The NSW Government has been urged to mandate rehabilitation referrals for employees not likely to return to work within four weeks.

An Australian Rehabilitation Providers Association (ARPA) policy paper says the state could save at least $38 million if legislation required ill or injured workers to be referred to rehab within three working days, with current delays causing a blowout in expenses.

“Because of poor claims management practices and scant knowledge of cover provided by workers’ insurance, there are often lengthy delays in workers receiving medical rehab services,” ARPA CEO Nathan Clarke said.

“Nearly one in three injured workers in NSW do not return to work within four weeks. This results in enormous personal, social, health and economic costs to them, their employers and the system.”

ARPA says workers’ compensation premiums are calculated on the time it takes to return an injured employee to the workplace and delays are inflating insurance costs.

The NSW Business Chamber last year called on the Treasurer to commission an urgent review of the system following employer complaints about poor practices since reforms were introduced.

More than 700,000 NSW businesses are required to hold workers’ compensation insurance, costing them more than $2.3 billion a year, but many executives are unaware it includes rehabilitation services, ARPA says.