Time is up for Zombie Agreements

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Zombie Agreements, or Enterprise Bargaining Agreements (EBAs) signed before 2010, are in the process of sunsetting by the Fair Work Commission. The agreements will automatically terminate on 7 December 2023, however, employers must give their workers notice of the changes before 7 June.

Employers must now begin the process of either moving onto a newly negotiated agreement, or reverting to their relevant Award. It’s crucial that businesses manage this process in a disciplined and rigorous way. 

What are Zombie Agreements?

Zombie Agreements are old EBAs that were made while Workchoices was law, before 2010. Often, they contain clauses and conditions that would not have been approved after 2010. Even though they have long since passed their nominal expiry date, the agreements have until now continued to apply indefinitely, hence the term “zombie agreement”.

The Federal Government moved to legislate Zombie Agreements out of existence last year, after a long political campaign against the agreements. Labor argues that the agreements were created under previous IR rules, and unfairly allowed to continue for years after these regulations were changed.

The Government believes many of the conditions in the agreements are unfair and wants businesses to either strike new agreements or conform with provisions in Modern Awards. Hence, it legislated for all agreements to terminate at the end of the year.

Should I negotiate a new agreement or go back to the Award?

Whether you look to negotiate a new agreement or revert to the Award will depend on the individual circumstances of your business. Every business will have different push and pull factors that determine what’s in their best interest. We’ve compiled a quick list of factors below – but its by no means exhaustive.

Union Activity

How active is the Union in your industry? Is the industry typically unionised at all? The relationship you have with the relevant union is a key factor here. If you’ve bargained and worked with the union in good faith many times, you might find that you can negotiate productivity gains in return for higher pay rates. However, the reverse could be true too. Consider if it’s possible to strike an agreement that is in your interest.

Industry Makeup

The Industry Award, and other nuances are also key. What are the possible productivity gains you could get out of an agreement? How different are they to the standard award? Naturally, these vary depending on what industry you’re in and how you staff the business.

Rolling back onto the Award

Likewise, it could also be better to just roll onto the Award. Awards are typically simpler than EBAs and far easier to implement into your Workforce Management Software and Payroll. Ultimately, a good way to find the best solution is to talk to your relevant industry association – for example, the Australian Hotels Association. Based on what Tanda has heard in this industry, it’s doubtful that many hospitality businesses plan to negotiate a new agreement.

How should I manage rolling off a Zombie Agreement?

It’s important to remember that many Award pay rates and conditions have changed significantly in the time since Zombie Agreements were created. This means that moving off them likely means you’ll be paying your staff more in wages and conditions. It’s important to model these cost impacts on your business.

Naturally, the exact costs can vary. A good way to model them is using Tanda rosters – you can look at the exact cost of a weekly roster and play around with it visually to see the changes, as well as model the effect of different scenarios such as overtime.

Another thing to consider is whether you want to strike a new deal or simply roll onto the Award rate. Individual circumstances will vary here, although often the Award can be simpler than customising many terms in the Award.

Paying staff & staying compliant with your Award

If you’re going down the route of moving to an Industry Award, automating award interpretation is key to staying compliant. Check with your current software provider if they can support automatic award interpretation to a level that meets your requirements. It’s also important to make sure you are compliant with other rules that are specific to each award, for example the outer limits rules for hospitality, or the consecutive days off rule for the retail award.

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