In late November, the opposition and crossbenchers teamed up to set up a two-month upper house investigation into the government's WorkCover legislation.
Its final report - tabled in parliament on Tuesday - made nine findings and 20 recommendations, including establishing an independent inquiry led by an expert panel into the operation and viability of the compulsory insurance scheme within three months.
The expert panel should report back with its findings within 12 months.
"The bill's proposed definition of 'mental injury' is not fit for purpose," the report read.
"The definition does not clearly define 'significant' dysfunction meaning judicial interpretation will be necessary for the amendments to operate properly."
The Victorian government should also conduct "urgent and meaningful" consultation with business, unions, injured workers and advocates, with the bill not to proceed until then.
"The adequacy of the consultation was questioned by a number of witnesses," the report said of public hearings.
"The Victorian Trades Hall Council Secretary, Luke Hilakari, characterised it as less 'consultation' and more 'consult-told'.
"In evidence, Mr Hilakari suggested that the government's position was a fait accompli and that their views were not reflected in the bill."
In a minority report, inquiry chair Georgie Purcell, Legalise Cannabis MP David Ettershank and Greens MP Katherine Copsey called for the immediate withdrawal of the bill but the recommendation was blocked by the government and opposition.
"This is a desperate attempt by the government to claw back money after deliberately underfunding WorkCover for years," Ms Copsey said in the upper house.
Under the current legislation, workers suffering stress and burnout would no longer be able to access weekly WorkCover benefits.
They would instead be eligible for 13 weeks of provisional payments to cover medical treatment, along with access to enhanced psychosocial support services.
Workers receiving payments beyond two-and-a-half years would also have to undergo another impairment and capacity test to determine if they are still eligible.
Mr Ettershank suggested the legislation was "profoundly cruel" at its heart.
"It punishes workers with mental health injuries, which is ironic given the government's own inquiry into mental health," he said.
The Liberals and Nationals released their own minority report, demanding the government guarantee a cap on premium increases for two years.
Opposition Leader John Pesutto maintains the bill is flawed but said his party would consider the majority report's recommendations.
"We want premiums to be reduced while maintaining a system that's fair for workers," he told reporters.
The average premium for businesses was lifted from 1.27 per cent to 1.8 per cent in July after the government declared the scheme was broken and in need of an overhaul.
Premier Jacinta Allan last year warned the government would have no choice but to raise premiums for businesses if the reforms did not pass.
WorkCover claims liability has tripled in Victoria since 2010, mainly because of the increased cost of weekly income support.
Many workers are staying on the scheme longer, with mental injury accounting for 16 per cent of new claims.
Taxpayers have topped up the WorkCover scheme with an extra $1.2 billion to offset rising costs over the previous three financial years.
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