Is it time to finally move away from my nominally expired or Zombie Agreement?

Yes.

Whilst the pressure has been on business to replace nominally expired enterprise agreements and particularly those pre-Fair Work agreements (Zombie Agreements) since FWC has taken more interventionist approach regarding their termination, the new Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) will only further compound such interventionist approaches.

New Test focusing on interest of Employees

The Bill will make the current test for terminating nominally expired enterprise agreements harder on employers by focusing more on the interests of employees covered by the agreement rather than the current more objective test of the public interest.  There will be some protections for employers but only in relation to significant threats to the viability of the business including considerations of redundancy, insolvency or bankruptcy.  Disputes will be hear by a FWC Full Bench if a single member cannot resolve the initial application – showing the seriousness of such matters.

Drop Dead dates for Zombie Agreements

Zombie Agreements will be specifically targeted with the effect that, unless specific actions are taken to the contrary, such agreements in whatever form they exist will end 12 months from the date the Bill is enacted.  There is a bit of ‘naming and shaming’ of employers with Zombie Agreements because there will be strict notification requirements in effect publicising to their workforce the nature of the Zombie Agreement and imposing civil remedy provisions for a failure to do so.  Extensions can be granted on application provided that the employer can demonstrate that the current agreement is better off overall than the modern award.

Unions and Employees will be able to start bargaining without Employers consent

In any event, the Bill will most likely compound the reduction of employers ‘charting their own destiny’ by introducing generous provisions which allow unions or employees to start the bargaining process without an employer’s consent where it is dealing with replacement covering the same or substantially the same group of employees of the earlier agreement. Such an approach will effectively remove the requirement for Majority Support Determinations. 

A better BOOT?

Theoretically, new enterprise agreements should be even more streamlined with the Bill proposing a more global BOOT test, rather than the current ‘line by line’ approach which has often created confusing results for multigenerational agreements depending on the level of ‘strictness’ applied by individual assessments of the Fair Work Assist team. Given the challenges with the BOOT it is likely that employers will have to wait to see how the ‘early decisions’ apply the legislative changes or in a worst case scenario FWC may take a proactive stance and create a strong early precedent through a 5 member Full Bench or similar.  Stay tuned.

What should employers do?

Given the challenges faced with the current enterprise agreement approval system before FWC we have previously recommended that employers avoid the enterprise agreement system where reasonably practicable to do so by providing competitive terms and conditions through either individually or collectively negotiated additional terms ‘on top of’ their existing industrial instruments.  This has served many employers very well because it takes the often disputed nature of enterprise bargaining away from an ideological dispute and simply provides more realistic and quickly implemented changes.  Such an approach will be more difficult under the Bill’s proposed changes. 

Any employer currently with a nominally expired or Zombie Agreement should take advice regarding their current arrangements and specifically seek internal discussions as to the strategic outcomes that could be achieved by ‘jumping’ into their own replacement enterprise agreement rather than being ‘pushed’ by the proposed Bill. 

Edge Legal

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