Tens of thousands of Australian employees are still unknowingly trapped in so-called “zombie” employment contracts written during the WorkChoices era, according to an investigation into ABC`s daily news podcast The Signal. As employer lawyers, we help employers with “zombie deals” and have a wealth of experience that helps clients mitigate legal risks and liability. If you need help, please contact us to arrange a free no-obligation consultation on +61 (07) 3876 5111 and subscribe to our newsletter A number of large companies have made headlines due to their “zombie deals”. In particular, Justin Hemmes` hotel and restaurant empire, the Merivale Group, had paid its 3,000 employees in accordance with an outdated operating agreement approved at the WorkChoices. It was found that employees were paid much less than provided for in the applicable Modern Award (“Award”) and, therefore, following the employees` request with the support of the union, the Fair Work Commission (“Commission”), with the support of the union, terminated the Merivale Group`s agreement, which required the Company to pay the applicable award rates, this has resulted in significant disruption and impact on the business. An Australian law firm has also confirmed that it accepts class action lawsuits to recover insufficient payments for all current and former employees of the Merivale Group. This has dealt a double blow to the Merivale Group, which could see an insufficient payment claim of between $15 million and $25 million. However, it is not clear whether an insufficient payment request can be successful, as the exploitation of zombie deals is legal and provided for by the FWA. A number of other large organizations have also ended their outdated deals, such as Noni B (which includes Millers, Katies, Crossroads, Autograph, and Rivers) and Baker`s Delight.
It is important to note that workChoices agreements were not subject to the “better overall test” and could result in employees being worse off than they would be under a modern price. The WorkChoices Act was later repealed, but many of the agreements created during this period are still in place. This created the term “zombie deals” in the media. Parliament did not pass the Omnibus Act, but employers who entered into collective or company agreements entered into before 2009 should start primarily with strategic planning of the terms and conditions of employment and what actually requires working on an enforceable indemnity. According to the current wording of what is proposed, from a date that Parliament decides, these employers will use the corresponding modern label with all its wages and conditions. Recently, obsolete company agreements have been increasingly reviewed and a significant number of them have been terminated by the Fair Work Board. In addition, the Australian Labor Party has announced its commitment to abolish all Zombie WorkChoices agreements if they are elected in the upcoming federal election. In the case of the On The Run deal, the “zombie” deal was struck in 2007 at the time of WorkChoices and was set to expire in 2012. While a “zombie deal” may seem like describing the next Hollywood success of the zombie apocalypse, it is actually a term often used to describe corporate collective agreements that have passed their nominal expiration date, especially agreements made during the WorkChoices era and before the Fair Work Act 2009 (“FWA”) went into effect. But lawyers and unions say tens of thousands of employees at other companies across the country are stuck in WorkChoices-era deals and often don`t know it because the federal government has so far refused to shut them down.
“We believe that these outdated and expired zombie agreements must be terminated and replaced with agreements that comply with the Fair Work Act. Under the FWA, WorkChoices era agreements or agreements entered into pursuant to the FWA will continue to apply after their nominal expiration date until the FWC approves a replacement or terminates the agreement. Individually or with the support of a trade union or the company itself, an employee may ask the FWC to terminate the company agreement. While an employer may legally have the right to pay its employees under zombie agreements and, on the one hand, may appear economically viable by placing the company in a seemingly unenviable competitive position, this short-term view does not explain the significant reputational damage that such agreements can cause if an employer relies on them. This can lead to increased control by workers` unions in the future and lead to an employer being unable to bear increased costs (due to sudden changes in pay rates). “Zombie agreements” remain legally in place in situations where employees and employers have agreed to continue. Tip 2 – When the company agreement expired, take active steps to mitigate the risk of dismissal She added that WorkChoices-era agreements remain common in a variety of fast food and beverage outlets across Australia and are often in effect because the employees who signed them did not understand that their working conditions did not match the modern reward. If you have a zombie deal that still applies to your workplace, it`s time to review your payment agreements and get advice on the best way forward. Proactive measures to move from an expired agreement avoid the situation where employers have to change abruptly. A company agreement indicates the fixed expiry date (we propose to register this date), although negotiations with trade unions may take place before its expiry. In practice, these agreements may continue to govern employees` working conditions, as section 59 of the Fair Work Act 2009 (Cth) states that a modern allowance does not apply to an employee if a company agreement applies (i.e. there is no “double” coverage).
A company agreement also has full legal effect after its nominal expiry date, even if its wage rates are lower than the premium rates. The nominal expiry date is only a “trigger” for other measures, such as the opening of bargaining by a union party or requests for bargaining orders (which require an employer to bargain in good faith). For example, if an enterprise contract was approved for a four-year-old child in 2008 and then expired nominally in 2012, an employee who is employed in 2017 and who falls under the expired contract will continue to be paid at the rates prescribed in the expired agreement. In this context, we recommend that employers check whether their company agreements have expired, in particular whether the agreement was created at the time of WorkChoices, and take the initiative on this issue. As Merivale Group has demonstrated, the termination of an agreement by employees and/or unions can have a significant negative impact on a company that is not well prepared. For example, the Merivale Group not only received significant negative publicity regarding its outdated deal, but also only had 6 weeks to update its entire payroll system and convert its 3,000 employees in 70 locations at the appropriate modern price. Merivale`s group`s human resources director said the company also needed to conduct a full review of its workforce and consider reclassifying some employees based on price. Tip 3 – If there is a “zombie deal”, seek legal advice on whether the BOOT test will still be successful “We know that between 2006 and 2009, at least 4,000 contracts in the hospitality, fast food and retail sectors have not yet been terminated. There are still hundreds of workers, but this only applies to the basic hourly wage in a company contract.
Many outdated enterprise contracts have an expiration date, but that doesn`t mean they`re automatic. “We believe that these outdated zombie agreements must be terminated and replaced with agreements that comply with the Fair Work Act. He added that the current mechanism for replacing zombie agreements is “an effective means” and confirmed that the database of the Ministry of Employment Contracts and Small Enterprises could not confirm the number of zombie agreements in force. An employee of Krispy Kreme gathered for her colleagues across Australia and submitted official documents to end the unfair “zombie” deal of the American company. Under the Fair Work Act, WorkChoices-era agreements can be forwarded to the Fair Work Board after the expiry date: “Zombie Agreement” is a term used by CUTA to describe collective agreements beyond their nominal expiry date, including agreements entered into before the Fair Work Act of 2009 came into force. . . .