What does the sunsetting of Zombie Agreements mean for employers?

When the Fair Work Act fully commenced on 1 January 2010, many workplace agreements no longer covered employees and so ceased to operate; with employees now covered by an enterprise agreement, modern award or other registered agreement. However, for certain kinds of workplace agreements made before 1 January 2010 that are still operational today, these are commonly known as Zombie Agreements.

The passing of the Secure Jobs Better Pay Act introduced provisions for the ‘sunsetting’ of Zombie Agreements, with the Fair Work Commission (FWC) releasing a list of Zombie Agreements which will automatically end on 7 December 2023. Among these are workplace agreements which may have been known as ‘collective agreements’, ‘certified agreements’, ‘Australian Workplace Agreements’ (AWAs), or ‘Individual Transitional Employment Agreements’ (ITEAs).

What does the ‘sunsetting’ of Zombie Agreements mean?

The ‘sunsetting’ of Zombie Agreements means that a workplace agreement made before 2010 that is still operational will automatically cease to apply to anyone, and therefore will cease to operate. As outlined in the Secure Jobs Better Pay Act, this will commence on 7 December 2023. Following the termination of a Zombie Agreement, employees’ minimum pay and conditions might then be set by a Modern Award that covers the employees, or an enterprise agreement that covers the employees (if there is an enterprise agreement in place).

Can Zombie Agreements be extended?

Much has changed since 2010 when it comes to workplace agreements and the way in which they are created, so a Zombie Agreement will likely not take into consideration Modern Awards or National Employment Standards as with any new agreement. While the FWC can extend a Zombie Agreement for up to 4 years, it is highly likely that the bar set would be high as most would need significant changes to meet modern standards. Employers who wish to extend a Zombie Agreemnet must do so before 7 December 2023.

What if I have a Zombie Agreement that is still operational?

The first step for an employer is to check if in fact, the pre-2010 Agreement still covers any of its employees. If it no longer covers anyone, then no action is needed. If the pre-2010 agreement is still operational and covers one or more employees, then it is a Zombie Agreement and the employer will need to provide workers with written notice about the sunsetting of the agreement. This must be done before 7 June 2023.

For employees covered by a registered agreement, employers should check the date the agreement was made. The 3 different kinds of pre-2010 agreements are:

Agreement-based transitional instruments – These include certified agreements, collective agreements, Australian Workplace Agreements (AWAs) and Individual Transitional Employment Agreements (ITEAs) made under the Workplace Relations Act 1996 (Cth).

Division 2B State employment agreements – These include collective and individual agreements that were registered under state industrial laws in New South Wales, Queensland, South Australia, and Tasmania, and were recognised for the purposes of the Fair Work Act.

Enterprise agreements made during the bridging period – Enterprise agreements made between 1 July 2009 and 31 December 2009.

If your business has a Zombie Agreement in place and you require support during this transition, get in touch with our team who can assist. Remember to follow us on Facebook, Instagram or LinkedIn to keep up to date with our practical tips and information for business owners and managers.