Negligent companies should pay the cost of NHS treatment for their injured employees, the government has suggested.

Launching a consultation document setting out circumstances under which employers could be billed for the treatment of injuries caused by negligence, health minister David Lammy said the move would encourage company bosses to reduce risks in the workplace.

The document, applicable to England and Wales, was backed by the TUC, which welcomed moves to "make the perpetrator pay".

And Lammy suggested that any extra income raised for the health service would go straight into the budgets of frontline hospitals.

It is believed that, if adopted, the new scheme could raise £120 million a year for the NHS on top of the £100 million a year already being raised - enough extra cash to fund almost 30,000 extra hip replacement operations.

The move was first suggested by the Law Commission, which found grounds to extend the current system of recovery of NHS costs from road traffic accidents to all personal injury claims.

"Wrongdoers should meet the costs of their actions in full. Extending the recovery of NHS costs to all personal injury claims will remove the burden from general taxpayers of subsidising part of the costs of a wrongdoer," said Lammy.

Consultation proposals include having the payment of NHS costs met by the person or organisation paying compensation, not by the person receiving treatment; having costs limited to the cost of any hospital treatment and associated ambulance costs - not primary care (family doctor) costs.

The scheme would be administered by the Compensation Recovery Unit on behalf of health secretary Alan Milburn and Scottish and Welsh ministers. The CRU is part of the Department for Work and Pensions.

Anticipating opposition from business leaders critical of the imposition of extra costs, Lammy promised to avoid more red tape.

"This scheme will not introduce any more regulations for business but it is unacceptable that taxpayers have to pay for the medical treatment of someone injured at work simply because employers fail to take adequate steps to protect their workforce," he said.

"By having to bear the cost of treating those injured in the workplace employers, for example, will have another incentive to reduce risks to their workforce and the public at large.

"People have a right to treatment free at the point of entry to the NHS. Employers have a responsibility to reduce the possibility of accidents to their workers."

Under the plans the NHS will play no part in accident victims' decisions about whether or not to claim compensation. The victim will not pay the charges nor will they be questioned by hospital staff about whether they will be making a claim for compensation.

There will be no need for patients to divulge medical information in order for recovery of costs to take place.

The government points to recent research from the Health and Safety Executive which indicates a "definite link" between increased insurance premiums and improved health and safety in the workplace.

"Responses to this consultation will help us decide what a recovery a scheme might look like, how it would affect all of us as patients, as individuals, as employers, as businesses, as insurers or within local and central government in terms of costs and processes," said Lammy.

The TUC's deputy general secretary, Brendan Barber, said: "We welcome this contribution to the debate about how Britain pays the price of workplace injury and illness. We need to balance the contributions of victims, employers and taxpayers. Making the perpetrator pay would increase the incentive for prevention."