Hi there, Andrew Koleda from on Demand HR here and today we are going to look at a recent article from the Guardian covering mental health’s impact on workers compensation schemes.

The article essentially highlights the rise of work-related mental heal claims leading to a situation where the insurance is effectively paying out more than it is collecting in premiums.  On Demand HR has been keeping our eye on this for a long time noting that the average duration of mental health related workers compensation claims is 26 weeks – longer than spinal cord related claims.

This article raises another alarming figure that 18% of claims reached 130 weeks in 2022.  Looked at another way, 18% of these claims reach north of $100,000 using only the national minimum wage of $812.60 per week.  No doubt this is something that businesses need to stand up and take notice of.  

The article goes on to discuss that the Victorian Government is considering raising the bar to link mental health-related issues from the workplace from simply a “casual link” to the workplace which seems a very low bar currently.

Benita Kolovos from the Guardian goes on to explain (waiting until the last line) the natural and obvious path for this discussion leading to an increase in workers compensation premiums for Victorian employers from 1.27% of payroll to 2% of payroll.  However, what is not discussed is the claims sensitive nature of these premiums for larger employers.  In other words, if you have had claims in the past few years, your premiums are already likely to be higher.  

So what should business do?  Well of course every business is different and for some, if there is a trend of mental health related workers compensation claims, there may be some systemic issues to deal with.  Many of our members have looked to implement an employee assistance program to help with employee mental health issues.  Others have looked to an insurance broker to assist with reviewing their premium to help keep costs down.

There are many ways to proactively tackle this growing issue, however, the right mix is going to be different for each business.  If you would like to have a chat about your businesses unique circumstances, please do not hesitate to reach out to us by visiting www.ondemandhr.com.au