NSW Digital Work Systems Act 2026: New WHS duties for businesses

The Work Health and Safety Amendment (Digital Work Systems) Act 2026 (Digital Amendment Act) passed both Houses of the NSW Parliament on 12 February 2026. The new legislation amends the Work Health and Safety Act 2011 and recognises any software or digital platform that allocates work, monitors performance or automates decisions as a potential workplace hazard.

Businesses using such systems must actively assess, manage and control associated risks the same as they would for any other hazard under new work health and safety (WHS) duties, or risk enforcement action such as penalty notices, improvement notices or a prosecution.

What the new legislation changes

We previously discussed the changes and their anticipated impact on employers. Now that the legislation has passed, the proposed changes are confirmed and enforceable upon assent.

The legislation introduces specific duties requiring Persons Conducting a Business or Undertaking (PCBUs) to ensure that the use and allocation of work by a 'digital work system' – broadly defined as an algorithm, AI, automation or online platform – does not put the health and safety of workers at risk. This includes automated rostering, performance tracking software and other decision-making systems.

Importantly, the Act treats the technology itself as a system of work, meaning PCBUs must:

• actively design, monitor and control those systems to prevent harm
• ensure outputs from these systems do not result in unreasonable workloads or excessive performance metrics or tracking, excessive monitoring or surveillance
• avoid outputs that lead to discriminatory practices.

Key challenges for businesses

Several terms in the legislation, such as what constitutes ‘unreasonable workloads’ or ‘excessive monitoring & metrics’, remain ambiguous. In practice, these may include:

• fatigue or unsafe work practices from automated scheduling that fails to account for worker fatigue or breaks
• psychological stress arising from excessive monitoring and metrics, including AI-driven performance tracking and unrealistic targets that pressure workers to prioritise output over safety
• discrimination or bias in decision-making algorithms, such as an AI-driven rostering system that consistently assigns fewer desirable shifts to a disproportionate number of workers from a particular age group or cultural background.

Even if work is allocated automatically by an ‘upstream’ algorithm, responsibility for any resulting safety risks rests with the PCBU.

When the legislation takes effect

The Digital Amendment Act has yet to receive assent but will commence in phases to allow businesses time to prepare:

• immediate commencement (upon assent on 18 February 2026): Regulators have administrative powers to issue guidelines and conduct reviews to facilitate the transition
• new WHS duties (sections 19(3) and 21A): Core duties to ensure workers’ health and safety are not put at risk by digital work systems will commence on a date set by proclamation. They do not need to wait for the regulatory guidelines before activation
• inspection powers: New rights for permit holders to inspect digital systems are delayed and cannot begin until at least one month after the first relevant guidelines are published.

Although the new rules for external inspections have not commenced, core duties to manage digital work risks can be activated at any time. Businesses should begin internal risk assessments and compliance planning now, rather than wait for the one-month grace period tied to the guidelines.

Once the new WHS duties commence, employers are expected to have assessed how their digital work systems affect employee health and safety, particularly regarding workload, monitoring and decision-making, and put in place appropriate controls.

Consequences for non-compliance

As with any breach of WHS laws, a business that fails to comply with the new laws faces a number of potential enforcement actions. These include issuing of penalty notices or the issuing of improvement or prohibition notices, which each carry significant fines for non-compliance. If the potential risk of harm is considered substantial, or in fact has resulted in harm, a formal investigation may be undertaken which could result in a prosecution of the business and its officers. With the expanded rights for WHS permit officials, there is also the possibility of civil proceedings for breach of those laws if entry is denied or restricted, resulting in penalties.

How to prepare your business for the new WHS duties

The Digital Amendment Act reflects a growing regulatory focus on the psychosocial risks associated with algorithmic management and workplace surveillance. To comply, businesses should consider the following steps:

• identify and assess digital risks: Map out all relevant digital work systems that could be captured by the proposed legislation (e.g. AI, automated scheduling, performance tracking) and conduct a targeted psychosocial risk review to identify compliance gaps, particularly concerning unreasonable workloads, excessive monitoring and discriminatory outcomes
• integrate systems and controls: Update any WHS management system and policies to document controls for digital risks. Establish clear protocols for managing new duties, such as mandatory consultation with workers on digital systems, and prepare for the expanded right of entry and inspection for WHS permit holders
• training and governance: Ensure HR, managers and system owners understand how to use the relevant systems responsibly, comply with officer due diligence obligations in relation to digital risks, and make defensible decisions regarding what constitutes ‘unreasonable’ or ‘excessive’ system use.

Businesses should also take time to understand how digital work systems affect work allocations, workloads, monitoring and decision-making, and take all ‘reasonably practicable’ steps to integrate these new duties into their existing WHS frameworks to ensure compliance with the new safety obligations.

If you would like more information about the Work Health and Safety Amendment (Digital Work Systems) Act 2026 or need assistance with reviewing your current WHS policies and digital work systems, please contact us here.

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Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Michael Selinger

Jessica Alamyar

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