Victoria's WorkCover scheme is set for a major overhaul.

The state is moving ahead with plans to restrict mental health payments to post-traumatic stress disorder, leaving workplace bullying and harassment excluded from compensation. 

The government has acknowledged that WorkCover is “fundamentally broken” and unsustainable due to ballooning costs of payouts, in particular mental health injuries.

However, experts warn that removing bullying and harassment from the scheme will give perpetrators a “green light” to continue their behaviour, and employees will no longer have the right to support and compensation when they have not been protected in the workplace. 

Psychological injury claims are more expensive and tend to last longer than physical injuries. Claims for workplace bullying and harassment account for 39 per cent of all psychological claims across Australia.

Katrina Norris, director of the Australian Association of Psychologists, says the proposed changes would take away an employer's responsibility to provide a safe workplace for employees. 

“It gives perpetrators of bullying and harassment a green light to continue their behaviour and removes the right of victims to support and compensation when they have not been protected in the workplace,'” she said. 

“This is a very slippery slope and is purely unacceptable.”

The government has signalled that better intervention to prevent bullying is part of the solution, and experts in the sector agree. 

Marcelle Mogg, CEO of Mental Health Victoria, suggested that the government could incentivise employers with reduced premiums for good performance. 

However, there are fears that if WorkCover is not accessible for mental injuries, people will not seek help until it is too late, putting greater strain on Victoria's already beleaguered health and mental health system.

“There's a real risk here that the mental health sector and the broader health system will bear the brunt of these policy decisions," Ms Mogg says. 

“If people are not able to access the care and support that they need under one system, they will present most likely to another system for care.”

The Andrews government held a royal commission into the mental health system and has poured billions of dollars into reforming the sector. However, the proposed changes to WorkCover have sparked criticism, with some saying that it is hypocritical for the government to take a constructive approach to mental health treatment in recent years while narrowing mental health help for workers.

Shadow Minister for Mental Health Emma Kealy said that Victorians had every right to be disappointed that the Labor government was taking steps to make it even harder to access mental health support. 

“The royal commission into Victoria's mental health system should have been the start of improving access to support and building our workforce, and yet it has never been harder to see a mental health professional with thousands of vacancies across the state,” she said.

Unions, including the Community and Public Sector Union, are concerned about the diminution of workers' rights and protections. 

Trades Hall Secretary Luke Hilakari said the Labor government had proudly taken the lead on mental health reform and laws for harassment and violence in the workplace. 

“The Andrews government must continue to support these people with mental health issues so they can continue to be well-functioning and contribute to Victoria,” he said.

Minister for WorkCover Danny Pearson says that the government is still conducting consultation on how to fix WorkCover. 

“We've been up-front that the WorkCover scheme is broken, and that's why we are talking to worker and business stakeholder groups to arrive at the best way to fix it,” he said in a statement. 

“We're looking at all options and listening to the feedback - our ultimate priority is to get people back to work after an injury.”