Pre-2010 workplace agreements or "zombie" agreements will automatically terminate (or "sunset") on 7 December 2023 unless an extension is granted by the Fair Work Commission (FWC).
The exact number of zombie agreements is unknown, but there are still hundreds estimated to be in existence, so their termination will have significant implications for employers and employees.
What is a zombie agreement?
Zombie agreement is a term used to describe industrial instruments between an employer and its employees made before the commencement of the Fair Work Act 2009 (Cth) that continue to operate. They can be between an employer and a group of employees or between an employer and an individual employee.
The FWC has published a list of zombie agreements, found here. However, this list is not exhaustive.
The main difference between enterprise agreements made and approved after 1 January 2010 and zombie agreements is that zombie agreements are not required to be compared against modern awards for the purposes of the Better Off Overall Test, meaning employees covered by zombie agreements may have less favourable terms and conditions.
What do I need to know?
Employees covered by a zombie agreement should have received notice from their employer informing them the existing agreement will automatically terminate on 7 December 2023 unless there is an extension request.
If a zombie agreement is not extended or replaced by a new enterprise agreement by this date, then employees will be covered by the relevant Modern Award.
Modern awards often contain different requirements depending on the classification level that aligns with a specific role, including for employees to be aware of their classification level and days and hours of work.
If you believe you get misclassified in this process, or your employer has contravened a modern award that applies to your employment, seek advice from an employment lawyer, as you may be entitled to recover compensation.
Limited circumstances for extensions
An employer, employee or industrial association entitled to represent the interests of one or more employees covered by the zombie agreement can apply to the FWC for an extension of the default period.
The FWC may approve an extension of a zombie agreement in limited circumstances, with a maximum period of four years. For example, while bargaining for a new enterprise agreement is occurring.
Extensions might also be considered for employees better off overall if the zombie agreement continued to apply to them rather than the relevant modern award.
Replacing a zombie agreement with an enterprise agreement
Employers and employees covered by a zombie agreement may already be bargaining for a new enterprise agreement to replace the terminating zombie agreement.
Several requirements need to be satisfied during this process, including the requirement for the new enterprise agreement to offer remuneration and working conditions that leave employees better off overall than if they were to be covered by the relevant Modern Award.
Any new enterprise agreements need to be approved by the FWC for them to take legal effect.