Suitable Employment Refusals and the Suspension of Compensation: AI Builds the Timeline, the Delegate Makes the Finding

A claimant stops turning up to a rehabilitation program, and the file lands on a delegate's desk with one question attached: can compensation be suspended, and is the record clean enough to do it. AI can lay out every date, offer and refusal that bears on that question, sorted into a timeline the delegate can read in minutes. It cannot answer the question. The without-reasonable-excuse finding, and the suspension that follows, is the delegate's to make.

Context for general readers: Under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act), an employee receiving compensation has obligations to take part in their own recovery: to undergo an examination the rehabilitation authority requires as part of assessing their capability, and to undertake a rehabilitation program aimed at getting them back to suitable employment. Where the employee refuses or fails to do so without a reasonable excuse, the employee's rights to compensation are suspended until they comply. Comcare's scheme guidance on suspension under the rehabilitation provisions sets out how, and the safeguards that have to be met first.

This is a piece about the narrow, high-stakes mechanism that suspends compensation for a rehabilitation refusal, and the equally narrow job AI can do around it. The suspension is one of the sharpest powers a delegate holds, because it stops payments to an injured person, so the record behind it has to be exact. AI can remove the assembly work in front of that decision, so the delegate's time goes to the finding rather than to reconstructing a scattered file. Every example here uses placeholders, because in production the file must be de-identified before it goes near an AI tool.

What actually triggers a suspension under the rehabilitation provisions?

Two failures trigger it, and two other sections carry the consequences that get mistaken for it.

Section 36, the assessment and the examination. Section 36(1) lets the rehabilitation authority arrange for an assessment of the employee's capability of undertaking a rehabilitation program, and section 36(3) lets it require the employee to undergo an examination by the person or panel making that assessment. Hold those two apart, because the suspension attaches to the examination and not to the assessment. Where the employee refuses or fails, without reasonable excuse, to undergo the examination, or in any way obstructs it, section 36(4) suspends the employee's rights to compensation, and to institute or continue any proceedings in relation to compensation, until the examination takes place. Note where the qualifier sits. Comcare's reasonable excuse guidance states plainly that the legislation does not require a reasonable excuse for the obstruction of an examination, and recommends one be sought from the employee anyway in the interests of natural justice. Comcare's guidance is also explicit that the provision is not self-executing: it requires the authority to work out whether there was a refusal or failure and whether it was without reasonable excuse. Once the required findings are made there is no discretion left to exercise, but there are two of them and not one. The second comes from the binding Guidelines and is set out below. AI can help organise the file that feeds this decision, but as the site's guide to a section 36 rehabilitation assessment sets out, it cannot conduct the assessment or choose the program.

Section 37, the program. The authority may determine under section 37(1) that an employee who has suffered an injury resulting in an incapacity for work or an impairment should undertake a rehabilitation program. A completed section 36 assessment is not a precondition to that determination. Section 37(3)(a) requires the authority only to have regard to any written assessment given under section 36(8), and the word any is doing the work: where one exists it must be weighed, alongside the other section 37(3) matters, but its absence does not block the determination. Having determined, the authority may provide the program itself or arrange it with an approved program provider under section 37(2). Where the employee, without reasonable excuse, refuses or fails to undertake that program, section 37(7) suspends the same rights to compensation until the employee begins to undertake the program.

Section 19(4), the offer refused. Section 37(7) is engaged where what the employee refuses is the rehabilitation program itself. A refusal of an offer of suitable employment is dealt with somewhere else entirely, and this is the point most often missed. Under section 19(4)(b) to (e), where an incapacitated employee receives an offer of suitable employment and fails to accept it, accepts it and then fails to engage or to continue to engage in it, fails to fulfil a condition that they complete a reasonable rehabilitation or vocational retraining program, or fails to seek suitable employment at all, section 19(4) requires Comcare, or the licensee determining the claim, to have regard to what the employee would have been earning in that employment when fixing AE, the able-to-earn figure in the section 19(2) formula. A higher AE means a smaller weekly payment, and potentially none, with no section 36 examination and no section 37 program anywhere in the chain. Section 19(4)(f) then applies a different test again, asking whether the failure was, in Comcare's opinion, reasonable in all the circumstances, which is not the reasonable excuse test in sections 36 and 37. A section 19 decision is a determination under section 60(1) on the same footing as a section 36 or section 37 one, so it is reconsidered and reviewed the same way.

Section 40, the employer's duty. Section 40 is titled "Duty to provide suitable employment". It requires the relevant employer, where the employee is undertaking or has completed a rehabilitation program, to take all reasonable steps to provide the employee with suitable employment or to assist the employee to find it. This is a duty on the employer, not a penalty on the employee. It matters here because it frames what a program is aiming at, and because Comcare's guidance expects the rehabilitation authority to make every attempt to assist the employee to comply before it issues a suspension determination. Note the trigger, though. The section 40 duty arises only where the employee is undertaking, or has completed, a rehabilitation program. On a section 36 examination refusal no program exists yet, so no section 40 duty has arisen and nothing about the employer's position gates the suspension. In practice, on the section 37 pathway, an undocumented suitable-employment position is hard to square with a record that says every attempt was made to assist the employee to comply, but that is a practice observation rather than a Comcare requirement: the four things SRC324 lists as ways of reducing non-compliance are all about explaining and arranging the examination or program with the employee, not about the employer's own paperwork. The suitable duties and recovery-at-work work sits on this side of the line.

The distinction is worth holding onto. A refusal of a suitable employment offer does not, by itself, suspend compensation. The suspension attaches to a refusal or failure, without reasonable excuse, to undergo the section 36 examination, to an obstruction of that examination, or to a refusal or failure to undertake the section 37 program. The offer refusal has its own consequence in the section 19(4) able-to-earn calculation, on its own test. Reaching for the wrong pathway is one of the fastest ways to have a decision set aside on review.

What has to happen before compensation is suspended?

The power is conditional, and the conditions are where suspensions are won or lost. Two sources set them. Comcare's scheme guidance is one. The other is the Guidelines for Rehabilitation Authorities 2019, a legislative instrument made under section 41 of the SRC Act, and section 41(2) of the Act requires every rehabilitation authority to comply with it. The Guidelines are binding text where the scheme guidance is not, and they carry two requirements the guidance compresses.

Start before the refusal. Section 11(1) of the Guidelines requires the authority, at the point it requires the examination under section 36(3) or the program under section 37(1), to notify the employee in writing that their rights to compensation, other than compensation for the cost of medical treatment payable under section 16, and their rights to institute or continue proceedings, may be suspended if they refuse or fail. That warning is separate from, and earlier than, the pre-determination notice below. A file that holds only the later one is missing a step.

First, the failure has to be a real refusal or failure to comply, not a misunderstanding or a missed letter. Second, it has to be without reasonable excuse. Comcare's reasonable excuse guidance applies a combined test: the delegate weighs both the subjective grounds the employee gives and whether those grounds are objectively reasonable, and asks whether the person was unable to comply rather than merely unwilling. Being dissatisfied with the terms of a request, or a difficulty that flows only from the employee's own preference, does not clear that bar. A genuine practical barrier can.

Third, before making any suspension determination the rehabilitation authority must inform the employee in writing that it believes grounds for suspension exist, and give the employee a right of reply, meaning a genuine opportunity to explain why they refused or failed to comply. Section 11(2) of the Guidelines puts the same obligation in mandatory terms: the authority must request reasons from the employee and must consider whether those reasons constitute a reasonable excuse. Skipping that step is a procedural fairness failure that survives no scrutiny.

Fourth, and this is the condition most often left off the checklist, section 11(3) of the Guidelines requires a second satisfaction before the determination becomes mandatory. The authority must be satisfied that the employee does not have a reasonable excuse for the refusal or failure, or that the employee obstructed an examination, and that the refusal, failure or obstruction is such that it prevents or interrupts the provision of effective rehabilitation. Comcare's SRC324 guidance states the mandatory step by reference to the reasonable-excuse finding alone. The instrument it footnotes is the binding text, and the instrument carries two limbs.

Three consequences are easy to state and easy to get wrong. Medical expenses continue to be payable during the suspension, as long as the section 16 requirements are met, so a suspension is not a total cut-off. The suspension lifts the moment the employee complies: undergoes the examination, or begins the program. But compensation is not back paid for the period of the suspension, so compliance restores the payments going forward and does not recover what was withheld. It is a lever to secure participation, and the loss it imposes is real.

Finally, a suspension under the section 36 or section 37 provisions is a determination for the purposes of Part VI of the SRC Act, because section 60 defines a determination to include a decision made under section 36 or section 37. It can be reconsidered, and then reviewed by the Administrative Review Tribunal. That is the audience the delegate's reasons and the compliance record behind them ultimately have to satisfy.

Where does AI fit, and where does it stop?

The gap between a defensible suspension and one that gets set aside is almost always the record: whether the file clearly shows what was offered, what was required, what was refused, on what dates, and what the employee said about it. That assembly work is exactly what AI does well, and it is the only part it should touch.

On a de-identified file, AI can build the compliance timeline: the sequence of the assessment request, the program requirements, each attendance and non-attendance, each item of correspondence, and each explanation the employee offered. It can flag the gaps, the missing return-receipt on a letter, the offer with no evidence it was communicated, the medical certificate that was never followed up. It can sort the employee's stated reasons against the subjective and objective limbs of the reasonable-excuse test so the delegate sees them cleanly. It can draft the structure of a procedural fairness notice for a human to complete.

What it cannot do is decide. Whether a refusal was without reasonable excuse is a judgement on specific facts that the Act gives to a person. The determination that follows that finding carries statutory consequences and a review trail. AI produces an input to that decision. It never produces the decision, and the file note has to make that boundary visible.

De-identification callout. Every claim in a worked example here uses placeholders: [CLAIMANT_NAME], [CLAIM_NUMBER], [CONDITION], [DATE_OF_INJURY]. In production, a rehabilitation compliance file must be de-identified before any of it is sent to an AI tool that sits outside the scheme's perimeter, with a documented process for the delegate to re-attach the output to the claim. This is the single highest-leverage control in the whole workflow.

Here is a prompt that builds the timeline without inviting the tool to reach a conclusion:

You are assisting a workers compensation delegate under the SRC Act 1988.
Using only the de-identified material provided, build a compliance timeline
for a rehabilitation matter. Do NOT assess reasonable excuse and do NOT
recommend suspension.

Claim: [CLAIM_NUMBER]  Condition: [CONDITION]  Injury date: [DATE_OF_INJURY]

Return a dated table in text form with these columns:
- Date
- Event (assessment request, examination, program requirement,
  attendance, non-attendance, correspondence, employee explanation)
- Source document reference
- Gap flag (mark any event missing a date, a receipt, or evidence it
  was communicated to the employee)

End with a plain list headed "Gaps for the delegate to resolve".
Add nothing beyond what the source material supports.

And a second prompt that sorts the employee's stated reasons against the test, still without making the call:

Using only the de-identified file, list every reason [CLAIMANT_NAME] has
given for not attending or not undertaking the rehabilitation program.
For each reason, set out in two columns:
- Subjective ground (what the employee says)
- Objective factors in the file that bear on it (supporting or
  contradicting), with a document reference

Do NOT conclude whether any excuse is reasonable. Do NOT use the words
"unwilling" or "unreasonable" as a finding. Flag any reason where the
file holds no evidence either way.

A de-identified worked example

[CLAIMANT_NAME], claim [CLAIM_NUMBER], has an accepted [CONDITION] with an injury date of [DATE_OF_INJURY]. A section 36 assessment supported a graduated return-to-work program under section 37. The program required attendance at a rehabilitation provider twice weekly. [CLAIMANT_NAME] attended twice, then missed four consecutive sessions.

The delegate runs the de-identified file through the timeline prompt. The AI output surfaces three things a quick read of the file had missed: the letter setting out the program requirements has no evidence it was sent to a current address, one missed session coincided with a date the employee had earlier flagged a specialist appointment, and the employer had not documented any suitable duties on site, which is relevant to the section 40 duty.

None of that decides anything. It tells the delegate the record is not yet clean enough to suspend. The delegate confirms the address, requests evidence of the specialist appointment, and asks the employer to document its suitable-duties position. Only once those gaps are closed, and only after issuing a written notice and considering the employee's reply, does the delegate turn to the reasonable-excuse finding and the suspension determination. The AI compressed a day of file assembly into minutes. The decision stayed exactly where the Act puts it.

How do you use AI on a rehabilitation refusal without crossing the line?

The steps below turn the boundary above into a workflow a delegate can run directly.

Step 1: De-identify before the perimeter

Strip the file of names, claim numbers, addresses, employer identifiers and any diagnosis tied to an identifier before it touches an AI tool that sits outside the scheme's controlled environment. Use stable internal placeholders you can re-attach afterwards.

Step 2: Build the compliance timeline, not a conclusion

Use the tool to assemble the dated sequence of offers, requirements, attendances, refusals and explanations. Prompt it explicitly not to assess reasonable excuse or recommend suspension.

Step 3: Resolve the gaps before you go near a finding

Treat every gap the tool flags, an uncommunicated letter, a missing receipt, an unverified medical reason, and, where a program is under way or completed, an undocumented section 40 position, as a task to close. A suspension built on a gapped record is a suspension waiting to be set aside.

Step 4: Check the first warning went out, then issue the notice and take the reply

Two written steps, not one. Confirm the section 11(1) warning was given when the examination or program was required, telling the employee that compensation other than section 16 medical treatment may be suspended if they refuse or fail. Then tell the employee in writing that you believe grounds for suspension exist, and give a genuine right of reply. AI can draft the structure of either notice; a person completes and sends it, and a person reads the reply.

Step 5: Make the reasonable-excuse finding yourself

Weigh the subjective grounds and their objective reasonableness, and ask whether the employee was unable or merely unwilling. Record the finding in your own reasons, referencing the facts, not the AI output.

Step 6: Determine, and document that AI was input only

Where the finding is that the refusal was without reasonable excuse, and you are also satisfied that the refusal, failure or obstruction prevents or interrupts the provision of effective rehabilitation, record the determination, that the suspension runs from the date of the determination, and the fact that medical expenses continue. Note in the file which tool assembled the timeline, what de-identified data it saw, and that the finding and determination were yours. Capture this at the time of decision, not later.

Governance checklist

• The file was de-identified before any of it reached an AI tool outside the perimeter
• The compliance timeline is complete and every flagged gap has been resolved
• The pathway is the right one: section 36 examination, section 37 program, or a section 19(4) able-to-earn adjustment on a refused offer of suitable employment
• The section 11(1) written warning was issued at the time the examination or program was required, not only at the pre-determination stage
• Where a rehabilitation program is under way or completed, the employer's section 40 suitable-employment position is documented on the file
• A written suspension notice was issued and the employee's right of reply was genuinely considered
• The reasonable-excuse finding is recorded in the delegate's own reasons, on the specific facts
• The record shows why the refusal, failure or obstruction prevents or interrupts the provision of effective rehabilitation
• The determination records that the suspension runs from the date of the determination and confirms section 16 medical expenses continue
• The file note captures the AI's role as input, at the time of decision
• The reasons could withstand reconsideration and Administrative Review Tribunal scrutiny

What to never do

Do not: Send an un-redacted rehabilitation file to an undocumented AI tool. Let an AI tool characterise a refusal as unreasonable or recommend a suspension. Suspend on a gapped record where a letter cannot be shown to have reached the employee. Skip the written notice or treat the right of reply as a formality. Treat a suitable employment offer refusal as an automatic suspension trigger, or miss that it runs to the section 19(4) able-to-earn calculation rather than to section 36 or section 37. Record the AI's role retrospectively instead of at the time of decision.

Bottom line

A rehabilitation refusal can suspend compensation, but only on the section 36 examination or the section 37 program, only where the refusal is without reasonable excuse and prevents or interrupts effective rehabilitation, and only after the employee has been warned in writing when the requirement was made and given a genuine right of reply on the determination. A refusal of an offer of suitable employment does not suspend anything: it runs to the section 19(4) able-to-earn calculation, on a reasonable-in-all-the-circumstances test. The employer's duty to provide suitable employment sits alongside that and arises only once a program is under way or completed, and medical expenses keep flowing throughout.

That is the law as it stands, and it is worth saying so out loud. The independent review of the SRC Act reported in September 2025 and the Government released it on 12 December 2025, with Comcare stating it will work with the Department of Employment and Workplace Relations to progress legislative changes and other reforms. As at 21 September 2026 nothing has been legislated, and the compilation in force is Compilation No. 82 (C2026C00285), which commenced on 1 July 2026 and carries no unincorporated amendments.

AI earns its place by assembling the de-identified compliance timeline and flagging the gaps, which is precisely the work that decides whether a suspension holds up. The finding and the determination are the delegate's, made on the specific facts and recorded in the delegate's own reasons.

Do this Monday:

• De-identify any rehabilitation compliance file before it reaches an AI tool outside the scheme's perimeter.
• Use AI to build the dated compliance timeline, and prompt it not to assess reasonable excuse or recommend suspension.
• Close every gap the timeline flags before going near a finding, including the employer's section 40 position where a program is under way or completed.
• Check the section 11(1) warning went out when the requirement was made, then issue the pre-determination notice and genuinely consider the reply.
• Keep the reasonable-excuse finding and the suspension determination human, and record the AI's role as input at the time of decision.

Content disclaimer: This article is for general educational and informational purposes only. It does not constitute legal, compliance, or professional advice. The SRC Act 1988 should always be consulted directly. Practitioners should refer to current Comcare scheme guidance and seek legal advice where required. Nothing in this article constitutes a formal determination or interpretation of law.