For contracts to be valid, they must satisfy some basic requirements – offer, acceptance, consideration and other key elements. In addition to this, they must also be compliant with the relevant legislation. 

For example, customer contracts need to be compliant with the Australian Consumer Law, and Employment Contracts need to comply with the Fair Work Act 2009

But what happens if an agreement is outdated or expired, but technically valid due to its preservation in law? This is what we call ‘zombie agreements’. 

Zombie agreements, as the term suggests, are contracts that have passed their expiry date but remain valid under certain laws. This article will focus specifically on enterprise agreements, given the recent outcome of the Jobs and Skills Summit in September 2022. 

As an employer, it’s essential that you understand how these outcomes affect your obligations under zombie agreements, and what you should do to ensure a smooth transition for your employees under their respective agreements. 

What Is A Zombie Agreement?

Like we mentioned briefly above, a zombie agreement refers to a contract that has passed its expiry date. However, due to the law and the lack of a replacement law, it remains valid and applicable to certain employees. 

This basically means that workers remain subject to the same conditions under these zombie enterprise agreements despite any changes to modern awards. This could work against the employee, as the existing conditions of zombie agreements may not be considered fair under the Fair Work Act 2009

These issues were items of discussion at the Jobs and Skills Summit – let’s go through their consensus below. 

What Happened At The Jobs And Skills Summit?

The purpose of the summit was to strengthen the workforce by providing improved wages, workplace environments and opportunities for employment. 

While they made a number of decisions, one that is worth highlighting is that of the validity of zombie agreements. 

More specifically, the government concluded that the Fair Work Act would be amended very soon to terminate zombie agreements. In other words, those contracts that were made prior to the enforcement of the Fair Work Act but continue to be valid due to transitional provisions will now be terminated. 

They also added that the process for terminating these agreements should remain fair for parties. 

What Does This Mean For Employers?

Many employers have employees who are still bound to zombie agreements that precede the Fair Work Act. As such, it’s important for these employers to be proactive in light of this news. 

If you’re an employer in this situation, it’s highly recommended that you take steps to transition to a modern award for your employees and your business as a whole. This way, you can ensure a smooth process with minimal hiccups following this change. 

It’s also worth noting that additional changes will be made to the Act to encourage flexible working arrangements and provide unpaid parental leave. Employers should refresh their understanding of their employer obligations as the National Employment Standards (NES) will soon reflect these changes – be sure to keep an eye out for updates! 

What Now?

As an employer, one of your first steps moving forward should be sorting out the transition for your business to modern awards. This way, when the proposed changes do take effect, your business will experience minimal disruption to its business activities and workflow. 

It also means your employees will have a smooth transition process, as well as time for you to familiarise yourself with the terms of the new relevant award. 

What Should I Know About Modern Awards?

Modern awards set out minimum entitlements for employees. While this is similar to the NES, the key difference here is that there are different modern awards for different industries. 

You can use Fair Work’s Award Finder Tool to find which award applies to your employees, and sort out the transition from there. 

Need Employment Advice?

Sorting out your employment obligations (in a timely manner, too!) isn’t always easy. It can be an overwhelming process if you’re trying to make sure you’re compliant with all the right laws. 

To ensure you don’t miss any key steps, it’s advisable to get help from a legal professional. At Sprintlaw, we offer an Award Compliance package which includes advice from our professional lawyer with respect to the award that applies to your employees and how you can ensure compliance. 

Alternatively, you could get more general advice around your obligations and responsibilities under our Employment Law Consult package. Either way, our lawyers are happy to provide you with high-quality, quick and stress-free legal help. 
If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or for a free, no-obligations chat.

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