NSW Government’s workers compensation reforms grant unions unfettered access to small business data under guise of safety

The Council of Small Business Organisations Australia (COSBOA) has condemned proposed changes to the NSW Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025, warning that the reforms represent a dangerous expansion of red tape and unnecessary complexity for business.

Under Schedule 4 of the Bill, employers using any “digital work system” – including commonly used software like rostering tools, spreadsheets and scheduling apps – would face new legal duties to ensure those systems do not cause stress or overwork for workers. The same provisions would also allow union officials with WHS entry permits to inspect those systems if they suspect a breach.

Matthew Addison, Chair of COSBOA, said: “This Bill is a sledgehammer to crack a nut, and small businesses will bear the brunt. It gives unions open-ended rights to access small business systems and data; including customer details, commercial information and staff rosters, on the vague basis that a digital tool might be causing stress.”

“The legislation seeks to address the misuse of artificial intelligence and technology in the gig economy, but the provisions go far beyond that. Small business owners – like café operators, tradespeople and retailers – aren’t using gig platforms or complex algorithms; they’re using everyday tools like rostering and scheduling software. These reforms risk treating ordinary technology as if it were AI, and that’s a huge overreach that will be unworkable in practice.”

COSBOA argues that the Bill’s definition of “digital work system” is so broad it captures nearly every modern business tool, from time-and-attendance apps to point-of-sale software and project management platforms. The lack of clarity about what constitutes “reasonably practicable” compliance would leave small businesses exposed to uncertainty and potential liability.

The proposal to give union officials access to inspect digital systems also poses an unacceptable threat to privacy, confidentiality and business integrity.

“These systems often contain commercially sensitive and personal data. Allowing unfettered third-party access, without notice or confidentiality protections, is a serious risk – not just to the business, but to employees and customers as well,” Mr Addison said.

COSBOA demands that the NSW Government immediately withdraw or substantially amend Schedule 4 and take a more balanced approach that protects workers without overwhelming small employers.

Specifically, the organisation recommends the Government:

• Withdraw or significantly amend Schedule 4 to narrow its scope;

• Exclude small businesses with fewer than 50 employees;

• Exclude standard off-the-shelf software used for normal business operations; and

• Introduce clear guidance, confidentiality protections and notice requirements for any digital system access.

In addition, COSBOA calls for a clear transition period and dedicated advisory support to help small businesses understand and meet any new obligations.

The organisation has criticised the NSW Government for moving ahead of national processes, with consultations on AI and digital regulation currently underway through Safe Work Australia and the Federal Government.

“NSW shouldn’t jump ahead of national reforms and risk divergence from national frameworks. Small businesses need one consistent national approach, not a patchwork of rules that differ from state to state.” Mr Addison said.

COSBOA has also rejected other elements of the Bill, including automatic employer liability for psychological injury claims and new employer excess payments, which it says will pile more administrative and financial pressure on small businesses that lack HR or legal support.

“No one disputes the need to manage mental health risks at work,” Mr Addison said.

“But this proposal risks creating confusion, red tape and fear – not safer workplaces. Small business needs clarity and support, not open-ended digital oversight.”

COSBOA’s full response to the NSW Workers Compensation Legislation Amendment (Reform and Modernisation) Bill 2025 is available here.

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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.