NSW digital systems bill threatens small businesses with impossible compliance trap

The Council of Small Business Organisations Australia (COSBOA) has condemned the Work Health and Safety Amendment (Digital Work Systems) Bill 2025, introduced in the NSW Parliament on 20 November 2025, warning it will considerably increase compliance obligations for small businesses and expose them to severe penalties.

Matthew Addison, Chair, COSBOA says the Bill is a “trojan horse” that grants union officials with WHS entry permits unprecedented access to business digital systems, including platforms containing payroll data, customer lists, pricing algorithms, and operational strategies, with penalties for businesses that fail to provide “reasonable assistance”.

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

“There are inadequate safeguards preventing these powers 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,” Mr Addison said.

The Bill also introduces new offences for breaches involving everyday software used by small businesses.

Mr Addison said the legislation fundamentally misunderstands how small businesses use technology.

“The Bill makes small business owners liable for work allocation, and anything from a standard spreadsheet to a basic off-the-shelf system is caught up in this overreach.”

Mr Addison said compliance obligations within the Bill are equally unclear, as it requires businesses to ensure digital systems don't create “excessive”, “unreasonable” or “discriminatory” outcomes, yet none of these terms are defined. Small businesses face significant liability without a clear understanding of what compliance actually looks like.

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

COSBOA also warned that the legislation is being rushed through NSW Parliament before Safe Work Australia finalises national guidance on digital work systems; creating yet another instance of NSW breaking ranks on national workplace regulation.

“Small businesses operating across multiple states are struggling to keep up with conflicting requirements. NSW's go-it-alone approach on workplace laws makes a complex environment even harder and it has to stop,” Mr Addison said.

“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.”

Mr Addison emphasised that current WHS legislation already require businesses to manage all workplace risks, including those from digital systems.

“The NSW Government has not explained what gap this Bill fills or why existing laws are inadequate,” he said.

“This appears to be a solution in search of a problem, drafted in response to political pressure rather than demonstrated workplace safety failures.”

COSBOA also highlighted the Bill was introduced in the absence of any regulatory impact statement, cost-benefit analysis, or formal consultation with the small business sector.

“The NSW Government talks about cutting red tape, yet this Bill will force thousands of small businesses to seek costly legal or technical advice just to understand their obligations,” Mr Addison said.

COSBOA is urging the NSW Government to exempt small businesses with fewer than 50 full time employees and to undertake meaningful consultation before progressing the Bill.

“Small businesses support safe workplaces, but they need laws they can understand, implement and comply with,” Mr Addison concluded.

“This Bill must be withdrawn and redrafted following genuine consultation with the business community it will impact.”

For more on COSBOA, visit: cosboa.org.au

-ENDS-

For media enquiries or interviews, please contact Matthew Addison, Chair, COSBOA on chair@cosboa.org.au or call +61 (0) 421 553 613.

About COSBOA

Established in 1979, The Council of Small Business Organisations Australia (COSBOA) is a member based not-for-profit organisation exclusively representing the interests of small businesses. The capability, representation, and reach of COSBOA are defined by a mix of over 50 national and state-based members. COSBOA's strength is its capacity to harness its members' views and advance consensus across policy areas common to many.

Our member organisations work with the COSBOA team to assist us with policy development and guide our advocacy - not just for small businesses but also for the benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.