WorkCover is changing in Victoria, with premiums frozen temporarily and updates to the way workers’ compensation is paid to injured or sick employees.

Take a look at what you need to know:

What are WorkCover premiums? 

WorkCover is a form of insurance paid by employers to cover the costs associated with workers’ compensation claims. In Australia, the WorkCover system is designed to provide financial protection and support to workers who suffer from work-related injuries or illnesses.

Employers are all required to pay WorkCover premiums but in recent years, the Government has had to top up the scheme in order to cover costs.

What is the WorkCover Premium Freeze?

A freeze in WorkCover premiums means there is a temporary hold on any increases in premiums businesses are obliged to pay. 

In Victoria, WorkCover premiums have been frozen at 1.8 per cent for the 2024-25 financial year, meaning employers will have more predictable costs in this area during that time.

While this is welcome news for employers, the freeze has been introduced as part of a larger move towards WorkCover reforms. Victoria’s current opposition party requested the freeze in exchange for passing the government’s proposed WorkCover Scheme Modernisation Bill.

The WorkCover Modernisation Bill

Around 98,000 Victorians received support through WorkCover in 2022-23. In the past three years, taxpayers have topped up the scheme with an extra $1.2bn to offset rising costs.

Because of this, the Victorian government introduced the WorkCover Modernisation Bill to fortify the financial health of WorkCover and to bring it up to date.

The government spent months consulting with unions, businesses, and other stakeholders to ensure that the revised scheme would meet the needs of modern enterprises.

Changes to WorkCover in Victoria

The goal of Victoria’s revised WorkCover scheme is to make it sustainable and fit-for-purpose, and to deliver better health outcomes for injured workers. Changes introduced on 31 March 2024 include:

• Workers who have been on the scheme for more than 130 weeks will need to undergo a work capacity test and whole of person impairment test, and meet eligibility criteria in order for payments to continue.

• Stress and burnout claims will only be eligible for 13 weeks of provisional payments, if their absence leaves frontline workers unaffected. Individuals experiencing these conditions will no longer be able to access weekly WorkCover benefits. The payments will be available to cover medical treatment and psychosocial support to help individuals return to the workplace or training pathways.

• A new body called Return to Work Victoria will be established. It will work with employers, unions, mental health, and occupational health experts to pilot supports for injured Victorians and those experiencing work-related mental stress to return to work or training.

• There will be clarifications for resolving initial eligibility disputes and mandates for an independent review of the scheme in 2027.

You can read more about WorkCover Modernisation here.

What to do as a business owner

While union representatives have expressed frustration about how the WorkCover changes may impact worker rights, the freeze on premiums and incoming changes should help to reduce the burden of WorkCover premium costs for employers.

As a business owner, monitor your premiums to ensure they don’t rise between now and July 2025. You will also need to have an awareness of how people are now compensated in the event of stress/burnout or claims that extend beyond two and a half years.

Speak to an accountant about how WorkCover premiums changes may affect your business.