NSW digital work systems bill a ‘Trojan horse’, COSBOA warns

The small-business advocacy body has voiced its disapproval of the NSW Digital Work Systems Bill, with concern that it will increase compliance and severe penalties for small businesses.

On 20 November, the Work Health and Safety Amendment (Digital Work Systems) Bill 2025 was introduced into the NSW Parliament and has received negative feedback from the Council of Small Business Organisations Australia (COSBOA).

According to COSBOA, the bill posed a significant threat to small businesses as it could capture them in an “impossible compliance trap”.

Matthew Addison, COSBOA chair, labelled the bill a “Trojan horse” as it would grant union officials with WHS entry permits unprecedented access to digital systems containing payroll data, customer lists, pricing algorithms, and operational strategies, as well as penalties for businesses that failed to provide “reasonable assistance”.

“Small businesses have legitimate commercial-in-confidence concerns about union officials accessing their operational systems,” he said.

“There are inadequate safeguards preventing these powers [from] being used for industrial rather than safety purposes. A union official does not need access to an entire customer database to investigate a safety issue.”

It was noted by the NSW Parliament that the object of the bill was to amend the Work Health and Safety Act 2011 to make it a primary duty of care for a person conducting a business or undertaking to ensure that the health and safety of workers was not put at risk from the use of a digital work system.

In addition to this, the bill also introduced new offences for breaches involving everyday software used by small businesses, which Addison said was a reflection that the legislation “fundamentally misunderstood” how small businesses used technology.

Compliance obligations within the bill were also said to be unclear, as it required businesses to ensure digital systems didn’t create “excessive, unreasonable or discriminatory” outcomes; however, none of these terms were defined.

Addison said the bill made small-business owners liable for work allocation, and anything from a standard spreadsheet to a basic off-the-shelf system was caught up in this overreach.

“Small businesses face significant liability without a clear understanding of what compliance actually looks like,” he said.

“The NSW government is creating penalties first and promising to define them later through regulator guidelines. That is backwards and fundamentally unfair.”

COSBOA noted the legislation was being “rushed” through the NSW Parliament before Safe Work Australia finalised its national guidance on digital work systems, which created another instance where NSW “broke ranks” on national workplace regulation.

Small businesses were already under a significant amount of pressure, and those operating across multiple states would also struggle to keep up with conflicting requirements.

Addison said NSW’s “go-it-alone” approach to workplace laws made a complex environment even harder, and it had to stop.

“If digital systems genuinely pose new safety risks, the response must be nationally consistent and evidence-based, not 50 pages of NSW-specific regulation that contradicts what businesses must do in other states and territories,” he said.

“Small businesses support safe workplaces, but they need laws they can understand, implement and comply with. This bill must be withdrawn and redrafted following genuine consultation with the business community it will impact.”