What is the NSW Digital Work Systems Act 2026?

The Work Health and Safety Amendment (Digital Work Systems) Act 2026 (NSW) is a state law that extends existing work health and safety duties to cover harm caused by artificial intelligence, algorithms and automated systems.

It amends the Work Health and Safety Act 2011 (NSW) rather than creating a standalone regime.

NSW is the first Australian jurisdiction to legislate specifically on digital systems at work. The primary duty and work allocation provisions commence on a date to be proclaimed. Expanded entry powers start at least one month after SafeWork NSW publishes its guidelines.

Waiting for proclamation buys little. Section 19 of the WHS Act already requires every PCBU to ensure worker health and safety so far as is reasonably practicable, and that duty has always covered systems of work.

What counts as a digital work system?

The Act defines a digital work system as an algorithm, artificial intelligence, automation or online platform. An earlier draft included the word software, and its removal before passage suggests ordinary email and messaging tools sit outside the definition.

The definition captures tools most Australian businesses already run. Any system that decides who does what, when they do it, or how well they did it is likely to be in scope.

Scope turns on function rather than sophistication. A spreadsheet macro that allocates shifts can raise the same questions as a machine learning scheduling engine.

What duties does the Act place on employers?

The Act creates two duties: a primary duty under section 19(3)(c1) covering any use of a digital work system, and a specific duty under section 21A covering work allocated by one. Both are qualified by what is reasonably practicable.

The primary duty applies to every use of a digital work system by the business, well beyond task allocation. Section 21A then narrows in on allocation and names the risks you must actively turn your mind to.

Section 21A requires you to consider whether algorithmic work allocation creates or contributes to:

• Workload. Excessive or unreasonable volumes of work for individual workers
• Metrics. Unreasonable measures used to assess and track performance
• Surveillance. Excessive or unreasonable monitoring of workers
• Discrimination. Unlawful discriminatory practices or biased decision-making

These four categories map closely onto the psychosocial hazards that model WHS Regulations 55A to 55D have required PCBUs to manage since April 2023.

Which psychosocial hazards does algorithmic management create?

Algorithmic management most often creates low job control, high job demands, surveillance stress and poor organisational justice. The hazard usually sits in the work design around the tool rather than in the code itself.

Five patterns show up repeatedly where digital systems direct work:

• Job control. Machine-paced workflows strip the discretion that protects against low job control
• Job demands. Automated queues set high job demands with no natural pauses for recovery
• Fairness. Unexplainable decisions create poor organisational justice that workers cannot challenge
• Surveillance. Continuous tracking quantifies output while ignoring effort and personal circumstances
• Support. Thin training leaves workers exposed as their existing skills feel obsolete

SafeWork NSW's AI WHS Scorecard names fragmented design, low job control and machine-paced work as three recurring design flaws in productivity tools.

Does the law apply to small businesses and outside NSW?

Yes for small business, and indirectly for employers based elsewhere. WHS duties attach to the PCBU regardless of headcount, so a five-person business using a scheduling app carries the same obligation as a national employer.

Businesses headquartered interstate still need to comply for any workers in NSW. Safe Work Australia has been asked to consider whether the model WHS laws should address the same subject matter, which would flow this approach through other state psychosocial laws.

Can unions inspect your AI systems?

Yes. The Act expands section 118 so WHS entry permit holders can require reasonable assistance to access and inspect a digital work system where a breach is suspected. At least 48 hours notice is required, and no more than 14 days.

In her second reading speech, NSW Minister for Industrial Relations Sophie Cotsis identified the material that could be inspected:

• Code and algorithms behind allocation decisions
• Performance metrics applied to workers
• Records, data logs and audit trails generated by the system

Business groups including the Australian Industry Group have criticised the breadth of this access. The powers wait on guidelines SafeWork NSW will finalise through public consultation, and recent SafeWork NSW enforcement activity in psychosocial safety indicates how actively they are likely to be used.

How to meet the new AI WHS duties

Treat an AI or automation rollout as a work health and safety change event, with a documented risk assessment completed before workers are exposed to it. Five steps cover a reasonable baseline.

1. Inventory every digital work system

List every tool that allocates work, sets targets, tracks activity or informs HR decisions. Include systems supplied by vendors and anything introduced by individual teams without central approval.

2. Assess the psychosocial risk of each system

Run a psychosocial risk assessment on each system in scope. Identify which hazards it activates, in which roles, and at what intensity.

3. Check what your vendor arrangements allow

Confirm you can see how decisions are made and what data is collected. The duty stays with you whether the system was built in-house or purchased.

4. Consult workers before allocation changes

Consultation carries weight when it happens before decisions are locked in. SafeWork NSW issued a prohibition notice at the University of Technology Sydney in September 2025 over consultation that had not finished before a change proposal was released.

5. Document controls and set a review date

Record the assessment, the controls and their owners. The NSW psychosocial code becomes a mandatory compliance benchmark from 1 July 2026.

FAQs

Is AI a psychosocial hazard in Australia?

AI can be a source of psychosocial hazards, and NSW law now says so expressly. The hazard arises from how a system allocates, paces and monitors work. Every Australian jurisdiction already requires PCBUs to manage psychosocial risks, so the underlying duty applies nationally.

When does the NSW Digital Work Systems Act commence?

The Act passed on 12 February 2026 and its main duties commence on a date to be proclaimed. Union entry provisions start at least one month after SafeWork NSW publishes guidelines. The primary duty under section 19 applies in the meantime.

Does the law apply to rostering and scheduling software?

Yes, where that software allocates work. Automated rostering sits squarely inside the definition of a digital work system. The test is whether the tool decides or shapes who does what work and when.

Who is responsible if the AI system came from a vendor?

The PCBU carries the duty. Buying a system from a third party leaves responsibility for the resulting risks with the business using it. Due diligence on how a vendor system makes decisions, and what data it collects, forms part of meeting that duty.

Are WHS policies and training enough to comply?

Policies and training alone fall short. Regulators expect changes to how work is designed and performed, with controls applied in order of effectiveness. Training sits at the weakest end of the hierarchy of controls and works best alongside structural change.

Do you need a risk assessment before rolling out AI?

A documented psychosocial risk assessment before deployment is the practical standard. Workers and health and safety representatives should be consulted during hazard identification rather than afterwards. Recording the assessment creates the evidence a regulator will ask for.

What are the penalties for breaching the NSW AI WHS laws?

Refusing reasonable assistance to a WHS entry permit holder attracts penalties of $13,310 for an individual and $66,770 for a body corporate. Serious breaches of the principal WHS Act carry substantially higher maximums, reaching millions of dollars and imprisonment for individuals.

Foremind helps Australian employers identify, measure and evidence psychosocial risk as work changes. Explore the Foremind platform to see how.

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