The end for zombie agreements! What you need to do
Posted on May 26, 2023
Zombie agreements will soon be a thing of the past, as new changes to the Fair Work Act 2009 (Cth) (FW Act) include the sunsetting (termination) of ‘zombie agreements’ on 7 December 2023. Read on to find out what you need to do to if your workplace is covered by a zombie agreement.
What is a zombie agreement?
A ‘zombie agreement’ is a pre-2010 agreement made before the commencement of the FW Act and modern awards, that continues to operate. These are a certain type of registered agreements which were made collectively between an employer and a group of employees or between an employer and an individual employee.
Zombie agreements often contain much less favourable terms and conditions to employees compared to modern awards and enterprise agreements. The approval of enterprise agreements under the FW Act requires a comparison of the terms of the proposed agreement with the modern award that would otherwise apply to the employee, to ensure that the employee is better off overall. Unlike enterprise agreements made under the FW Act, zombie agreements were not required to be as favourable as the terms of the relevant modern awards.
The most common type of zombie agreements are collective agreements, workplace agreement and Australian Workplace Agreements made under the Workplace Relations Act 1996 (Cth) the FW Act predecessor.
What if my organisation has a zombie agreement?
Zombie agreements will automatically terminate on 7 December 2023 unless an application is made and granted by the Fair Work Commission before 7 December 2023 to extend the default period of the agreement. The maximum period of extension is four years. The granting of an extension will depend on the specific type of zombie agreement and the individual circumstances, however generally the employer must be able to satisfy the Fair Work Commission that the employees are better off overall under the zombie agreement than the applicable modern award.
Unless there is a new enterprise agreement to cover the employer and relevant employees before 7 December 2023, the employees will be covered by the applicable modern award once the zombie agreement ends.
What do I need to do?
On or before 6 June 2023, all employers covered by a zombie agreement must give each employee who is covered by the zombie agreement a notice that says:
- They are covered by a zombie agreement;
- That the zombie agreement will terminate on 7 December 2023 unless an extension request is made to extend the agreement; and
- The sunsetting process commenced on 7 December 2022.
Employers who fail to notify the employees of the sunsetting of the zombie agreement may be such to penalties of up to $16,500 per breach for individuals and $82,500 per breach for companies.
Key Takeaways
Employers with zombie agreements are required to take prompt action to notify employees before 6 June 2023 to ensure they are compliant with the new amendments.
We recommend that employers start comparing their zombie agreements to the applicable modern award and consider whether they need to make an application for extension, commence bargaining for an enterprise agreement or prepare to implement employment contracts and individual flexibility arrangements after the termination of the zombie agreement.
Want to know what other changes you may have missed? Please refer to our recent article about the recent changes to the FW Act here.
Please contact our workplace relations team if you require assistance.
