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Zombie Agreements

In a recent Fair Work Commission decision, a strongly worded warning was provided to employers who continue to rely on outdated ‘Zombie Agreements’, stating that:

“If employers are enjoying a comparative benefit in reduced wages by application of very old agreements, which do not provide for penalty rates near-equivalent to the modern award that would otherwise apply, the clock is essentially ticking for those agreements.”

‘Zombie Agreements’ is a colloquial term which refers to Enterprise Bargaining Agreements negotiated in the Work Choices-era, before the commencement of the Fair Work Act and during what was known as the ‘bridging period’ from July 2009 to 31 December 2009, prior to the commencement of the Modern Award system.

The term describes Agreements which have been preserved in law because, despite being past their nominal expiry date, have not been terminated or replaced by another Agreement.

This means that the wages, conditions, allowances, and other benefits remains as per the Agreement and do not improve as changes occur to the Modern Awards. This can leave workers substantially disadvantaged in comparison to worker’s employed under their industry’s applicable Modern Award.

The Morrison Government’s Industrial Relations ‘Omnibus’ Bill originally sought to have all ‘Zombie Agreements’ automatically terminate on 1 July 2022 but the revised legislation that passed Parliament in March 2021 removed that provision.

Recent cases in the Fair Work Commission, however, indicate that provided an application to terminate a ‘Zombie Agreements’ is ‘appropriate’ and is ‘not contrary to the public interest’ ─ which will both be met if an Agreement has reached its nominal expiry and contains terms which are less beneficial to employees than those contained in the relevant award ─ such an application is likely to succeed.

Despite the Government removing the original provisions from the Omnibus bill, it’s worth noting that in an election year, it’s quite possible that the Coalition’s IR Policy might again suggest a determinative end to ‘Zombie Agreements’.

If you would like advice regarding Zombie Agreements or any other aspect of Industrial Law, contact our team for advice.