The Sunsetting of ‘Zombie Agreements’: A Guide for Employers
What are ‘zombie agreements’?
Zombie agreements are employment agreements made prior to the commencement of the Fair Work Act 2009 (Cth) (“the Fair Work Act”). These agreements, which have been allowed to operate to the present, can either exist in the form of collective agreements or an agreement between an employer and an individual employee, commonly known as Australian Workplace Agreements or “AWAs”. Whilst these agreements have nominal expiry dates, they continue to have legal effect until they are terminated.
Since the present government’s passing of the Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2022 (Cth), several amendments have been made to the Fair Work Act, among those, legislation that sunsets (terminates) zombie agreements if not extended or replaced by new enterprise agreements on 7 December 2023.
How do I know if my staff are subject to a zombie agreement?
The Fair Work Commission has compiled a list of agreements that they have identified as either a zombie agreement or a potential zombie agreement, these lists can be accessed on the Fair Work Commission website.
It is important to note that this list is not exhaustive as the Fair Work Commission does not have access to all agreements made between 2006 and 2009. A reasonable assumption to make is that if your relevant agreement is dated before 2010, it is most likely a zombie agreement and will sunset on 7 December 2023.
What should I do if my staff are subject to a zombie agreement?
The Fair Work Act states that employers covered by a zombie agreement must notify each affected employee in writing. The notice should contain the following information:-
Which kind of zombie agreement they are covered by;
The agreement will terminate unless an application is made to the Fair Work Commission before 7 December 2023; and
That the sunsetting process commenced on 7 December 2022
Non-compliance with these notification requirements can lead to penalties of 60 penalty units for individuals (about $16,500).
What can I do before 7 December 2023?
If you wish to extend a zombie agreement, you must apply to the Fair Work Commission by 7 December 2023. The Fair Work Commission may approve an extension in limited circumstances with the maximum period of extension being four years.
Alternatively, an employer and its employees may elect to bargain for a new enterprise agreement however this new agreement must satisfy the requirements of the Better Off Overall Test (“the BOOT”). Effectively, this means that the new agreement must offer pay and conditions that would leave employees better off overall than if they were to be covered by the relevant Modern Award.
What if I don’t extend or replace the zombie agreement?
If a zombie agreement is not extended or replaced by a new agreement by 7 December 2023, employees will then automatically be covered by the relevant Modern Award. You should be aware that your employees may be covered by different Awards, depending on their role and duties.
You should be proactive in determining whether your employees are covered by zombie agreements and take action ASAP. Navigating these recent changes can be difficult, if you require any assistance or advice in ensuring your business is ready for 7 December 2023, please contact our Wayne Dever or Kaleob Vickers McKeon on (02) 4967 0888.