The Health and Safety Line Just Moved. The Employment Law Line Didn’t.

There is a sentence doing the rounds in small businesses this spring. It goes something like this: we have fewer than 20 staff, so under the new rules we only have to worry about the serious stuff.

It is half true. The half that is false is the half that ends up in the Employment Relations Authority.

What changed

The Health and Safety at Work Amendment Act 2026 received Royal Assent on 9 July 2026 and comes into force on 1 April 2027. It rebuilds the Health and Safety at Work Act 2015 around one idea: critical risk.

A critical risk is one likely to result in death, a notifiable injury or illness, a notifiable incident, or a listed occupational disease — or one tied to a hazard managed by regulations under the Act. The test looks at consequence. If the risk occurs, is the realistic outcome that serious?

Two tiers follow. A small PCBU — broadly, a business with fewer than 20 workers — has its main duties limited to managing critical risks. Everyone else must still manage all risks, with critical ones first. Count carefully before you decide which you are. “Workers” means more than payroll: contractors, labour-hire staff, and regular volunteer workers all count toward the 20.

WorkSafe’s own examples show how much falls away. A small shop, it says, is not required to manage minor manual-handling injuries, slips and trips, or minor cuts.

Where the mind goes missing

Now take a different kind of hazard. The manager who belittles people in front of customers. The workload that never ends. The roster that changes at ten at night. The software that counts keystrokes.

These are psychosocial hazards, and the new framework handles them awkwardly. WorkSafe’s guidance says critical risks can include psychosocial hazards “sometimes through flow-on effects”. Its example is a truck driver whose stress and fatigue matter because they are likely to lead to a crash. The physical consequence is what carries the risk over the line.

The Act itself goes a little further. Section 22A(3) says that, for this test, risk includes harm to mental health associated with the hazard. So mental harm is not shut out. But the list of consequences it has to lead to did not change: death, a notifiable injury or illness, a notifiable incident, or a listed disease. Under s 23 of the principal Act, a notifiable injury or illness is either one of a short list of serious physical injuries needing immediate treatment, or one that requires, or would usually require, admission to hospital for immediate treatment. Most psychological harm at work does not look like that. It looks like sleeplessness, sick leave, a GP appointment, and in the end a resignation letter.

So for most small employers, most psychosocial risk will sit outside the critical-risk line from April. Bell Gully flagged the gap while the Bill was still before Parliament. Whether that was the right policy call is a fair debate. It is not the one we want to have here.

Our point is narrower. It is about what the Act did not touch.

The line that did not move

The Health and Safety at Work Act is one statute. The employment relationship is governed by another, and by the employment agreement itself. The 2026 reform amended neither of them.

The duty of good faith in s 4 of the Employment Relations Act 2000 still applies to every employer, with no headcount threshold.

Personal grievances still apply. An employee whose employment is affected to their disadvantage by an unjustifiable action of the employer can still raise a grievance under s 103(1)(b). An employer who sits on a bullying complaint is a familiar route to one. So is constructive dismissal, where the employee resigns because the employer’s breach made staying untenable.

The employer’s obligation to take reasonable steps to keep its people safe still applies too — and here we should be honest about a complication.

In Attorney-General v Gilbert, a probation officer’s health broke down under years of understaffing, workload, and management failure his employer had been warned about again and again. The Court of Appeal held that the implied duty to maintain a safe workplace covers psychological harm, not only physical injury. But it also said the content of that duty is informed by health and safety legislation. That opens a real question. When the statute narrows for small employers, does the implied duty narrow with it?

No court has answered that yet. What we can say is that Gilbert did not rest on the statute alone. The Court also relied on the employer’s duty of trust and confidence: an employer could not keep that duty while exposing an employee to an unnecessary risk of psychological harm it could reasonably have avoided. That limb owes nothing to the Health and Safety at Work Act, and the 2026 reform did not touch it. Nor did it touch the good faith duty in s 4.

Put plainly, for the 15-person business: from April, a WorkSafe inspector can issue a small PCBU an improvement notice only where the issue relates to a critical risk or welfare facilities. Your bullying problem may no longer be WorkSafe’s business. The Authority will still hear the grievance.

Why the gap is worse than it looks

If the employment law exposure is unchanged, why write about it at all? Because the reform changes behaviour, and the behaviour is where the risk grows.

The first problem is attention. When a regulator stops asking about something, businesses stop recording it. For many small employers, the health and safety system was where a complaint about a manager or an impossible workload got written down, assessed, and acted on. Strip that system back to the statutory floor, and the complaint still arrives. It simply has nowhere to go.

The second problem is evidence. In a grievance, an employer defends itself with its record: what it knew, when it knew it, and what it did. Gilbert is a study in what the absence of that record costs. The employer there had no health and safety plan dealing with stress, while the warnings piled up in its own files. Health and safety risk assessments used to create part of an employer’s record almost as a by-product. Without them, the record has to be built on purpose, or it will not exist when it is needed.

There is a third, quieter trap. Many employers have policies promising to identify and manage all workplace hazards. Where those policies form part of the employment relationship, quietly dropping below them is not a health and safety question. It is a question of whether the employer kept its own word.

The untested ground

One kind of hazard deserves a section of its own, because it is arriving in small businesses without much ceremony: software that allocates work, sets targets, and watches. Rostering apps, productivity trackers, tools that score calls, AI that drafts the performance review. The harm they can do is almost always psychosocial — a pace that never lets up, the sense of being measured every minute, decisions about your working day made by something you cannot question. Which means that under the new test, it will almost never be critical.

Our view is that this is where psychological harm at work is heading. Not because the software is malicious, but because it is tireless, and people are not.

It is also ground no one has yet walked. We are not aware of any Authority determination or Employment Court judgment in which a grievance has turned on psychological harm caused by an AI or algorithmic system. The principles are old: good faith, unjustified disadvantage, and the duty not to expose an employee to psychological harm that could reasonably have been avoided. Their application to a system that sets the pace of someone’s day is new.

The first employer to face that argument will have no precedent to lean on — only its own record. Why it chose the tool. What it told its people. What it did when someone said the pace was hurting them. It is worth remembering that the employer in Gilbert had once run systems to manage workload and support its staff, and let them lapse at the office where the harm was done. An employer that switches on a tool which quickens the work, and then stops listening, may find itself closer to those facts than it would like.

Across the Tasman, New South Wales has gone the other way. Its Work Health and Safety Amendment (Digital Work Systems) Act 2026 creates an express duty treating algorithmic work allocation, performance metrics, and worker surveillance as safety risks to be managed. New Zealand has not followed. That does not make monitoring software risk-free here. It means the risk is carried by employment law and the Privacy Act 2020 instead.

What we would do before April

Work out whether you are a small PCBU, counting workers the way the Act does, and check again if your numbers rise and fall with the seasons.

Do the critical-risk work the Act requires, and write down your reasoning, especially on the borderline calls.

Then keep one simple, separate line for everything else that can hurt people at work and turn into a grievance: bullying, workload, harassment, and monitoring. Treat it as employment practice rather than health and safety compliance. Make sure a complaint has somewhere to land and someone who must answer it.

Before you switch on software that sets the pace of work or watches it, talk to the people who will work under it, and keep a note of what they told you. If the tool is already running, ask them now.

Finally, read your own policies. If they promise more than your system now delivers, change the system or change the policy, and consult your people before you do either.

One caution on timing. Until 1 April 2027 the current Act applies in full, and a general election falls before then, so the reforms may yet be contested.

The lighter load

Parliament has narrowed what the regulator can demand of a small employer. It has not rewritten what an employee can bring to the Authority.

The law has given small businesses a lighter load to carry. It has not given them a lighter duty to the people who carry the work.

This article is general commentary, not legal advice. Every workplace is different; for advice on your own situation, get in touch.