Zombie agreements and the Secure Jobs, Better Pay Bill passes lower house

On 27 October 2022, the Federal Government introduced the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill (Bill) to Parliament.

If passed, the Bill will amend the Fair Work Act 2009 (Cth) (FW Act) and introduce many, but not all, of Labor’s pre-election promises and Jobs and Skills Summit commitments, including in relation to enterprise bargaining and agreement making, pay secrecy, flexible working arrangements and sexual harassment protections.

The Bill does not address contractors, labour hire or gig-economy workers, and we will likely see proposed changes in relation to those issues next year.

On 10 November 2022, the Bill passed the House of Representatives (with 80 votes to 56) after the government made further concessions in relation to some of the more controversial enterprise bargaining provisions.

One aspect of the Bill which has significance for businesses that still have transitional industrial instruments made prior to the Fair Work Act regime commenced is the sunsetting of “Zombie” agreements.

Currently, enterprise agreements made prior to the introduction of the FW Act (such as collective agreements) continue in operation after their nominal expiry date until they are terminated by the Fair Work Commission or replaced with a new enterprise agreement.

The Bill contains provisions which provide for the automatic sunsetting of these ‘zombie’ agreements.

The effect of the Bill is that, unless an extension is granted by the Fair Work Commission, all zombie agreements will automatically terminate 12 months after the commencement of the Bill. The Bill also introduces a requirement that employers give notice to employees covered by these agreements, within 6 months of the commencement of the legislation, of the automatic sunsetting of the agreement.

A zombie agreement may only be extended, for up to 4 years, if the Commission is satisfied that:

• the relevant employees, viewed as a whole, would be better off overall under the agreement than under the award which would otherwise cover them (or under a new enterprise agreement applied for), and it is otherwise appropriate to extend; or
• it is reasonable in the circumstances to extend the life of the agreement.

In most cases it is unlikely that these conditions will be satisfied.

Employers with such agreements should therefore be planning for their future industrial arrangements in terms of new enterprise agreements or reversion to relevant underlying awards.

This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.

The authors would like to thank Lachlan Chuong with his assistance in preparing this article.