July 26, 2022

10 Crucial Steps for the Termination of ‘Zombie Agreements’

Although the term ‘Zombie agreement’ sounds like something out of a horror movie, it’s a term commonly used to describe an Enterprise Bargaining Agreement (EBA).

Every EBA has a nominal expiry date and after this date has lapsed it leaves it open for any of the parties to apply for the termination of the agreement. The Fair Work Commission is the deciding authority on whether an application for termination can be fulfilled. A request for termination will only come into effect if the commission believes that it is not contrary to the public interest to do so and that a termination will be appropriate in the particular circumstance.  The Commission will look to ensure that Employees covered by the agreement will be no worse off under the termination and have been consulted on the termination prior to the application being lodged.

To outline the physical steps in executing a termination successfully:

Pre-Work:

  1. Undertake comparison assessment of employees under the EBA versus relevant industrial award to ascertain if employees will be worse or better off under the termination.  
  2. Prepare the assessment in such a way that it can be relayed to the employees during the consultation to help them in understanding how they will be affected by the termination.

Consultation (Best Practice):

  1. Preparation of written notification for all employees covered by the Agreement advising that you are proposing the termination of the EBA and reverting to the applicable industrial award
  2. Undertake a series of information sessions that outline the reasons why the termination is being proposed, benefits etc and provide employees with the opportunity to ask questions
  3. Prepare individual correspondence for each that outlines how they will transition to the award if the EBA is terminated (this is where the assessment calculations come in) preferably you would be able to provide information that outlines what an employees pay would look like under the award versus the EBA
  4. Allow the employees at least 7 days to consider the information and ask any questions
  5. Undertake a vote to approve the termination (secret ballot – 51% is needed to approve the termination) – conducting a vote is not mandatory but it has been proved to be favourably accepted by the commission in assessing the application for termination

Application:

  1. Completed relevant forms and collated with copies of correspondence issued to employees and calculations
  2. Lodge online through the FWC portal
  3. Wait for the hearing date to be set and the commission decision to be made
  4. If successful – EBA will cease to operate on the date of the decision of the Commission and the award applies immediately

If your business has a zombie agreement that still applies, it’s time to review your arrangements. Feel free to reach out for advice at (07) 4051 7307 or hello@hrdynamics.com.au

HR DYnamics

Tailored, transparent, and pragmatic HR solutions