NSW Psychosocial Hazard Laws: 2026 Changes
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General information only. Not legal advice. NSW-specific unless stated. Seek your own legal advice for your specific circumstances.
What's changed in 2026 and do leaders need to do differently
Between October 2025 and July 2026, NSW introduced four major changes that are reshaping how organisations manage psychosocial health and safety. Together, these changes move psychosocial hazards from a wellbeing conversation to a compliance, governance and work-design conversation. They also introduce a new obligation for leaders to consider how AI, automation and digital work systems may be creating psychosocial risks in the workplace.
| What Changed | What It Means for Leaders |
|---|---|
| 1. The Code of Practice becomes the compliance benchmark (1 July 2026) | You need evidence that psychosocial risks are being managed, not just good intentions or wellbeing initiatives. |
| 2. The hierarchy of controls now applies to psychosocial hazards | Regulators expect organisations to address the design of work before relying on training, resilience programs or EAPs. |
| 3. Enforcement powers have expanded | SafeWork NSW has increased inspector numbers and unions can now initiate certain civil penalty proceedings. The likelihood of scrutiny has increased. |
| 4. AI and Digital Work Systems now create WHS obligations | Employers must assess whether AI, algorithms, automation and digital monitoring systems are creating psychosocial risks. |
The First Shift: The Code of Practice Is Now the Compliance Benchmark
What changed?
From 1 July 2026, section 26A of the Work Health and Safety Act 2011 (NSW) commences following amendments introduced through the Industrial Relations and Other Legislation Amendment (Workplace Protections) Act 2025 (NSW).
Prior to this change, the Managing Psychosocial Hazards at Work Code of Practice served primarily as guidance regarding what was known about psychosocial risks and what may have been considered reasonably practicable.
From 1 July 2026, the Code becomes a much stronger compliance benchmark.
What this means for leaders
The question is no longer simply whether you care about worker wellbeing. The question is whether you can demonstrate that your organisation has identified psychosocial hazards, assessed risks, implemented controls and reviewed whether those controls are working. If you choose a different approach from the Code, you may need to show that your controls provide an equivalent or higher level of protection.
This means:
- The Code effectively becomes the regulator’s reference point.
- Organisations need evidence demonstrating how psychosocial risks are managed.
- Alternative approaches must be capable of demonstrating an equivalent or higher standard of protection.
Source: SafeWork NSW; WHS Act 2011 (NSW) s.26A; Industrial Relations and Other Legislation Amendment (Workplace Protections) Act 2025 (NSW).
The Second Shift: Your hierarchy of controls matter
What changed?
The WHS Regulation 2025 now formally requires organisations to apply the hierarchy of controls when managing psychosocial risks. The WHS Regulation 2025 strengthened psychosocial risk obligations through sections 55C and 55D. The hierarchy of controls now formally applies to psychosocial risks. This requires organisations to consider controls such as:
Higher-order controls
- Work redesign
- Job redesign
- Resource allocation changes
- Process improvements
- Role clarification
- Workforce planning
Lower-order controls
- Training
- Awareness programs
- EAP services
- Wellbeing initiatives
This does not mean lower-order controls are ineffective. It means leaders should be able to explain why higher-order controls were not reasonably practicable if lower-order controls are the primary intervention. This means organisations must first consider whether risks can be eliminated, reduced through redesign or controlled through changes to work systems before relying primarily on training, awareness programs or wellbeing initiatives.
What this means for leaders
Many organisations have invested heavily in wellbeing programs, resilience training and Employee Assistance Programs (EAPs). These remain important. However, regulators increasingly want to know: “What did you change about the work itself?” . If excessive workload, poor role clarity, inadequate resources or unrealistic deadlines are contributing to psychosocial risk, organisations must be able to demonstrate they considered higher-order controls before relying on worker-focused interventions.
The Third Shift:
Enforcement Has Expanded Beyond SafeWork NSW – Unions
What changed?
Registered unions can now initiate certain civil penalty proceedings under the WHS Act without waiting for SafeWork NSW to prosecute.
Several developments have increased enforcement activity:
- SafeWork NSW became an independent regulator on 1 July 2025.
- Additional psychosocial inspectors have been appointed.
- More than 1,000 psychosocial-focused inspections have been conducted.
- Unions can now initiate certain civil penalty proceedings directly.
The message from regulators is increasingly clear: Psychosocial risk management is moving from an education phase into an enforcement phase.
What Evidence Will Regulators Look For?
If an inspector, board, union representative or legal adviser reviewed your organisation tomorrow, they would likely look for evidence of five things:
1. Hazard Identification
Can you demonstrate how psychosocial hazards were identified?
Examples include:
- High job demands
- Low job control
- Poor support
- Poor role clarity
- Exposure to traumatic events
- Violence and aggression
2. Risk Assessment
Can you show:
- Who is affected?
- What is the likelihood of harm?
- What could the consequences be?
3. Controls
Can you demonstrate:
- What controls were implemented?
- Why they were selected?
- Where they sit within the hierarchy of controls?
4. Consultation
Can you show evidence that workers and HSRs were consulted?
5. Review
Can you demonstrate controls are reviewed and updated when circumstances change? The March 2026 Industrial Relations Commission decision involving the NSW Department of Education reinforced an important principle: Having controls written down is not enough.
Organisations need evidence that those controls are actively operating in practice.
The Fourth Shift: AI and Digital Work Systems Become a Safety Issue
Perhaps the most significant future-focused reform is one many organisations have not yet considered.
In February 2026, NSW introduced the Work Health and Safety Amendment (Digital Work Systems) Act 2026, making it the first Australian jurisdiction to create specific WHS obligations relating to AI and digital work systems.
What Changed?
The legislation applies to technologies that influence how work is allocated, managed, monitored or controlled, including:
- AI-assisted work allocation
- Automated rostering and scheduling systems
- Performance monitoring software
- Productivity tracking tools
- Algorithm-driven workflow systems
- Platform-based work allocation technologies
Importantly, employers cannot avoid WHS responsibilities simply because decisions are being made by technology or by a third-party vendor.
The duty remains with the employer.
What This Means for Leaders
Many organisations are implementing AI to improve efficiency, reduce costs and increase productivity.
The new legislation introduces a second question:
“Could this technology be creating psychosocial risks?”
For example:
| Technology | Potential Psychosocial Risk |
|---|---|
| Automated rostering | Reduced predictability and work-life balance |
| Productivity monitoring software | Increased pressure, surveillance and stress |
| AI-driven workload allocation | Excessive job demands or unrealistic expectations |
| Algorithmic scheduling | Reduced employee autonomy and control |
| Digital performance dashboards | Constant monitoring and heightened psychological pressure |
Digital and AI Adoption done better
This does not mean organisations should avoid AI.
It means organisations need to assess the impact of AI and digital systems in the same way they would assess any other workplace hazard.
The New Leadership Question – historically, leaders have asked: “Can this technology improve efficiency?”. Now they must also ask:
“What impact could this technology have on worker health, safety and wellbeing?” That includes considering:
- Workload
- Job demands
- Worker autonomy
- Fatigue
- Role clarity
- Psychological safety
- Human oversight and decision-making
Why This Matters
Many psychosocial risks are no longer being created solely by managers or organisational structures. Increasingly, they are being created by the way work is designed through technology. The regulator’s position is becoming clearer: If technology influences how work is performed, then technology must be included in your psychosocial risk assessment process.
Talk to People Plus Science about their ELEVATE Model for Human Centric Digital Adoption.
What Does this mean for all leaders – boards and executives and managers?
Five Questions Every Board and Executive Team Should Ask
- What are our highest psychosocial risks today?
- What controls are changing the work itself, not just supporting workers?
- Can we demonstrate our decision-making process?
- Have we assessed psychosocial risks created by AI or digital systems?
- Would we be comfortable explaining our approach to SafeWork NSW, a union or our board tomorrow?
Because from 1 July 2026, the strongest protection is no longer a wellbeing strategy.
It is a documented, evidence-based psychosocial risk management process that can withstand scrutiny.
“Neuroscience is the foundation for the approach we bring to every engagement. Partnering with our leaders to provide the insights that allow for improved decision making resulting in organisational resilience. Carolyn Grant
Interested in Learning More?
Book a briefing on psycho-social assessments and organisational resilience today. Mitigate your greatest risk and drive high performing, thriving teams.
