Sunsetting of ‘Zombie’ agreements and introduction of ‘cooperative workplace agreements’ – Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022

SUNSETTING OF ‘ZOMBIE’ AGREEMENTS

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) has been passed and amends schedules of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 to automatically sunset all remaining transitional instruments covered by the schedules (agreement-based transitional instruments, State employment agreements and enterprise agreements made during the ‘bridging period’ (1 July 2009 to 21 December 2009)).

If an agreement is ‘sunsetted’, and there is no replacement agreement in place, it is likely that a modern award may apply to the employer and employees.

The amending provisions will mean that:

1. ‘Zombie’ agreements will be ‘sunsetted’ at the end of the ‘grace period’ for the agreement (12 months from the time the Bill is passed – referred to as the ‘default period’) unless extended by the Fair Work Commission (FWC).

2. Employers are required to give employees covered by ‘zombie’ agreements written notice advising the employee:
   1. that the employee is covered by an agreement-based transitional instrument, State employment agreement or enterprise agreement made during the ‘bridging period’ (this is the period where agreements were made between 1 July 2009 to 31 December 2009 before the commencement of the BOOT and modern awards); and
   2. that the instrument will terminate unless an application is made to the FWC for the FWC to extend the ‘default period’ (see below); and
   3. the day on which Part 13 of the Bill commences.

   Failure to provide this written notice will expose employers to penalties.

3. An employer, employee or industrial association may apply to the FWC before the end of the ‘default period’ for the FWC to grant an extension of no more than four years. That application must be accompanied by a copy of the agreement and declarations required by the procedural rules of the FWC. The FWC is required to publish decisions made regarding applications to extend the default period.

4. The FWC is obligated to extend the default period in certain circumstances, including when it is reasonable in the circumstances to do so.

Consequently, unless the FWC grants an extension, ‘zombie agreements’ will automatically terminate 12 months after the Bill’s commencement. For this reason, employers need to identify whether a ‘zombie’ agreement continues to apply, and if so, prepare the relevant notifications when required and consider whether an application to extend the default period will be made.  If not, whether a new enterprise agreement will be made, or how modern award(s) will apply.

COOPERATIVE WORKPLACE AGREEMENTS

The Fair Work Act 2009 (Cth) provides for three different types of enterprise agreements: single-enterprise agreements (made by a single employer and its employees), multi-enterprise agreements (MEA) (made between two or more employers that are not single interest employers and their employees) and greenfields agreements (made in relation to new enterprises before employees are employed).

The Bill’s amendments replace the current MEA bargaining process and agreement making processes with a new ‘cooperative workplace agreement’ (CWA) framework.  This essentially separates multi-enterprise agreements into two categories – supported bargaining agreements and CWAs.

The Government has expressed that these changes aim to “get more people on to enterprise agreements” because “workers on agreements benefit from better pay and conditions – and employers on agreements benefit from better productivity.”

CWAs:

1. are intended to cover multiple businesses and their employees;

2. are voluntary for employers to participate in and will apply where a supported bargaining authorisation is not in operation;

3. to be approved, must require the FWC to be satisfied that at least some of the employees to be covered are represented by a Union in relation to bargaining for the agreement (see section 186(2A)); and

4. can be varied to bring new employers within the agreement and to remove employers from coverage of the agreement (by majority agreement of employees to the change).

No bargaining orders could be issued or protected industrial action taken, in relation to a proposed CWA.

Employers interested in the CWA framework can contact us for further advice.