask employees how they are, encourage them to discuss any work-related concerns and, where required, implement suitable support and controls.
  • Have systems in place for workforce planning and workload management to ensure that employees have sufficient resources and a realistic workload. Equally, raise and deal with performance or behavioural concerns quickly, fairly and effectively.
  • Develop skills for leaders through coaching, mentoring and training to improve the support of employees.
  • Proactively inform workers about their entitlements if they become unwell or unfit for work, and provide necessarily support for them to remain or return to work.
  • Ensure there are robust reporting mechanisms
  • Provide appropriate and confidential channels to support workplace mental health and wellbeing, such as employee assistance programs.

How the Victorian Chamber can help

Promoting positive mental health benefits your business and employees. However, mental health is complex in the context of the workplace and can feel overwhelming.

The Victorian Chamber’s expert consultants have the skills and experience to help you effectively navigate the steps to create a mentally healthy workplace. From our Mental Health Comply and Partner packages, through to our training services, we enable you to build a thriving, productive workplace while meeting your legal obligations.

Our teams are also available to speak with you about your specific needs and hold specific expertise in the management of WorkCover – our best guidance is to seek expert advice quickly if there is a claim that you believe should be disputed, and to actively manage all claims actively throughout the life of the claim.

While prevention is ideal, we can help you manage the full range of IR issues – including managing complex claims and considerations around termination of employment where workplace injuries extend beyond the 52-week employment obligation period.

For more information on how the Victorian Chamber of Commerce and Industry can support your business or to access our mental health consulting services or Workers Compensation and Injury Management support, call us today on (03) 8662 5222.


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