A review of 16,000 workers’ files found 3.5 per cent had been underpaid due to an error in the way the insurer, icare, was calculating their earnings before their injuries.

At least 53,000 injured workers will now share in a $38 million payout from the NSW public insurer, and icare’s chief executive has had to make a “sincere apology” for miscalculating payment amounts.

The calculation errors were made between 2012 and 2019.

NSW Shadow Treasurer, Daniel Mookhey, told The Guardian that the decision was “a big step forward for justice” for injured workers, who had been the victims of “the biggest act of wage theft committed by any Australian government”.

He said the government should guarantee the repayments would cover the state’s public service.

Unions NSW raised its concerns about the bureaucratic hoops that injured workers faced before they could be compensated.

“icare must err on the side of accepting further claims from people who have been underpaid,” Unions NSW secretary, Mark Morey, said.

“There may be many thousands more sick and injured workers whose underpayments have not been captured by this review. icare needs to give them the benefit of the doubt.”

Morey said the icare saga should prompt a “fundamental rethink” of how the state treats sick and injured workers.