All employers who have employees covered by “Zombie Agreements” must give all affected employees written notice by 6 June 2023 about the automatic termination or ‘sunsetting’ of the Zombie Agreement. A failure to give the required written notice could result in a financial penalty being ordered by a Court.

‘Zombie Agreement’ is the general term given to an industrial instrument that commenced prior to 1 January 2010 and the introduction of the current Fair Work Act 2009. A number of these Zombie Agreements remain in force today and they often provide for terms and conditions less favourable than those under the relevant modern award/s that would otherwise apply to the relevant employees. Once a Zombie Agreement terminates, which will automatically occur on 7 December 2023 unless an extension application is made for the Agreement to continue, the relevant employees will typically become covered by a modern award (unless another enterprise agreement is negotiated and in place by that date).

Aitken Legal recommends employers complete the following steps:

1. Check to see whether any of your employees are covered by a registered agreement.
2. If so, check to see when the agreement was made.
3. If it is a pre-2010 agreement, give written notice to the employees covered by the agreement. This written notice must state (as a minimum):

• • what kind of pre-2010 agreement your employees are covered by;
  • that the agreement will terminate on 7 December 2023 unless an application to extend is lodged before 7 December 2023; and
  • that the transitional legislation amendments commenced on 7 December 2022.

The types of pre-2010 agreements include an “agreement-based transitional instrument”, a “Division 2B State employment agreement” or an “enterprise agreement made during the bridging period”. Employers must correctly identify which type of agreement covers their employees, and they should seek advice from Aitken Legal if they are unsure.

Aitken Legal considers that there are other matters which should be considered for inclusion in the written notice to employees as a matter of good practice and to ensure that your affected workforce has certainty about what the change means for them.  For example, the written notice might contain assurances that an employee’s remuneration will not be adversely affected by this change, and / or that new employment contracts referencing coverage under the relevant award will be issued in the lead up to 7 December 2023.

If affected employers consider that this change will have significant impacts on how they manage and pay their workforce, then they should seek legal advice from Aitken Legal as a matter of priority.