“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.

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• The respondent was a sole trader.
• The respondent and appellant were friends and had helped each other out previously doing jobs, without payment.
• In March 2017, the appellant and another individual were assisting the respondent with some roofing work.
• The appellant fell through the roof and was injured.
• The appellant made a workers compensation claim.
• The claim was dismissed by the Workers Rehabilitation and Compensation Tribunal on the basis that the appellant was not a worker for the purposes of the Act and not entitled to workers compensation.
• The appellant appealed to the Supreme Court of Tasmania.

Was the appellant a worker for the purposes of the Act?

In determining whether the appellant was a “worker”, the Tribunal looked at the intent between the parties to enter into contractual relations.

Commissioner Wilkins determined that the respondent had no intention of paying the appellant for his assistance. The appellant had no experience in roofing work and the respondent’s hourly rate was so low he could not afford to pay for assistance.

The totality of the relationship between the parties is important in determining whether or not a person is a worker. The appellant gave evidence that the respondent:

• Provided him with safety equipment;
• Told him where to walk on the roof;
• Told him what to do; how to do it; and when it was to be done.

In this case Chief Justice Blow observed that the evidence is equally consistent with the appellant being a volunteer as him being an employee hired for the day.

Ultimately the Chief Justice concluded that there it was open to Commissioner Wilkins to find that the appellant was not a “worker”.

This case demonstrates the importance of a mutual understanding of the nature of a working relationship, prior to any work being undertaken. Be sure to ask questions in relation to your employment agreement and insurance coverage, particularly if there is no written contract.

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The Central Proposition

Lawyers are not the only professionals to provide advice touching upon taxation, financial and estate planning, corporatisation and structuring/restructuring – all of which have the capacity to affect not only the client but those around them. Badenach v Calvert gives primacy to the client’s instructions in establishing the duty owed by the professional to those who may be affected by his or her advice. The case concerned a lawyer, Mr Badenach, who was sued by the beneficiary under a will which Mr Badenach had drawn. The beneficiary alleged Mr Badenach had been negligent because there was no advice given (because it was not sought) about the prospect of a daughter – who was left out of the will – making a testator’s family maintenance (TFM) claim.

That TFM claim eventuated and was successful. The beneficiary then brought a claim in the Supreme Court of Tasmania against the lawyer. It was alleged that Mr Badenach ought to have enquired about the testator’s daughter and then volunteered advice which would have seen the beneficiary receive his inheritance other than by will (for example, advice to effect an inter vivos transfer or, given the estate comprised land, to transfer the land into a joint tenancy to take advantage of the rule of survivorship).

The Court held at first instance that it could not make a finding about what would have been done had the lawyer offered TFM advice to the testator, and as a consequence did not decide whether a duty of care was owed to Mr Calvert as a disappointed beneficiary.

The Court of Appeal found that Mr Badenach both owed that duty and had breached it, and re-framed the issue about what the testator would have done as being a question going to the measure of damages rather than an evidential shortcoming.

An application for leave was successfully made to the High Court on 26 October 2015, and the appeal heard when the High Court sat in Tasmania in March of this year.

The High Court held unanimously that the contested duty of care, which the Court of Appeal had held to exist, was not owed by Mr Badenach to Mr Calvert. That duty was above, and probably inconsistent with, the duty owed by Mr Badenach to the testator which was limited to the scope of the retainer. A number of other issues also tended against a result for the disappointed beneficiary – including the lack of evidence concerning what the testator would have done had he been presented with ‘volunteered’ advice about the prospect of a TFM claim.

A simple message delivered by the High Court is to be explicit in setting boundaries to a retainer, or for that matter any other contract. Mr Badenach’s retainer set the boundaries of that relationship, and could be easily identified by the High Court to then establish the perimeter of his duty of care. As was pithily put by The Honourable Justice Gageler:

“[Mr Calvert’s failure] stems from the absence of a fact necessary to establish a duty of care of the requisite scope and to give rise to the existence of damage: an expansion in the scope of the Testator’s instructions – a new or enlarged retainer”.

Maintaining Prudence While Not Delivering Beyond Retainer Scope

The High Court’s decision is not, however, an invitation to close enquiries when taking instructions (on any matter – not just a will – and for any professional, not just a lawyer). The joint judgment of Justices French, Kiefel and Keane refers to Mr Badenach making enquiries about the testator’s family as a ‘prudent’ measure (it would no doubt have, in turn, disclosed the prospect of TFM action – to then, one would expect, result in some general advice about how a TFM claim could see provision made from the estate if successful). A similar observation was made in the first instance decision of The Honourable Chief Justice Blow, who held that the lawyer owed the testator a duty to take his instructions about his daughter and a possible TFM claim by her.

But it seems that having made that prudent enquiry, and providing limited advice about the general nature and effect of any prospective TFM application, it is a separate issue – and an extension to the retainer – to then provide advice about the prospects of success of any TFM application, or how its affect could be avoided through methods other than a will.

To the extent that critics voiced concerns – particularly after the decision of the Court of Appeal – about the prospect of professionals having to run extensive and time-consuming enquiries to implement even the simplest of instructions, the High Court’s decision should silence those concerns without inviting practitioners to turn a blind eye to potential issues which routine enquiries ought reveal.

The dividing line drawn by the High Court seems to be for the professional to undertake sensible enquiries and identify any problematic issue should it present itself, and to then clarify whether advising upon the merits and consequences of that issue is inside, or beyond, the retainer. Mr Badench did not need to present his client with that option to escape liability on the facts before the High Court, but had he identified the potential for future challenge to the estate, and delimited his instructions, it is more likely that the claim against him would never have been brought.

Retainer Practices

Lawyers are one of the few professions for whom it is mandatory (in certain cases) to enter into a written client retainer. However it is sensible practice for any professional to retain a written record of both the retainer and of any important instructions.

Estate planning matters in particular have the potential for dissatisfaction to lie dormant for many years, until a will is read or a future transaction is effected. Memories usually fade, staff may leave, and documents sent to others may not survive. Maintaining a bank of material which demonstrates the limitations to a professional’s retainer remains – even more so given the High Court’s decision in Badenach v Calvert – the best protection against future claims.

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