Sunsetting of ‘zombie’ agreements – what you need to know

Effective 7 December 2023:

In September 2022, the Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2022 amended the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 to introduce new provisions about pre-2010 employment agreements, otherwise referred to as ‘zombie agreements’.

What happens on 7 December 2023?

Under the Secure Jobs Better Pay amendments, all agreements made before 1 January 2010 that are still in operation will automatically sunset (or terminate) on 7 December 2023, unless an application to extend such agreements have been made to the Fair Work Commission (“the FWC”) prior to this date.

Examples of ‘zombie’ agreements include:

• pre-reform certified agreements
• individual transitional employment agreements (ITEAs)
• Australian Workplace Agreements (AWAs)

If you currently have employees covered by ‘zombie’ agreements, the automatic termination of these agreements may result in the following effective 7 December 2023:

Employees on a ‘zombie’ agreement will revert to the relevant Modern Award (“the Award”). This means that wages and entitlements of the relevant employees will be covered by the Award, which may lead to a significant increase in labour costs.

Please note that if you currently have employees covered by ‘zombie’ agreements that will be terminating on 7 December 2023, written notice of such should have been given by 7 June 2023. If you have yet to provide written notice, we encourage you to call us on 1300 972 092 for legal advice as civil penalties may apply.

As an employer, what can I do?

From 7 December 2023, employees covered by a zombie agreement that is terminated will be covered under a modern award.

Modern awards often contain different requirements and some require employees to be notified of things such as work hours and classification level. Therefore, it is essential for employers to understand the modern award’s requirements and align each employee’s classification level with their role.

You may wish to consider the following in preparation for the incoming legislative changes:

• Check if you have employees on ‘zombie’ agreements. You can consult the list of ‘zombie’ agreements that are currently in operation on the FWC website here but please note that this list is not a complete list of all ‘zombie’ agreements.
• Apply to the FWC for an extension (up to a maximum of 4 years) if you need your ‘zombie’ agreements to continue operating beyond 7 December 2023. Please note that the extension must be applied for before 7 December 2023. An extension is not guaranteed and will only be granted if the FWC considers it reasonable and appropriate to do so.
• Seek legal advice to determine how these changes will affect your agreements if you are concerned that you have any ‘zombie’ agreements in place, if written notice was not provided to relevant employees by 7 June 2023, or if you require assistance with applying for an extension with the Fair Work Commission.
• Prepare for any changes to legal minimum condition such as hours of work of employees and changes in pay and entitlements (due to any applicable penalties, overtime, allowances entitlements) as a result of the termination of ‘zombie’ agreements/automatic transfer to the Award.

It is recommended that you seek legal advice through Constructive Legal Solutions to determine which modern award applies to your business, the differences between the zombie agreement and modern awards, and how to classify employees appropriately.

For more information, you may wish to contact our Workplace Relations team to assist you further via our Contact Us page.

Please note that this article is not intended to provide legal advice, but rather constitutes general guidance on upcoming changes in the rules. It is recommended that you seek legal advice through Constructive Legal Solutions