Shelf life of zombie agreements set to expire shortly
What is a zombie agreement?
The term “zombie agreements” is used to describe ageing workplace agreements that will be declared deceased by the end of 2023. Fortunately, it doesn’t necessarily mean you will be pursued and devoured by the living dead when you turn up for work.
Any workplace agreement that was made before the commencement of the Fair Work Act 2009 and is still in operation will automatically terminate on 7 December 2023.
Thousands of zombie agreements still in existence in Australia
The Fair Work Commission recently revealed that there are more than 100,000 zombie agreements still in existence, some of them dating back unchanged to the 1990s.
They range from large companies that are the Australian arms of multinational corporations to thousands of small businesses.
The Fair Work Commission has published a list of different possible types of zombie agreements on its website. (Please see Our list of possible zombie agreements.)
Legislative changes to end zombie agreements
The Labor government has said the requirement to set new workplace agreements would modernise pay and conditions for workers.
Minister for Employment and Workplace Relations Tony Burke said zombie agreements had been a “major loophole undercutting pay and conditions”. (Please see More than 100,000 ‘zombie’ workplace agreements revealed in public Fair Work Commission document, Smart Company, 15 February 2023.)
The end of zombie agreements was set for December 2023 in the government’s Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, which ends all workplace agreements established before 1 January 2010 at that time. (Please see Delivering secure jobs and better pay, 2 December 2022.)
Consequences of non-compliance with workplace agreement laws
Many of these outdated agreements date back to the WorkChoices era. Businesses have until 6 June 2023 to provide a written alert to any employees who are covered by such agreements.
Employers who fail to alert affected employees about the new workplace agreement requirements risk having compliance action or civil penalties imposed by the Fair Work Commission. (Please see Enterprise agreements and enterprise bargaining, 24 January 2023.)
Employers should get legal advice to understand how the new requirements will impact their business and to ensure they comply with the new laws.
Laws governing workplace agreements are often complex, requiring analysis of court judgements and several new pieces of legislation.
Infringing workplace laws can lead to fines of $1650 per breach for an individual and $8,250 per breach for a company. Court litigation for serious contraventions of workplace agreements can lead to fines up to $165,000 per breach for an individual and $825,000 per breach for a company.
Transitional period for terminating zombie agreements
Employers or employees who choose not to broker a new deal but instead keep their zombie agreement can apply for an extension to the FWC. If an employee applies to terminate a zombie agreement in coming months, employers may ask the FWC for a transitional period of up to 12 weeks before it takes effect.
However, the FWC must compare the terms of the proposed agreement with the modern award that would otherwise apply to the employee. The FWC sets out to ensure employees are better off overall under a new enterprise agreement, including base rate of pay, penalty rates, casual rates, overtime rates, allowances and rostering.
The Fair Work Commission has provided information on the changes on its website. (Please see Secure Jobs Better Pay Act – what’s changing.)