NSW Has Passed Australia's First AI Workplace Safety Law. Here Is What Employers Need to Do Before It Starts.

New South Wales has become the first Australian jurisdiction to put AI, algorithms and automated platforms explicitly inside the Work Health and Safety Act. The Work Health and Safety Amendment (Digital Work Systems) Act 2026 passed parliament on 12 February 2026 and received assent on 18 February. Neither the primary duty (s 19(3)(c1)) nor the work allocation duty (s 21A) is currently in force. Both require proclamation before they take effect, and no proclamation date has been announced as of publication. But once commenced, an employer’s AI-driven rostering tool, performance tracker or algorithmic workload system will be legally classified as a workplace hazard if it creates excessive workload, unreasonable metrics, invasive surveillance or discriminatory decisions.

What does the Act actually cover?

The Act defines “digital work system” broadly as any algorithm, artificial intelligence, automation or online platform. In practice, that captures most modern workplace technology: automated rostering, AI-driven performance scoring, gig platform task allocation, productivity tracking software, and algorithmic scheduling tools.

Two new duties sit at the core of the legislation. First, a new section 19(3)(c1) requires a person conducting a business or undertaking (PCBU) to ensure, so far as is reasonably practicable, that workers’ health and safety is not put at risk from the use of any digital work system. This applies to all uses of digital work systems, not only work allocation.

Second, a new section 21A targets work allocation specifically. Where a digital work system allocates work, the PCBU must consider whether the allocation creates or contributes to four categories of risk: excessive or unreasonable workloads, excessive or unreasonable performance metrics, excessive or unreasonable monitoring or surveillance, and discriminatory practices or decision-making.

A Redbridge poll of 1,507 NSW workers found 38% believe the risks of AI outweigh the benefits, and 69% support tougher regulation of AI in the workplace. Three in ten workers reported being required to meet targets that feel unrealistic or unfair because of automated systems.

What are the union inspection powers?

The Act gives WHS entry permit holders, including union representatives, new powers to require reasonable assistance to access and inspect digital work systems where a breach of WHS laws is suspected. A permit holder must give 48 hours’ notice (and no more than 14 days’ notice) before exercising these powers. Refusing to comply with an inspection request carries penalties of AUD $13,310 for an individual or AUD $69,980 for a corporation (121 and 607 penalty units respectively).

These entry provisions will not commence until at least one month after SafeWork NSW publishes guidelines on how the powers should be exercised. Those guidelines have not yet been drafted and will be subject to public consultation. The guidelines may be sector-specific, meaning the entry powers could apply to some industries before others.

For employers, the inspection power raises two practical concerns flagged by Norton Rose Fulbright: permit holders may encounter material subject to legal professional privilege when reviewing digital systems, and broadened access rights increase the likelihood that information unrelated to a WHS breach could be drawn upon in industrial contexts. Employers will need clear protocols to identify and assert privilege quickly, and to keep confidential information separated from permit-holder-accessible data.

The inspection powers have drawn strong opposition from employer groups. Business NSW and Ai Group raised concerns about the breadth of the new duty, the compliance burden on SMEs, and the risk that expanded access rights could expose sensitive HR, payroll and commercial data beyond the scope of a WHS investigation. King & Wood Mallesons noted that the wide definition of “digital work system” risks catching a much broader set of HR systems than first considered.

Why does a NSW law matter nationally?

Three factors make this relevant beyond New South Wales.

Safe Work Australia review. The Act includes a review clause that activates if Safe Work Australia amends the national Model WHS Act to deal with substantially the same subject matter. Safe Work Australia has been tasked with examining whether the model laws should be updated to address digital work systems. If it does, every state and territory that adopts the model laws will inherit similar obligations.

Precedent for other jurisdictions. NSW Minister for Work Health and Safety Sophie Cotsis described the legislation as establishing that “if PCBUs delegate tasks to an algorithm which creates harm, the Act clarifies that managers are responsible for the human impact.” Other state governments will be watching the implementation, and unions in Victoria, Queensland and Western Australia are likely to push for equivalent protections.

December 2026 Privacy Act deadline. From 10 December 2026, the Privacy and Other Legislation Amendment Act 2024 (Cth) requires all Australian entities using automated decision-making affecting individuals’ rights or interests to disclose this in their privacy policy. Penalties for serious breaches can reach AUD $50 million. For employers using AI in workforce management, the NSW WHS duty and the national Privacy Act ADM disclosure requirement hit the same operational AI tools from different regulatory angles. The governance work overlaps substantially.

What should employers do now?

The Act has not commenced, but waiting for proclamation is the wrong approach. PwC Australia, Moore Australia and Hamilton Locke all recommend preparing now. The compliance work takes time, and employers who start after proclamation will be behind.

Identify every digital work system used to allocate work or assess worker performance. This includes automated rostering, AI-driven scheduling, performance scoring, productivity tracking, and any SaaS platform with embedded algorithmic features. Many employers do not have visibility into the algorithmic parameters of off-the-shelf tools they are already using. That visibility gap is now a compliance risk.

Run psychosocial risk assessments on those systems. Assess whether any digital work system creates excessive workloads, unreasonable performance targets, intrusive monitoring or discriminatory outcomes. Document the assessment. The existing psychosocial risk management Code of Practice under the WHS Act already provides a framework; the new duties extend it explicitly to digital systems.

Update WHS policies and procedures. Ensure that AI and algorithmic risk management is included in your WHS management system. Train managers and senior executives on what the new duties will require. Develop protocols for responding to permit holder access requests, including identifying privileged material and separating it from accessible data.

Review vendor contracts. If a third-party SaaS vendor’s tool allocates work or monitors performance, the PCBU remains legally responsible for the health and safety impact. PwC’s analysis notes that employers will need to carry out appropriate due diligence on third-party digital work systems, including ensuring they are free from potential bias. If your vendor cannot explain how its algorithm allocates work or sets performance metrics, you cannot demonstrate compliance.

Prepare for the December 2026 Privacy Act ADM requirement simultaneously. The governance work is largely the same: know where AI touches decisions about people, document how it works, and ensure human review sits between the algorithm and the outcome. Building one inventory that serves both the NSW WHS duty and the Privacy Act disclosure requirement is more efficient than treating them as separate compliance exercises.

Two deadlines, one governance programme

NSW employers face a two-front compliance horizon: the WHS digital work systems duty once proclaimed, and the national Privacy Act ADM transparency requirement from 10 December 2026. Employers in other states face only one of those deadlines today, but the Safe Work Australia review mechanism means the WHS dimension could arrive in any jurisdiction within the next 18 months. The organisations best placed are those treating “no secret AI in workforce management” as a design principle rather than a compliance afterthought.

Sources

NSW Parliament, Work Health and Safety Amendment (Digital Work Systems) Bill 2025. parliament.nsw.gov.au
CBP Lawyers, “NSW amends WHS Act: employers now expressly required to consider risks of using AI,” 24 March 2026. cbp.com.au
Moore Australia, “NSW AI Workplace Laws 2026: What Employers Using Digital Tools Need to Know,” 21 March 2026. moore-australia.com.au
Hamilton Locke, “NSW Parliament passes WHS Digital Work System Duty,” February 2026. hamiltonlocke.com.au
PwC Australia, “When technology becomes a WHS risk: NSW’s landmark Act explained,” 19 February 2026. pwc.com.au
DLA Piper, “New South Wales government passes nation-first work health and safety obligations for digital work systems,” 3 March 2026. knowledge.dlapiper.com
Norton Rose Fulbright, “NSW Parliament passes Digital Work Systems Bill: What employers need to know,” March 2026. nortonrosefulbright.com
Pinsent Masons, “NSW becomes first Australian state to regulate digital safety risks in the workplace,” 13 February 2026. pinsentmasons.com
King & Wood Mallesons, “New AI related changes to NSW Work Health and Safety laws,” March 2026. kwm.com
L&E Global, “Australia: NSW Expands WHS Framework to Capture Digital Work Systems,” 23 March 2026. leglobal.law
OHS Reps, “NSW passes Digital Work Systems Act 2026,” February 2026. ohsrep.org.au
Unions NSW, “New bill protects workers from AI excesses,” 12 February 2026. unionsnsw.org.au
HCA Mag, “Threat has already arrived: NSW workers push for strong AI safeguards at work,” 9 February 2026. hcamag.com