Circular 2023/3: Sunsetting of zombie agreements

Purpose

1. The purpose of this circular is to inform Australian Government agencies of amendments to legislation which give effect to the sunsetting of so-called ‘zombie agreements’ and to provide advice about next steps.

The legislative changes

2. 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 old employment agreements.

3. Under the amendments, all agreements made before 1 January 2010 that are still in operation will automatically sunset (or terminate) on 7 December 2023. Affected agreements include agreement-related instruments made:

   • prior to the full commencement of the Fair Work Act 2009 on 1 January 2010; and
   • during the ‘bridging period’ between 1 July to 31 December 2009.

4. Affected agreements can be collective or individual agreements (such as individual transitional employment agreements or Australian Workplace Agreements) made before 1 January 2010. 

5. Further information about the changes are available on the Department of Employment and Workplace Relations website and the Fair Work Commission website.

The requirement to notify

6. Agencies who have employees covered by these agreements are required to provide written notice to advise employees that:

   • the employee is covered by a zombie agreement;
   • the zombie agreement will terminate on 7 December 2023 unless an extension application is made to extend the default period; and
   • this sunsetting process commenced on 7 December 2022.
7. The written notice must be provided by 6 June 2023.

Which agencies will be affected

8. Most agencies will not be relying on zombie agreements to set terms and conditions for employees. However, it is possible that some zombie agreements still have technical application to some employees.
9. Some agencies may be aware that they have one or more employees that remain covered by a zombie agreement.
10. Other agencies will need to consider whether they have any employees covered by a zombie agreement.

How to consider whether your agency has affected employees

11. The Fair Work Commission (FWC) has published a list of possible zombie agreements. 

12. Agencies are encouraged to:

    1. review their records and the Fair Work Commission list;

    2. consider whether any zombie agreements exist for their agency;

    3. consider whether any cohorts of employees may be covered by zombie agreements; and

    4. notify any employees that may be covered in accordance with the notice requirements.

13. Agencies should pay particular attention to the following cohorts of employees in assessing whether they may be covered by a zombie agreement:

    1. employees who are covered by a common law arrangement or a comprehensive determination (made under section 24 of the Public Service Act 1999 or other enabling legislation) and fall within the coverage terms of a zombie agreement;

    2. employees covered by an individual transitional employment agreement (ITEA), an Australian Workplace Agreement (AWA) or a pre-reform AWA;

    3. employees employed under the Public Service Act who may be covered by the Continuous Improvement in the Australian Public Service Enterprise Agreement 1995 (CIAPS Agreement); and  

    4. SES employees.

14. No employee currently covered by an enterprise agreement that was made after 1 January 2010 (regardless of whether it has passed its nominal expiry date or has been supplemented by a determination) will be covered by a zombie agreement.

What to do if some employees may be covered by a zombie agreement

15. Agencies who have employees covered by a zombie agreement must comply with the notice requirements.
16. In some cases, the coverage of zombie agreements is uncertain. Where an employee may be covered by a zombie agreement, agencies are encouraged to take a cautious approach and notify potentially affected employees.  
17. If an agency is considering making an application to extend a zombie agreement, they must first consult with the APSC.

Further information

18. For further information on obligations with respect to zombie agreements, you can contact APSC Workplace Relations at workplacerelations@apsc.gov.au.