Australia has its first AI-specific workplace law. New South Wales passed the Work Health and Safety Amendment (Digital Work Systems) Act 2026 on 12 February, making it the first jurisdiction in the country to impose explicit legal duties on businesses regarding the use of artificial intelligence, algorithms, automation and online platforms in the workplace.
The legislation is not yet in force – its core provisions require a proclamation date that has not been announced, and union inspection powers cannot be exercised until SafeWork NSW publishes guidelines following public consultation. But its passage signals a regulatory direction that recruitment agencies, particularly those using AI-powered tools to screen candidates, allocate work or manage contractor shifts, cannot afford to ignore.
The law amends the Work Health and Safety Act 2011 (NSW) to introduce two new duties. First, employers must now ensure that workers’ health and safety is not put at risk by any digital work system used in the business. Second, there is a specific new obligation around the allocation of work: where a business uses an algorithm or AI platform to distribute tasks or shifts among workers, it must ensure that the allocation process does not create health or safety risks for those workers.
The definition of “digital work system” is deliberately broad. It captures algorithms, artificial intelligence, automation and online platforms. That scope has raised immediate concern among employer groups. The Australian Industry Group described the Bill as “fundamentally flawed and unwarranted,” arguing that existing work health and safety duties already covered the introduction of new technologies and that the new union inspection powers were particularly objectionable.
Those inspection powers are the most contentious element. Under the amended Act, union officials holding a WHS entry permit will be able to enter a workplace and require reasonable access to digital work systems if they suspect a breach of the new duties. They must give at least 48 hours’ notice but no more than 14 days’. The practical implication is that an agency’s AI screening tool, automated rostering platform or digital performance monitoring system could become subject to union inspection.
For the recruitment industry, the implications run in two directions. Agencies operating in NSW that use AI tools to allocate temporary or contract workers to assignments, manage shift patterns, or assess candidate fit through automated screening will need to audit those systems for any associated health, safety and psychosocial risks to workers. That is a genuine compliance obligation once the provisions are proclaimed.
The wider significance, though, is national. Safe Work Australia has been tasked with examining whether the national model WHS laws should be updated to address digital work systems. The NSW Act includes a review clause that triggers automatically if the national framework is amended to deal with the same subject matter. What starts in NSW may not stay there.
That question is particularly live for recruitment agencies, which are among the heaviest users of AI and algorithmic tools in the Australian workforce. From applicant tracking systems that score CVs to platforms that match contractors to shifts, the industry has been faster than most to adopt the technology that this law now places under regulatory scrutiny.
None of this requires immediate action today. The provisions are not yet in force, the union entry guidelines have not been drafted, and the proclamation date remains unset. But businesses operating in NSW should begin auditing what digital systems they use, how those systems affect workers, and whether their risk management frameworks account for AI-related psychosocial hazards. Waiting for the guidelines to arrive before starting that work is likely to leave insufficient time.
Sources: Work Health and Safety Amendment (Digital Work Systems) Act 2026 (NSW); Australian Industry Group, February 2026; Moore Australia; DLA Piper; Hamilton Locke; LegalVision WHS Regulatory Update, March 2026; Australian Industry Group Significant Workplace Relations Issues Report, March 2026.
