One key change is the sunsetting of ‘zombie agreements’. If your business has employees with zombie agreements applied to their employment, it is critical you act now and develop a strategy for the year ahead.

#1: What is a Zombie Agreement?

‘Zombie agreement’ is used to describe a range of transitional agreements that were made before the introduction of the Fair Work Act 2009 and Modern Awards (effectively any agreement made before 1 January 2010) and which have passed their nominal expiry date but continue to operate – as they have not been terminated or replaced by a new agreement.

Although this may affect some individual agreements, this change will predominantly affect zombie enterprise agreements made before 1 January 2010.

#2: What’s the issue with Zombie Agreements?

Unlike modern enterprise agreements, the terms and conditions of a zombie agreement are not measured against – or required to be more favourable (or ‘better off overall’) than – the terms of the otherwise applicable modern award. They exist in a vacuum and the only requirement is the base rates of pay in the zombie agreement are ‘no less’ than the base rates of pay in the relevant modern award.

As a result, it is not uncommon for zombie agreements to be devoid of certain modern award employee entitlements, e.g. they may have low or no penalty and/or overtime rates.

#3: What will happen to Zombie Agreements?

Zombie agreements will automatically ‘sunset’ (i.e. terminate) at the end of 6 December 2023 unless an extension is granted by the Fair Work Commission (FWC).

A zombie agreement can be extended on application to the FWC for up to four years – but only if employees are ‘better off overall’ under the zombie agreement (rather than the applicable modern award) or if bargaining for a replacement agreement is underway.

It is important to note this does not mean the zombie agreement can continue to operate indefinitely. It is simply deferring or delaying termination. The zombie agreement will sunset at the end of the extension period.

#4: My business is operating under a zombie agreement, what should I do?

Employers must notify affected employees by 6 June 2023 that:

1. They are covered by a zombie agreement
2. The agreement will be terminated on 6 December 2023, unless it is extended by application to the Fair Work Commission.

Considering this obligation, which carries a potential civil penalty if not met, it is important employers begin to think about what this will mean for their business.

Naturally, employees will want to know what impact the termination of the zombie agreement will have on their employment. Will they revert to the applicable modern award, or will you begin negotiations for a new enterprise agreement? It is important businesses consider all available options now and develop a clear strategy for the transition.

The Victorian Chamber recommends employers familiarise themselves with the terms and conditions of the applicable modern award and conduct a compliance review to ensure your business – and payroll system – is prepared for the transition.

Remember to check for any zombie agreements that may still apply to your employees. Preparation and planning is key, and it is important you seek advice and assistance early.

#5: Where can I get assistance?

The Secure Jobs, Better Pay Act contains other significant changes to enterprise bargaining. The changes are complex and comprehensive and will impact the way businesses approach bargaining.

The Victorian Chamber’s team of Workplace Relations Consultants are bargaining experts and regularly support members at the bargaining table, behind the scenes and in the Fair Work Commission. They are ready to assist your business with the transition away from your zombie agreement.

For assistance on any aspect of your employment obligations, please call the Victorian Chamber Workplace Relations Advice Line on 8662 5222.