In Short
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NSW has amended work health and safety laws to expressly require employers to assess and manage risks arising from AI and other digital work systems.
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Unions can now commence civil penalty proceedings for WHS breaches and may receive a portion of any penalty ordered by the court.
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Recent court decisions confirm that businesses must actively supervise contractors and cannot rely solely on their expertise to meet WHS duties.
Tips for Businesses
Map how AI and digital systems are used across your organisation and assess any associated health, safety and psychosocial risks. Update policies, risk registers and consultation processes to reflect the new NSW requirements. Strengthen documentation, contractor oversight and incident reporting. Regularly review supervision practices and ensure managers understand their WHS responsibilities.
Summary
This article explains recent work health and safety regulatory updates for business owners and officers in New South Wales, Australia. It outlines legislative changes, enforcement trends and court decisions, and is prepared by LegalVision’s business lawyers, a commercial law firm that specialises in advising clients on work health and safety compliance.
Maintaining compliance with workplace health and safety developments is a continuous responsibility for officers. This round-up examines the latest updates in work health and safety (WHS) to assist officers in fulfilling their duties and remaining up to date with regulatory changes.
Legislative Updates
Employers Must Now Expressly Consider AI Risks
In our previous update, we noted the NSW Parliament was considering the Work Health and Safety Amendment (Digital Work Systems) Bill 2025. As of 12 February 2026, this Bill has now passed parliament. This Act requires employers to consider the risks of using AI and other digital work systems in the workplace.
Employers’ existing duty under section 19 of the Work Health and Safety Act 2011 (NSW) now extends to ensuring workers’ health and safety is not put at risk by digital work systems. This includes risks arising from:
- work allocation through digital systems;
- surveillance and monitoring of workers; and
- decision-making processes within the workplace that utilise digital technology.
Why This Matters
We know that many businesses, including yours, use AI or other digital systems in some way. This might include automated rostering software, AI-powered HR tools, performance monitoring systems or even staff using AI to draft emails. If you use these tools, they are now clearly covered by your WHS obligations.
The Act also expands unions’ right of entry powers. If a WHS breach is suspected, union officials with a WHS entry permit can enter the workplace to inspect digital work systems. This means they can require reasonable assistance to access emails, algorithm-based tools and other digital platforms during an investigation (subject to guidelines to be issued by SafeWork NSW).
AI Surveillance
Increasingly, businesses are adopting AI surveillance software that tracks employee activity in real time. This can include:
- monitoring all work on an employee’s computer;
- real-time tracking of people’s movements and activities;
- recording conversations through microphones; and
- AI systems are synthesising this data to assess employee attitudes and performance.
Although Australian surveillance laws allow monitoring if you give proper notice, WHS laws now require you to assess whether this monitoring creates psychosocial risks for your workers.
Practical Steps for Compliance
You already had a duty to eliminate, or if that is not possible, minimise psychosocial risks at work. Now, the law clearly requires you to consider how your use of AI may create those risks.
At a minimum, your business should take the following steps:
1. Investigate and map your company’s use of AI
This includes identifying where AI is being used across your organisation, such as:
- HR departments using AI platforms to summarise employee data or generate reports;
- operating systems that use AI for rostering or scheduling;
- individual workers using AI tools to draft warning letters, emails or other correspondence; and
- any personal logins or third-party AI platforms accessed by employees.
2. Consider implementing an AI usage policy
This prevents employees from using AI systems without proper oversight and ensures consistency across your organisation. As part of this policy, you should establish clear guidelines about:
- which AI tools are approved for use;
- how AI-generated content should be reviewed and verified;
- privacy and confidentiality requirements when using AI systems; and
- reporting obligations when new AI tools are introduced.
3. Conduct a comprehensive risk assessment
This assessment should consider:
- the nature of the AI system and how it operates;
- how likely it is that the system could create health and safety risks;
- what harm could arise from the system’s use, including psychosocial harm such as stress, anxiety or feelings of constant surveillance;
- appropriate controls to eliminate or minimise identified risks; and
- regular review processes to ensure controls remain effective.
It is important to note that the law does not prohibit the use of AI. Rather, it requires businesses to understand and manage the safety implications of using these systems.
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Expanded Union Powers to Commence Civil Penalty Proceedings in NSW
From 1 March 2026, registered industrial organisations, including unions, in NSW will be empowered to initiate civil penalty proceedings for WHS breaches under the Work Health and Safety Act 2011 (NSW) on behalf of affected workers.
What Has Changed?
In the past, regulators such as SafeWork NSW mainly took action for breaches of WHS laws. Under the new rules, unions can now take action themselves if the regulator decides not to prosecute, or does not start proceedings within a set time after being consulted about the alleged breach. This change increases the number of parties that can bring claims.
Moiety Payments
Significantly, the current prohibition on unions being awarded a portion of the penalty following a successful prosecution, known as a ‘moiety’, has been removed. This means that courts can now direct part of a fine or other penalty to be paid to the prosecuting union organisation.
Practical Implications
These changes create several important implications for businesses operating in NSW:
1. Increased exposure to litigation.
Businesses should expect heightened scrutiny of WHS compliance decisions, documentation and consultation processes. The broader rules mean unions are more likely to bring ‘strategic’ or ‘test’ cases, especially in industries where union representation is strong.
2. Greater focus on documentation.
With multiple parties now able to initiate proceedings, you must ensure their WHS governance frameworks, policies and risk registers are comprehensive and regularly updated. Proper documentation of consultation obligations, risk assessments and control measures will be critical in defending any potential claims.
3. Financial incentives for prosecution.
The introduction of moiety payments creates a financial incentive for unions to pursue WHS prosecutions. This may result in increased enforcement activity, particularly in high-risk industries or where there are allegations of serious or repeated breaches.
What Businesses Should Do
To prepare for these changes, businesses operating in NSW should:
- review WHS governance frameworks, policies and risk registers to ensure they are current and comprehensive;
- ensure consultation obligations with workers and health and safety representatives are met and properly documented;
- audit high-risk areas, including psychosocial hazards, fatigue and previously identified concerns;
- strengthen incident reporting and investigation processes to address potential breaches early; and
- provide additional training where needed to ensure managers and supervisors understand and apply WHS obligations consistently.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Cases and Incidents
A recent decision of the NSW Industrial Court makes it clear that if you engage contractors, you must actively supervise their work and check that they follow safety requirements. You cannot rely solely on a contractor’s technical expertise to meet your WHS duties.
What Happened?
A construction company engaged a specialist contractor to undertake specialised work at a residential building site. During this, a labourer employed by the contractor suffered a significant electric shock.
The contractor provided various safety documents throughout the project, including safe work method statements and pre-mobilisation checklists. The construction company had also implemented some safety measures, including arranging for warning markers to be installed on the powerlines and erecting hoarding around the site.
What Was the Outcome?
The Court found the construction company guilty of breaching its WHS duty and imposed a fine of $300,000. Although the company had safety systems and engaged a reputable contractor, it did not take all reasonably practicable steps to keep workers safe.
The Court accepted that the construction company was less at fault because it had hired a specialist contractor and could rely on its expertise to some extent. However, the Court made clear that this did not remove the company’s responsibility for workplace safety.
Key Takeaways
This case is a clear reminder that your WHS duties also cover contractors and their workers. You can rely on contractors for their specialist expertise, but you still must make sure the work is carried out safely.
To ensure compliance when engaging contractors, your business should:
- carefully review contractors’ risk assessments and safe work method statements to ensure they properly address site-specific hazards;
- actively supervise contractors and check that the agreed safety measures are actually in place and being followed;
- act promptly on any warning signs that safety systems are not being followed or are inadequate; and
- maintain regular site inspections to identify and address unsafe work practices before incidents occur.
Questions?
If you need legal assistance with a WHS matter or need help identifying an officer, book a consultation call on Prism. As a member, you can request unlimited legal advice consultations.
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