The Victorian Parliament has passed a Bill to enact changes to the Victorian Accident Compensation Act 1985 (the Act).

While there are a number of changes in relation to workers compensation insurance issues, this bulletin focuses on the impact on employers from an employment and OHS perspective.

Operation of the Act

Most provisions of the Act will take effect from 5 April 2010. Part 13 of the Act dealing with return to work commences on 1 July 2010.

Reasonable management action - the stress exclusion

Section 82(2A) of the Act, commonly known as the "stress exclusion", has been amended in the following ways:

  • "Injury consisting of an illness or disorder of the mind caused by stress" has been changed to a "mental injury". This change may be interpreted as broadening the provision.
  • The provision has been clarified to make it clear that the exclusion operates so that "compensation is not payable" to an employee under this section, making it clear that workers will have no entitlement to compensation if the exclusion applies.
  • A new term of management action is included. Management action includes previously stated actions (e.g. transfer, demotion, discipline, redeployment, retrenchment and dismissal) and new further actions (e.g. appraisal, counselling, training, investigation). Importantly, the definition of management action is not limited to the listed actions. Management action may therefore be given a broad definition, as it is in other States. It may extend to decisions relating to rostering, allocation of work or other actions taken by the employer in the management of its business operations.

The exclusion in section 82(2A) will be activated if:

  • A worker sustains a mental injury where the whole or predominant cause is as a result of:
  • a management action taken by or on behalf of the worker's employer on reasonable grounds and in a reasonable manner, or
  • a decision of the employer on reasonable grounds to take, or not to take, any reasonable management action
  • Any expectation by the worker that the employer would take, or not take, any management action, or would make a decision to take, or not take, any management action (as defined). This includes an expectation that was reasonably or unreasonably founded. This also includes whether the "expected" management action/decision was intended to be taken/made, or not intended to be taken/made.

What this will mean in practice

The broader definition of mental injury may enable workers to bring broader claims than just stress, but new reasonable management action provisions may limit claims by employees. Employers should ensure that they have robust performance and conduct management processes in place, and are able to justify actions taken, to be in the best position to rely on the reasonable management action exclusion.

Preclusions for drink driving

A number of provisions of the Act provide for specific exclusions as a result of circumstances where a worker is found guilty of a drink driving offence.

A worker who is found guilty of a drink driving offence will receive weekly payments for up to 130 weeks at a reduced amount depending on the level of their blood alcohol, up to a blood alcohol reading of 0.24. The provision does not apply if the incident results in death or severe injury.

What this will mean in practice

Workers that drink and drive will have reduced entitlements.


Amendments to the Act make it an offence for employers or prospective employers to engage in “discriminatory conduct” in relation to workers or applicants for employment. The new provisions generally align with the provisions prohibiting discrimination under the Occupational Health and Safety Act.

Discriminatory conduct by employers or prospective employers includes:

  • Dismissing or threatening to dismiss a worker from employment where the dominant reason is a “prohibited reason” within the meaning of the legislation.
  • Altering, or threatening to alter, the position of a worker to the worker's detriment; or
  • Refusing or failing to offer employment to an applicant for employment where the dominant reason for the conduct is a “prohibited reason” within the meaning of the legislation.

Conduct engaged in for a prohibited reason includes:

  • Where a worker has given notice of an injury
  • Taken steps to pursue a claim for compensation, or
  • Lodged a claim for compensation.

Penalties for employers and prospective employers who engage in discriminatory conduct will be imposed and the Act provides for a range of remedies for discriminatory conduct including:

  • Orders to pay damages
  • Compensation
  • Reinstatement.

A worker or applicant for employment may request that the Authority commence a prosecution for an offence under the discrimination provisions and request that a decision by the Authority not to prosecute be reviewed by the Director of Public Prosecutions.

What this will mean in practice

Employers face significant consequences if they discriminate against employees because the employee has brought a claim or notified the employer of an injury. Employers need to ensure that they have appropriate policies and procedures in place to deal with situations which may give rise to discrimination under the Act.

Requirements to keep an employee employed

  • The current obligations under section 155A, which require that an employer keep an employee employed for 12 months from the time that the employee commences to have an entitlement to weekly payments, have been replaced by section 194.
  • Section 194 now refers to a 52 week "employment obligation period". The employment obligation period begins on the date that the employer receives a medical certificate from a worker or a claim for weekly payments of compensation from a worker, whichever is the earlier date.
  • The 52 week period is an aggregate of the periods of incapacity from the work related injury, beginning on the earliest date, and regardless of whether the worker has an incapacity for work over a consecutive period.

Consistent with section 155A, the suitable employment provisions require that a worker must be provided with:

  • suitable employment if the worker has a current work capacity, or
  • pre-injury employment if a worker no longer has an incapacity for work to the extent that it is reasonable to do so.
  • An employer must, to the extent that it is reasonable to do so, plan the return to work of a worker from the date on which the employer knows or ought reasonably to have known of the worker's incapacity for work whichever is the earlier date.
  • An employer must consult with the worker, the treating medical practitioner and an occupational rehabilitation services provider about the workers return to work.

The workers’ obligations include:

  • participation and co-operation in the return to work planning
  • actively using an occupational rehabilitation service and participation in assessments
  • making reasonable efforts to return to work in suitable or pre-injury employment.
  • Very significant increases in penalties will apply to a breach of these provisions. This will be supported by an increased return to work inspectorate, with greater powers (see below).

What this will mean in practice

Employers continue to have an obligation to provide employment for injured employees for a period of 52 weeks – the time now starts ticking from the time that the employee receives a medical certificate or from the date that the employee claims workers’ compensation, whichever is the earliest. Significant penalties will now apply to a breach, which is more likely to be identified by the inspectorate.

Return to Work Inspectors

Return to Work Inspectors are given the same powers under the Act of Inspectors under the Occupational Health and Safety Act 2004 (Vic) including:

  • powers to enter any workplace during business hours
  • requiring a person to produce any document and to examine a document
  • to require a person to answer the Inspector’s questions
  • issuing Return to Work improvement notices to employers where there is a reasonable belief that an employer is contravening provisions of the Act or has contravened a provision of the Act.

It will be an offence to refuse or fail to provide assistance to an Inspector that is reasonably required for the exercise of his or her powers.

What this will mean in practice

Employers should ensure that they comply with the return to work provisions of the Act as they may be investigated by the Return to Work Inspectors. Employers and employees must take steps to understand the powers of the inspectors and ensure that they comply.


  • The Act now provides for higher penalties, including in relation to failing to provide suitable employment (the penalties increase to approximately $105,000 for a body corporate from approximately $14,000 under the current Act).
  • The Authority will have the power to accept an enforceable undertaking in connection with a contravention or alleged contravention of the Act.
  • Adverse publicity orders may also be given where a Court has convicted a person of an offence under the Act.

What this will mean in practice

Employers should be aware that a failure to comply with the Act may result in significant financial penalties as well as other sentencing options that may harm the reputation of a business, through adverse publicity orders.

What should employers do?

  • Employers should review their current policies and procedures for dealing with workers’ compensation claims to ensure that they comply with the Act.
  • Employers should develop procedures to deal with Return to Work Inspector requests.
  • Employers should review their discrimination policies to include discrimination under the new Act.
  • Employers should provide training to employees who manage employees and claims management to ensure that they understand their new obligations.