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On or before 6 June 2023, employers must be ready to inform all employees who are currently covered by zombie agreements that they will be affected by an automatic sunset date, and that action is required to ensure an extension is sought if they would prefer to remain covered by the current agreement.
What is a zombie agreement?
A zombie agreement is an agreement which was made prior to 1 January 2010, at the time modern awards began operating under the Fair Work Act.
Enterprise agreements made after 1 January 2010 have been subjected to a ‘better off overall’ test, which zombie agreements were not subjected to. Therefore, who are employees covered by the earlier agreements may find they are working under terms and conditions which are less beneficial than they would otherwise be receiving under the applicable modern award.
When will zombie agreements terminate?
The automatic sunset date for all zombie agreements is 7 December 2023.
For those who would like to extend the operational period, there is an option to make an application to the Fair Work Commission on or before 6 December 2023 to extend the term by up to four years.
There are three parties who may make the application to the Fair Work Commission to extend the operation of the agreement:
- the employer;
- an affected employee (i.e. the one who is covered by the instrument); or
- an industrial association which has the authority to represent the interest of one or more affected employees who are covered by the instrument.
Is there a simple way to check if an employee is covered by a zombie agreement?
Yes. The Fair Work Commission has published a list of some zombie agreements, which can be accessed here. The list is intended to assist employers but should not be relied upon solely. The list will continue to be updated with information about zombie agreements, including those which are pending extension or have already been extended.
What must employers do if they zombie agreements in place?
Employers must inform any of the employees in their workplace who are covered by a zombie agreement on or before 6 June 2023 that:
- they are covered by a zombie agreement;
- the zombie agreement is due to terminate on 7 December 2023 and an extension request must be made to extend the default period; and
- the sunsetting process came into effect on 7 December 2022.
What should employees do if they are covered by a zombie agreement?
Employees who are covered by an award can be proactive and check if theirs is going to automatically sunset on 7 December 2023, remembering that the onus is on their employer to notify them in writing about the termination date. If the employee would like to seek an extension with the Fair Work Commission it is their right to do so, however, they should first compare their existing agreement with the current award to determine if they would be in a better position coming off the zombie agreement.
Are there penalties for employers who do not inform affected employees about zombie agreements?
Yes. The onus is on employers to determine whether any of their employees are covered by zombie agreements and to inform them accordingly. There is a penalty of 60 penalty units ($13,320) for individuals or 300 penalty units ($66,600) for bodies corporate for failing to notify employees about the automatic termination, which will take place in June.
Employers who are unsure about their rights and responsibilities with regard to notifying employees under zombie agreements should seek legal assistance. Our experience employment lawyers can help you understand how to determine which employees are affected and how to notify them to remain compliant and avoid a penalty.