Sunsetting of Zombie Agreements

Workplace agreements made before 2010 that remain in operation, known as ‘zombie agreements’, will automatically ‘sunset’ on 6 December 2023 under legislation passed by the Commonwealth parliament.  This means the agreements will cease to apply to anyone after that date. 

These agreements may have been known as ‘collective agreements’, or ‘certified agreements’, or individual statutory agreements (ITEAs and AWAs), depending on when they were made and the system they were made in.

Can we just make a new agreement in the same form as the zombie agreement?

Much has changed since 2010 when it comes to the agreement-making system.  Your zombie agreement will reflect the point in time it was made and won’t take account of modern awards and the National Employment Standards, against which a new agreement would be assessed.  It is highly likely your zombie agreement would need significant changes before it could be approved as a new agreement by the Fair Work Commission (FWC).

Is there an option to extend our zombie agreement?

Yes, the FWC can extend zombie agreements for up to 4 years.  But the bar to clear will be a high one.  Given you would be asking the FWC to extend an agreement that is already (at least) 13 years old, we expect the FWC to grant very few extensions. See our August news post.

What happens from 7 December 2023?

If a modern award covers the work done by an employee covered by a zombie agreement, the modern award will apply to the employee from 7 December unless you successfully apply to extend the agreement or you replace it with a new agreement.

What do we have to do before 7 December 2023?

By 6 June 2023, you need to notify employees covered by a zombie agreement that the agreement will terminate on 6 December.

You should also look at what the impact will be of the zombie agreement sunsetting.  What are the differences between your zombie agreement and any modern award/s that will apply to employees?  You need to prepare to pay employees under the modern award/s from 7 December.  For some employers, the change may be significant, and it is best to prepare for the change well before 7 December comes around.