AI related changes coming to NSW Work Health and Safety laws

The New South Wales Government has introduced the Work Health and Safety Amendment (Digital Work Systems) Bill 2025 (NSW) into parliament, seeking to introduce specific duties and entry permit holder rights in relation to digital work systems into the Work Health and Safety Act 2011 (NSW).  These changes, if passed, will see NSW as the first Australian State to specifically regulate safety risks arising from the introduction of artificial intelligence and digital work systems into workplaces.

Businesses in NSW should monitor the Bill's progress, as its passage is likely though the Greens party are pressing for further reforms. Employers are also anticipating guidelines on providing WHS entry permit holders access to digital work systems and implications for AI use.

These changes build on a series of transformative changes we have seen to work health and safety laws in New South Wales over the last few years, summarised in our previous article. 

Background

In May 2025 significant and controversial reforms were proposed to the workers compensation regime in NSW in the Workers Compensation Legislation Amendment Bill 2025 (NSW), including to limit the ability of workers to claim compensation when they suffer psychological injuries. 

After that bill was referred to an indefinite upper house inquiry, in August 2025 the NSW Government sought to reintroduce largely identical reforms as part of the Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025 (NSW).  That approach was heavily criticised by opposition parties, professional bodies and leading commentators.  It was in that second bill that the NSW Government also first proposed work health and safety reforms to cover the use of artificial intelligence and digital work systems.

After significant amendments, the original bill – the Workers Compensation Legislation Amendment Bill 2025 (NSW) – passed parliament on 18 November 2025.  Importantly, that bill only passed with amendments removing increases in whole person impairment (WPI) thresholds. This would have seen many employees with serious psychological injuries being denied access to long-term benefits, and including having the NSW Chief Psychiatrist develop a better system for accessing psychological impairment for workers' compensation purposes.  That bill did not include any work health and safety reforms.

Work Health and Safety Amendment (Digital Work Systems) Bill 2025 (NSW)

With the passing of the original bill, the NSW Government has now introduced its proposed changes to work health and safety laws in a new, separate bill, the Work Health and Safety Amendment (Digital Work Systems) Bill 2025 (NSW) (Bill).  In introducing the Bill into parliament, the relevant Minister, Sophie Cotsis, said:

‘Businesses across New South Wales are rapidly adopting digital tools to drive efficiency and productivity. That comes with benefits, but use of those systems cannot be at the expense of the health and safety of workers.’

The main changes proposed to the Work Health and Safety Act 2011 (NSW) (WHS Act) by the Bill are set out below:

Is a new specific duty required?

In relation to the proposal to amend the primary duty of care placed on PCBUs, Ms Cotsis stated as part of her second reading speech:

‘By explicitly recognising digital work systems within section 19(3), the bill ensures that PCBUs actively consider the risks of those systems in meeting their primary duty of care to workers. It makes clear that digital work systems must be treated as a specific area of focus within a PCBU's work health and safety responsibilities. While the existing primary duty already captures risks associated with digital technologies, this change removes any ambiguity and clarifies its scope.’

These comments reflect what many stakeholders believe make these changes unnecessary – that the existing broad duty imposed by section 19 of the WHS Act already captures the introduction of new systems and processes, including the increasing use of artificial intelligence in the workplace. 

Arguably, it is the broad, existing formulation of section 19 of the WHS Act which is one of its strengths.  That formulation adapts easily to cover the use of new technologies.  By adding an element of prescription within the primary duty of care, is there a risk that the duty may be less capable of evolving as changing needs arise?

The changes proposed by the Bill go further, though, by introducing a new specific duty in section 21A into the WHS Act.  In relation to the proposed new section 21A, Ms Cotsis stated:

‘‘The section also requires PCBUs to consider whether the allocation of work by a digital work system creates or results in …  risks … Well-recognised drivers of physical and psychological harm—such as stress, anxiety, depression and fatigue—can occur when risks of this nature are not properly identified and managed.

As digital systems increasingly shape how work is organised, these risks cannot be left unexamined or unmanaged. This proposed duty reflects the reality that harm does not arise from the technology itself but from how digital work systems are designed, deployed and managed in practice. The amendment ensures that PCBUs take active steps to ensure that digital work systems are implemented safely and responsibly, with worker protection front of mind.’’

Greater access for WHS entry permit holders

For those stakeholders who are critical of the proposed changes, including technology developers and gig economy operators, it is perhaps the proposed access rights for WHS entry permit holders which is the most contentious area.

In her second reading speech, Ms Cotsis, explaining the proposed changes to the access to be provided to WHS entry permit holders, sought to put these changes into their broader context:

‘‘Entry permit holders play an important role in ensuring workplace health and safety through their ability to inquire into and inspect work systems relevant to a suspected contravention of the Work Health and Safety Act 2011. …

This complements the existing right under section 118 (1) (a) for entry permit holders to inspect any work system while at a workplace when inquiring into a suspected contravention of the Act. In practice, reasonable assistance means allowing the permit holder to access and inspect the system, or providing an explanation of how the system functions so that the permit holder can meaningfully carry out the inspection. This amendment is important because individual workers often do not have visibility of how digital work systems operate or the awareness or opportunity to identify risks embedded within them. Entry permit holders play a critical role in ensuring that these systems are transparent and accountable in terms of impacts on health and safety.’’

Challenges for employers

There are significant challenges for employers arising from these proposals:

• employer groups have been vocal in expressing the concerns of many, that these access rights may allow unions and their representatives unprecedented access to an employer’s commercially sensitive information, the personal information of employees, and in some cases, access to proprietary software used by employers in their operations. What effect the changes may have on the use of artificial intelligence, and more broadly, innovation also remains to be seen
• while reasonable access will be subject to guidelines made by the regulator, those guidelines have not yet been released, and
• the existing rights of WHS entry permit holders under section 188 of the WHS Act include the right to consult with workers, inspect any work system, to make copies of documents, to conduct tests where it may be relevant to a suspected breach of the WHS Act. This may require employers to not only inform WHS entry permit holders about artificial intelligence use in operations, but could allow those persons to come away with source code, training data and logs, and audit trails.

Out of step with the model work health and safety laws?

Work health and safety legislation in all Australian states (other than Victoria) is based on the model work health and safety laws developed by Safe Work Australia. 

In proposing these reforms, the NSW Government had previously received feedback from stakeholders, expressing concerns that these changes may put the WHS Act out of step with the laws in the rest of Australia.

In an attempt to ameliorate those concerns, the Bill now includes a mechanism for the Minister to review these changes, if the model work health and safety laws are amended in the future to deal with substantially the same subject matter.  The NSW Government’s position is that while it is committed to national harmonisation, it believes these changes are necessary to protect workers now.

Implications for employers

Businesses operating in NSW will need to closely follow the progress of the Bill.  While the Bill is expected to pass the NSW parliament, the position of all opposition parties is not clear.  The Greens party has publicly stated that it does not believe that the reforms go far enough and that they consider that related changes are required to be made to workplace surveillance legislation.

As always the devil will be in the detail and many employers will eagerly await the guidelines to be published as to what reasonable access they will need to provide to WHS entry permit holders to their digital work systems and what this may mean for the use of artificial intelligence in their operations.