With 6 June 2023 around the corner, employers need to ensure they are prepared to inform any affected employees of impending termination of 'zombie' agreements and the consequent reversion to the relevant award.

What are 'Zombie' agreements?

'Zombie' agreements are agreements made before 1 January 2010, when modern awards commenced operation under the Fair Work Act 2009 (Cth), and which continue to operate.

Unlike enterprise agreements made after that date, 'zombie' agreements were not required to be compared against modern awards for the purposes of the better off overall test (BOOT), meaning that employees covered by those agreements may have less beneficial terms and conditions than they would otherwise receive under the applicable modern award.

How do I check if an employee is covered by a 'zombie' agreement?

Helpfully, the Fair Work Commission has published a list of some 'zombie' agreements (accessible here). However, this list is not exhaustive and further enquiries within your business may be required.

When will they terminate?

All 'zombie' agreements will automatically sunset on 7 December 2023.

However, this period can be extended for up to 4 years by making an application to the Fair Work Commission on or before 6 December 2023.

An application to extend the operation of the agreement may be made by an employer, an employee covered by the instrument, or an industrial association entitled to represent the interest of one or more employees covered by the instrument.

Immediate action required:

If any employees in your workplace are covered by a 'zombie' agreement, you must provide affected employees with written notice on or before 6 June 2023 informing them that:

  • they are covered by a 'zombie' agreement;
  • the 'zombie' agreement will automatically terminate on 7 December 2023, unless an extension request is made to extend the default period; and
  • the sunsetting process commenced on 7 December 2022.

Key takeaways

Employers must be proactive in determining whether any employees are covered by 'zombie' agreements to avoid penalties of 60 penalty units ($13,320) for individuals or 300 penalty units ($66,600) for bodies corporate for non-compliance with notifying employees about automatic sunsetting.If you are in doubt as to whether any of your employees are covered by a 'zombie' agreement, or are seeking advice on extending the default period, contact any member of our expert team.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.